Lucid Motors CEO on why Tesla isn't its main competitor

Peter Rawlinson, Lucid Motors CEO, joins Yahoo Finance to talk about how his company is taking on the luxury and EV markets.

Video Transcript

JULIE HYMAN: And we're joined now by Peter Rawlinson. He is the Lucid Motors CEO. He is joining us from California, where the company is based. Thank you for being here, Peter. Of course, Tesla just came out with its numbers late yesterday and reiterated its target to produce 500,000 vehicles. Now, you were the engineer-- chief engineer-- on the Model X. You worked at Tesla. Any lessons from that experience and from the Tesla experience in terms of production, specifically? Because as we know, starting a carmaker is not exactly an easy proposition.

PETER RAWLINSON: Absolutely. And there's a huge gap in the endeavor from getting from a prototype stage to a car in production. We're very cognizant of that. We're hitting production in Spring '21 with Dream Edition of Lucid Air, and the whole team is very focused upon that. But we're putting a lot of processes in place to ensure that we can undertake that in a successful and cohesive manner. We are starting our preproduction build at our purpose-built factory late this year so we can dial in the processes, and get all the quality right before we start actually producing cars for customers.

PRAS SUBRAMANIAN: Hey Peter, Pras here. So we're talking about-- you mentioned the factory in Casa Grande. You want to put out about 34,000 vehicles in the first year, and potentially 400,000 at the end of the decade. That being said, does that mean that you guys are to come out with a cheaper model to really compete with Tesla on a mass scale, or do you just want to target that upper, you know, Mercedes S Class customer?

PETER RAWLINSON: I think it's really important that we start at a high-end position as a true luxury brand. I'm a great believer that the first product defines the brand in the way, Tesla Model S defined Tesla as a brand. And I believe that Lucid Air Dream Edition will define us as a new brand, as a West Coast brand. And the brand is all about sort of the heritage and the inspiration of the state of California, fused with Silicon Valley technology.

But it's absolutely my mission and ambition to make sustainable mobility more widespreadly adopted, and we can only do that by progressively making cars at more attainable price points. And that's why I'm so pleased that we're going to bring in this sort of foundation for the whole Lucid Air range. The Air adds a more attainable price point starting early in '22. It can't come soon enough.

ADAM SHAPIRO: I'm curious, and keep in mind I've got a Studebaker poster over here, so this is a 19th century company that is still one of my favorites. Have you built-- because the images of the vehicle are stunning. But how many prototypes have you built and tested? What are you learning from these vehicles?

PETER RAWLINSON: Right. Well, we've got a very extensive fleet. We're in the stages of completing a fleet of 80 basic prototypes. These are not concept cars. These are not show cars. These are real engineering prototypes. We built our alpha fleet a few years ago, and this beta fleet, they're broadly 95% production-representative. And we're actually building them on a pilot line so we can learn from the process of construction, as well as the attributes from the prototypes.

So the first prototypes, they are for developing the fundamentals of the car, the structure, the suspension, the ride and handling, the durability. But as we go through the prototype process, we layer on testing of different attributes for noise and vibration, the fit and finish, and the interior. We're doing a lot of work at the moment with the HVAC, air conditioning system with the interior as we get more into representative interiors into our prototypes. And this is a very phased, progressive process, which leads inexorably to the build of our preproduction cars in the plants in Casa Grande in December this year.

INES FERRE: Hey, Peter, Ines here. We've seen traditional manufacturing companies going into the EV space, even the luxury ones, BMW, Mercedes Benz announcing a lineup. And GM also announced some manufacturing changes to make an EV Cadillac. How do you see these traditional manufacturers going into the EV space? Are they a position to make this a reality for them?

PETER RAWLINSON: I'm really disappointed. I mean, Tesla's got a preeminent lead over the others now, by many years, because Tesla recognizes this is a technology race. We recognize that. I'm disappointed that the traditional automakers are not moving fast enough, and that's really why Lucid's come on to the scene, to accelerate this process. Tesla can't do this alone. We need to accelerate this technology race for a widespread adoption of sustainable mobility. That is our mission.

And if you apply one key metric to the ability of any EV company to demonstrate this technology, that is efficiency. How far can I travel in miles per kilowatt hour? And we're not seeing high levels of efficiency from these other automakers. Tesla's right up that. Lucid's surpassing Tesla. We're getting over four and 1/2 miles per kilowatt hour. I'm not seeing anything close to that from these traditional automakers. Porsche Taycan is more like 2.6. And you know, email Volkswagen, they just launched the ID.4. And I applaud that-- great for Volkswagen, to see them rising to the challenge. But they're just not there with the efficiency. It's just over three miles per kilowatt hour, for a relatively small car. Whereas Lucid Air is a full-sized luxury sedan, and it's over 4 miles per kilowatt hour. That is the measure. The traditional automakers are just not rising to the plate, stepping up to the plate fast enough. It's as simple as that.

PRAS SUBRAMANIAN: Hey Peter, Pras again. So, you know, you mentioned Tesla and you talked about their-- they have that lead in efficiency and how, you know, Lucid is almost up there, or surpassed them. You used to work there. You know, Elon Musk last night in the earnings call talked about how what separates Tesla from the others is that they can-- they're so vertically integrated. They can actually-- want to make-- want a part, we could actually make a machine to make that part. Is that how you compete with Tesla? Is that how you compete with their efficiency and then their technology and their software stack?

PETER RAWLINSON: Well first of all, I would say our main competitor is a car company. I'd highlight Mercedes Benz in terms of the attributes of Lucid Air. We're going after S Class Mercedes. But it's a natural comparison, and I accept that comparison with Tesla. Now, I mean, you could go super vertically-integrated. There's a historical precedent with Ford with the River Rouge plant. You could go into iron ore smelting, you can go into nickel mining. The question is, is there a proportionate value add and value proposition for the company?

I see this as a very nuanced solution. I think that it's absolutely crucial for us to be super vertically-integrated in the key areas that offer maximum value. So we're going super vertically-integrated in the design and development and integration of our electric powertrain technology and the manufacturing of that. We're not going to buy-in our motors, we're not going to buy-in our battery packs. We can actually buy cells in from LG Chem, but we're going to develop our own cells longer-term. So yes, we're going to be super vertically-integrated in the key selected areas that offer maximum value. Are we going to be super vertically-integrated in making our own tires? No, Pirelli do a great job of that.

JULIE HYMAN: You're not going to be doing sampling anytime soon. Peter Rawlinson.

PETER RAWLINSON: No smelting anytime soon, no.

JULIE HYMAN: Thanks. Hopefully you can join us again soon. Lucid Motors' CEO Peter Rawlinson, appreciate it.

PETER RAWLINSON: Thank you.