Maynard Um; Head, Investor Relations; Lucid Group Inc
Marc Winterhoff; Interim Chief Executive Officer; Lucid Group Inc
Taoufiq Boussaid; Chief Financial Officer; Lucid Group Inc
Stephen Gengaro; Analyst; Stifel
Andres Sheppard-Slinger; Analyst; Cantor Fitzgerald
Davis Sunderland; Analyst; Baird
Tobias Beith; Analyst; Redburn Atlantic
Operator
Hello, and welcome to Lucid's First Quarter 2025 earnings conference call. (Operator Instructions)
I would now like to turn the conference over to Maynard Um. You may begin.
Maynard Um
Thank you, and welcome to Lucid Group's first-quarter 2025 earnings call. Joining me today are Marc Winterhoff, our Interim CEO; and Taoufiq Boussaid, CFO.
Before handing the call over to Marc, let me remind you that some of the statements on this call include forward-looking statements under federal securities laws. These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, vehicles and products, studios and service networks financial and operating outlook and guidance, macroeconomic, policy and industry trends, tariffs and trade policy, company initiatives and other future events. These statements are based on predictions and expectations as of today and actual events or results may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our most recent filings with the SEC and the forward-looking statements on Page 2 of our investor deck available on the Investor Relations section of our website at ir.lucidmotors.com.
In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this afternoon as well as in the investor deck.
With that, I'd like to turn the call over to Lucid's Interim CEO, Marc Winterhoff. Marc, please go ahead.
Marc Winterhoff
Thank you, Maynard, and I thank everyone for joining us on our first quarter 2025 earnings call. I'd like to begin by expressing my sincere appreciation to our employees, customers, partners and shareholders. Your continued belief in our mission is what drives us forward every day.
In the first quarter of 2025, we continue to make significant strides on both operational execution and strategic positioning. We delivered 3,109 vehicles, up more than 58% year-over-year and our fifth consecutive quarter of record deliveries. And this was despite very limited deliveries in Saudi Arabia due to a system change that has been fully resolved since then. We produced 2,212 vehicles, up 28% year-over-year. We also had over 600 vehicles in transit to Saudi Arabia.
This will be counted towards production in Q2. We saw a significant year-over-year improvement in gross margin, which was ahead of our guidance provided in our Q4 earnings call, while managing operating expenses.
More recently, we completed a convertible notes offering with strong support from the public investment fund, I'd be remiss if I didn't personally thank them for their continued support and partnership. Demand for the Lucid Air remains strong, and I'm proud to say that the 2025 Lucid Air was again named Best Luxury Electric Car by U.S. News and Road Report for the fourth consecutive year. In the first quarter, the Lucid Air remained the #1 best-selling EV and the third best-selling sedan overall in its segment in the U.S., including gas cars, from many of the most storied brands in the world. In the month of March, we were even the best-selling vehicle of any type in our segment in the U.S.
according to third-party data. Many of our customers continue to tell us that once they experience a Lucid, it's hard to go back. That's what sets us apart, not just the specs, but the way it feels to drive and live with on a daily basis.
Turning to the Lucid Gravity. We are very excited by the strong interest we're seeing, and one of the most recent significant moments was the special customer event in the just outside of our studio in New York City. Our extraordinary stunt activation delivered meaningful results for Lucid. Over the course of 1 weekend, more than 3,000 people visited our New York store, leading to a significant increase in aided awareness, particularly among EV intenders. On social media, the campaign reached over 11 million people, driving some of our most significant follower and engagement growth to date.
The Lucid Gravity is not just another SUV. It's to both lead forward in design, space, performance and technological elegance. The reaction we received in New York and in our recent media drive events confirm what we believed all along that the Lucid gravity is a game changer. MotorTrend said that the Lucid Gravity is as good as an EV SUV get. Road, Lucid passenger vehicle is almost too good to be real.
added, The gravity is all around capability establishes a new era in electrical SUV engineering. And said Lucid Gravity's brilliance makes other cars seem pointless.
And the Lucid Gravity continues to attract new people to the brand with more than three-quarters of orders coming from those that are new to Lucid. You can expect us to significantly ramp up our marketing campaigns throughout 2025. And as we put greater emphasis behind building the Lucid brand with customers, we are thrilled to share that we signed a global ambassador who's reach across entertainment, culture and fashion will be a catalyst for our next phase of marketing and growth. We have a very special Lucid Gravity campaign we are currently producing and which will air soon. Stay tuned, an official announcement is forthcoming.
