Tesla rival Lucid rises on home turf
New York — Peter Rawlinson says the Tesla Model S is Electric Vehicle 1.0, and the Lucid Air is EV 2.0. People are listening because he’s been the chief engineer for both.
Following his breakthrough success with Tesla founder Elon Musk on the Model S sedan in 2011, Rawlinson moved on to his second Silicon Valley electric-car startup. At Lucid Motors, the chief technology officer is honing the lessons learned at Tesla to build the Air.
A prototype of the striking battery-powered sedan with a full-glass moon roof stretching the length of the cockpit — hence the name Air — premiered in April at the New York Auto Show. California-based Lucid is ramping up a $240 million fundraising campaign as a first phase toward a 2019 production goal in Arizona. The company aims for a sticker price starting at $60,000, similar to the Model S.
In a field of would-be Tesla fighters that include General Motors Co.’s Chevrolet Bolt, Porsche’s Mission E, BMW’s i lineup and troubled prospects like Faraday Future and Detroit Electric, Lucid has emerged as the badge-du-jour largely on the shoulders of Rawlinson’s resume and the talented team of ex-Tesla engineers he has brought with him.
Yet, as Lucid attempts to woo capital and put its vision into production, it faces the same question that has vexed competitors: Can electric-car startups be profitable or is Tesla’s success built on the Cult of Elon Musk?
Based in Menlo Park not far from Tesla’s headquarters, Lucid is determined to prove that electric vehicles are the future. Investors have doubts and question whether Tesla’s sky-high market valuation is specific to mercurial CEO Musk. The visionary entrepreneur with a Midas touch created the online payment system PayPal and SpaceX, the private commercial space company that recently launched the world’s first reusable rocket.
“Elon Musk is Tesla,” said Jeff Schuster, vice president of forecasting at LMC Automotive, an auto industry analysis firm. “No one else has his kind of following. The luxury electric vehicle space exists because of him.”
Rawlinson, whose resume includes stints as boss engineering at Jaguar and Lotus, said the electric-vehicle revolution is bigger than one personality. So when Lucid came knocking in 2013, he brought his engineering brain trust to Lucid Motors to create a better Model S.
The Air would go head to head against the Model S sedan. It promises to have similar gee-whiz tech features such as a touch-screen tablet infotainment display and “over-the-air” software upgrades.
Rawlinson & Co. have created a car that is smaller than the midsize Model S or the Mercedes E-Class, but with the same interior space as a long-wheelbase Mercedes S-Class. With a top trim offering a 130 kilowatt hours or kWh of battery, Lucid said the Air can go 400 miles on a charge. Tesla gets 335 miles on a 100-kWh battery.
The 1,000-horsepower version of the Air that showed in New York is said to have hit 217 miles per hour in testing. Lucid said Air pricing will be similar to the Model S — starting at $60,000 ($52,500 after a federal tax break) to upward of $100,000.
“What differentiates us (from other EV startups) is that we are the team that did it before. We were largely responsible for the Model S,” Rawlinson said in an interview with The Detroit News in New York. “I brought all the key engineering people who were with me at Tesla.”
Anton Wahlman, a Silicon Valley-based auto analyst with the investment site Seeking Alpha, follows the electric-vehicle market closely. “I love the car,” he said about the Air. “It looks great, and Lucid has a first-rate team. It’s the Model S 2.0. Updated interior and a much more plush backseat. But is there market enough for it?”
Wahlman pointed to first-quarter sales results indicating that Model S and Model X sport utility vehicle sales are flattening out. Indeed, Tesla sales in the United States were down 30 percent from the 2016 third quarter.
Founded as battery-maker Atieva in 2007 with funding from Chinese electronics billionaire Jia Yueting, Lucid was spun off as a carmaker last October as its Air sedan was readied for public introduction. Atieva has continued as a battery-maker supplying power packs to Formula E racing in Europe.
LMC Automotive’s Schuster said EV startups are risky, but Lucid is among those that could make it: “What they’ve shown in prototype form is encouraging, that they can go after the Model S.”
As Lucid raises money for production, questions continue to dog the company. One concern is that Lucid has been without a chief executive since 2015 (chief technology officer Rawlinson is the senior executive).
Then there is Rawlinson’s insistence that the proof that electric startups can be profitable is that Tesla is making money. This even though Tesla says it has yet to turn a profit — it lost $773 million on $7 billion in revenue in 2016.
“It is a widely believed myth in the industry today that electric cars are somehow unprofitable. That is simply untrue,” Rawlinson said.
“There is potentially a larger profit margin on electric cars than its gasoline counterpart. Tesla is making money on its cars right now — and it very well suits Elon Musk. If you were pre-eminent in that business, wouldn’t it be the smartest play to convince all would-be competitors that it is unwise to enter and compete against you?”
Auto investment analyst Wahlman disputes the claim based on Tesla’s publicly released figures. “Tesla is not profitable; they are losing money hand over fist,” he says. “It’s in Lucid’s interest right now to make the argument that Tesla is making money because their money-raising depends on it.”
Rawlinson said Lucid has attracted investments from the Rockefeller family’s Venrock venture capital arm and Japan’s Mitsui Group conglomerate. One trend is particularly bright for EVs, he said: falling battery costs.
“The reality is battery prices are going to fall dramatically,” Rawlinson said. “You don’t need a ‘Gigafactory’ — the last thing we need is the financial burden of a ‘Gigafactory,’ ” referring to Tesla’s Nevada lithium ion battery plant. “We can rely on the supply base to carry that investment weight. The world is going to swing electric in the next decade as the price for batteries falls.”
Rawlinson said his team has worked with supplier Samsung on a new type of cell chemistry to improve battery degradation from fast charging.
Breaking the rules
Investment analysts like Wahlman are encouraged that Lucid is focused on just being a carmaker without the added infrastructure of a battery factory and charging stations that Tesla has taken on.
“They are not going to integrate as vertically as Tesla,” he said. “That will help them, but you have more established automakers like VW and BMW that are even less vertically integrated. And battery costs are going to come down for them as well — so that doesn’t give Lucid or Tesla an advantage. Samsung will sell any automaker the same (battery) from GM to VW to Hyundai.”
Startups, however, are in vogue. Barring a serious economic downturn, Wahlman and Schuster predict Lucid will reach its $240 million capital goal. “Like Tesla, they are the anti-car company. That has given them some cachet,” said Schuster, who added that Tesla and Lucid are specialty brands that will be swallowed up by larger automakers.
For now, Rawlinson said he is focused on producing a vehicle like no one has seen before.
“If The Model S hadn’t been an outstanding car, Tesla wouldn’t be the company it is today,” he said. “From that platform, all those possibilities can grow. We must not screw up Lucid Air.”
To that end, Rawlinson lured one of the industry’s acclaimed designers, Derek Jenkins, to pen the Air. An ex-Mazda designer, Jenkins’ achievements include the widely admired MX-5 Miata sports car and CX-9 SUV.
Like Rawlinson, Jenkins found Lucid a liberation from the gas-engine box.
“The transition from the gas engine to electric car is the closing of one book and the opening of another,” Jenkins said in New York. “I can break rules that I couldn’t have done anywhere else.”
Henry Payne is auto critic for The Detroit News. Find him at email@example.com or Twitter @HenryEPayne.