And this is just the start. I'm pleased to welcome pronounced AK, to Lucid as Senior Vice President of Marketing. AK brings a wealth of experience to the Lucid team in building iconic brands, including Red and will play a key role in accelerating Lucid's marketing initiatives, increasing the reach and the relevancy of the Lucid brand, strengthening consumer engagement and driving global growth. The continued deliveries of the Lucid Gravity to customers, including the first deliveries of the limited Dream addition. In fact, we are delivering more Lucid Gravity as we speak.
On the technology access and licensing side, we continue to see more interest, and we had a number of new conversations. I think OEMs are starting to see our leading EV technology as complementary to their scaling and manufacturing capabilities. We are also seeing more of an interest in the platform. Our powertrain hardware as well as our software and software-defined architecture. Discussions are ongoing and are at varying stages with some much deeper maturity and some in the early stages.
While many companies are currently focused on the tariff situation, I'm optimistic about the potential for our technology access and licensing business. We've also seen interest in our manufacturing capability in Arizona. As OEMs look for more capital-efficient strategies to make vehicles in the U.S., we've seen several inbound inquiries to discuss possible cooperation.
It's still early and talks are preliminary, but the President and the administration want to have a strong manufacturing sector in the U.S., and we are looking at potential ways we can leverage our assets. The recent purchase of assets gives us further optionality while adding hundreds of more American jobs. So far, we welcomed more than 250 former employees with strong backgrounds in EV technology, which will support our growth plans. We received a lot of questions about this. And I think it's worth highlighting the tremendous value we received.
We paid approximately $17 million in cash plus the assumption of their 2 Arizona leases. Truly a great deal that allows us to gain assets that would have otherwise been significantly more costly by a huge factor. For context, these assets are valued at hundreds of millions of dollars. We have also engaged with strategic partners in Saudi Arabia and recently announced an MOU with the King Abdullah University of Science and Technology or KAUST. KAUST world-class research infrastructure and talent has the potential to further boost our technology leadership in many dimensions, including our ADAS and autonomous driving road map, bringing cutting-edge innovation from the lab to the road.
As part of this cooperation, Lucid will have access to KAUST's high-performance supercomputing capabilities, significantly enhancing simulation capabilities and providing compute power to train our AI models for ADAS and autonomous driving technologies. It also dramatically enhances our ability to develop advanced materials, simulate real-world physics, motor fluid dynamics and thermal transfer, analyzed electromagnetic flux and accelerate AI training for autonomous systems, digital twin technology and large language models. We are excited about this collaboration and thrilled about the breakthroughs it will drive across our engineering, autonomous driving and AI initiatives.
On the autonomous vehicle front, we are in advanced discussions with partners. We have told us that Lucid Gravity is the best positioned AV capable platform on the market. Lucid Gravity comes out of production at M1 with an AV capable sensor suite, redundant electrical and controlled architectures and the latest SoC. If you think about what fleet operators care about, they essentially have 2 critical requirements. The first is asset utilization.
The second is operating costs. Lucid's leading technology enables both of those in ways that I believe no one else can. On asset utilization, longer range means less time for stops, while faster charging means less downtime to charge.
On operating costs, greater efficiency means smaller battery for a given amount of range, resulting in lower charging costs. And a smaller battery without sacrificing range results in less weight, which can result in less ware. On Level 4, we believe the industry has acknowledged Lucid's AV capabilities, multiple L4 focused software mobility companies have engaged Lucid about potential collaboration. On Level 2++ and Level 3, we've engaged with several companies to discuss accelerating L2++ L3 development and multiple paths forward. We are focused on delivering the best and safest solution to our customers, leveraging models that can quickly scale in multiple geographies and optimizing Lucid's CapEx and OpEx to get a competitive product timely into market.
Before I close, let me touch on the topic of tariffs, which we've been getting asked about frequently. Taoufiq will go through our guidance in more detail, but I wanted to highlight that the automotive supply chain is global. And of course, I don't believe anyone can be immune. We are in a better position than others given that we produce all of our vehicles we sell and major components like our drive units, battery modules and packs in the U.S. in Arizona, but changes in policy bring about uncertainty until we get more definitive clarity to be able to assess the full impact and consequences.
And the macro impact to the consumer is also something that is uncertain. But we've always been forward thinking in our strategy, and we've been proactively working towards localizing supply. For example, although our 2170 battery cells from Panasonic today are produced in Japan, we expect future production at Panasonic's new production facility in Kansas. We've also committed to sourcing battery raw materials in the United States, such as graphite from partners like Graphite One and Resources. We also engaged in a range of other optimization initiatives to mitigate some of the tariff impacts, including collaborating across the supply chain to share challenges and financial responsibilities.
For example, when you look at rare earth metals, we can make the necessary technical changes in-house to use different suppliers. We could potentially use entirely different rare earth metals as well without impacting performance. Both in the industry that outsource as many do, don't have the same level of flexibility or even technical know-how to do that. But I also want to highlight again the importance of leading technology because of our high-power density, the Lucid driving unit actually uses less rare content compared to others, and Atlas will be even better. It's very similar to how our technology enables us to have a smaller battery for a given amount of range compared with our competitors.
This underscores the importance of in-house technology know-how, and I believe we are among the best in the world in that regard. And it's not just having our factory in the U.S. I think something that's not well appreciated is the advantage of designing, developing and manufacturing your own technology in-house.
By vertically integrating, we are able to have more control over certain components that go into our vehicles. At the same time, we are exploring a variety of strategic adjustments to better align with the changing landscape, including vehicle price changes, tariff risk mitigation and bifurcating the supply chain. These efforts are expected to help support overall cost effectiveness and supply chain efficiency. So the world is rapidly evolving, and we will be as nimble as we can. We are constantly evolving our strategy in examining our sourcing plans.
Some of this may take time. And as I said earlier, no one is likely to be new, including us. But relative to many other OEMs, we have some advantages. Our U.S. manufacturing plant is in Arizona, and we vertically integrate our technology, which provides flexibility.
And we will have production and vertical integration in our new assembly plant in KSA, M2 will allow us to optimize our production, location and supply chain strategies utilizing this highly strategic geographic locale. But of course, we will remain attentive to policy developments and maintain open lines of communication with relevant stakeholders and government partners.
In closing, we are not here to follow the EV playbook. We are here to rewrite it with a Lucid Air, now with a Lucid Gravity and in the near future, our Midsize platform variance. We have a world-class team driving innovation every day, and I feel Lucid is positioned better than it has ever been before. The road ahead is exciting, and we're just getting started. Thank you for your continued support and for believing in what Lucid represents, not just a car company, but as a catalyst for what's possible.
With that, I'd like to turn it over to Taoufiq to provide an update on our financials.
Taoufiq Boussaid
Thank you, Marc, and thank you to those who are taking the time to join us today. It's a pleasure to be here with you for my first full earnings call as CFO of Lucid Motors. Since joining, I've spent time across the organization with our engineering teams, our factory floors, our commercial teams and our partners. And what stands out is the deep sense of mission and the shared belief in what Lucid represents, not just building remarkable EVs, but leading the transformation of the automotive industry through innovation, performance and sustainability.
We know that delivering on this mission requires more than just great technology. It requires discipline, financial, operational and strategic, and this quarter, we've made meaningful progress on all 3 fronts. Let me walk you through the key highlights of the quarter and how they fit into our broader strategic agenda. One of my top priorities as CFO is ensuring that Lucid has the financial strength and flexibility to scale responsibly in Q1, we took 2 important steps to bolster our liquidity and financial resilience. In February, we renewed and upsized our GIB credit facility in Saudi Arabia, increasing the commitment by approximately $240 million.
In April, we closed a $1.1 billion convertible senior note offering due in 2030, which included the full exercise of the $100 million over allotment option, and we used $935.6 million of the net proceeds to repurchase approximately $1 billion in principal of our outstanding 2026 notes.
Both transactions demonstrated strong institutional support, particularly from the public investment fund, our strategic anchor investor and extend our liquidity runway into the second half of 2026 even before factoring in additional financing sources like Saudi Industrial Development Fund or the Ministry of Industry of Saudi Arabia grants. These actions are part of a deliberate strategy, maintain balance sheet strength while minimizing shareholder dilution and do so in a way that supports our long-term growth ambition. Now turning to Q1 results. We produced 2,212 vehicles, a 28% year-over-year increase and delivered 3,109 vehicles, up more than 58% year-over-year. Importantly, this was achieved despite temporary systems issues in Saudi Arabia that have now been fully resolved.
Total revenue for the quarter was $235 million, representing 36% growth year-over-year.
We also recognized $31.5 million in regulatory credit revenue, a significant contribution and an area where we see continued opportunity. Gross margin improved meaningfully. On a GAAP basis, Q1 gross margin was negative 97.2%, up from negative 134.3% in the prior year quarter. This was ahead of the directional guidance we provided in February. The improvement reflects higher regulatory credit revenue, continued focus on cost transformation and disciplined execution.
When adjusting for onetime supply recovery benefit in Q4, we delivered over 1,000 basis points of sequential improvement. Let's turn to operating expenses. In Q1, R&D was $251 million, down from Q4, largely due to the lower Lucid Gravity related development expenses. However, we expect R&D to increase throughout the year as we accelerate investments in our Midsize program and in the Atlas powertrain platform.
SG&A was $212 million, a 13% sequential decline. The change was primarily attributable to a reversal of $35.4 million related to previously recognized stock-based compensation expenses. This reversal is onetime in nature, and we expect this to normalize in the second quarter. Combined with seasonal growth and marketing initiative that we signaled last year, we would expect a more significant sequential increase in SG&A in the second quarter. We're continuing to focus on efficiency, but we are also investing where it matters, including brand building and expanding our commercial reach.
Adjusted EBITDA in Q1 was negative $563 million and improvement of 2% versus Q4.
Moving to the balance sheet, our liquidity position and the strategic deployment of capital. We ended Q1 with approximately $4.56 billion in cash and investment and total liquidity of $5.76 billion. This provides a strong platform from which to execute on our long-term strategy. Inventory increased to $471 million, up from $408 million in Q4 as we ramp up production of the Lucid Gravity. This is in line with our build plans and expectations.
CapEx for the first quarter came in at $161.2 million. Now turning to our outlook. The level of uncertainty has increased since our last earning calls. As Marc indicated, we've been working on ways to mitigate some of these impacts. But adversity is not new to Lucid, and we have always been a nimble company.
We built a greenfield EV factory during the time of tremendous turmoil during COVID when not just getting parts, but also getting people was challenging. We faced incredible supply chain disruption during the time when some of our suppliers were forced to shut down factories. And we launched the Air in a time of macroeconomic uncertainty. We were able to do this through the resilience of our team, a strong partnership with our supply chain and the determination that I believe is embedded into the DNA of the company.
There is a lot of uncertainty, and we need to tackle it with the same vigor as we have in the past. Last quarter, we provided the potential gross margin headwind of 7% to 12% based on the tariff impact as we were aware of at the time of our Q4 earnings calls back in February. Based on what we understand today and the best information we have, we see the potential impact in the range of 8% to 15%. This is a challenging situation and the outcome on our financial performance depends upon various underlying factors, including market volatility and regulatory challenges. And as a result, the range could further change.
Although the situation remains fluid, we are taking efforts to mitigate the impact as best as we can.
Turning to production. We forecast production of approximately 20,000 vehicles in 2025. Although there are many uncertainties in the market, we believe we have some potential levers if market dynamics were to fluctuate, but we feel this is still an appropriate target. With regard to our liquidity position, we ended the quarter with a total liquidity of approximately $5.76 billion, which we believe provide us runway into the second half of 2026. I would also highlight that this does not include potential future Saudi Industrial Development Fund loans or Ministry of Industry of Saudi Arabia brands.
Moving to CapEx. We believe in the large opportunities for Lucid ahead of us and will continue to invest for growth. We expect capital expenditure for 2025 to be approximately $1.4 billion, which include investments in our AMP-1, AMP-2 and retail infrastructure. That said, I believe we have potential levers here as well if market dynamics were to change. From a product perspective, beyond the Lucid Air and the Lucid Gravity, we plan to expand our vehicle lineup with upcoming midsize platform, which is scheduled for start of production in late 2026.
Introducing a new vehicle is always challenging and complex, particularly at our rapid pace, and we are leveraging the insights gained from our Lucid Gravity production ramp, while planning for our Midsize production.
The highly uncertain macroeconomic environment and swift moving trade policies further complicate these efforts, and we are diligently working to optimize our supply chain and manufacturing plans for our midsized platform in response. In closing, let me leave you with this. We're building more than a car company. We're building a technology-driven, capital discipline, vertically integrated enterprise designed to lead in the next era of mobility. We're executing against our near-term goals, driving volume, improving margin and operating with rigor, and we're positioning ourselves for long-term value creation with a clear strategic priorities, strong liquidity and breakthrough products that redefine what EVs can be.
To our employees, partners and shareholders, thank you for your continued trust and belief in Lucid.
With that, I'll turn it over to Maynard to take your questions.
Maynard Um
Thanks, Taoufiq. We'll now start the Q&A portion of the call. Before we take questions from those on the phone, I do want to any questions that our retail investors sent in through the technology platform. Question 1 is from Karthik A. With the acquisition of the Nikola factory, can Midsize rollout and ramp be accelerated than previously planned second half 2026.
Also, does this acquisition minimize the capital expenditure than previously planned. .
Marc Winterhoff
Maybe I take the first part. Taoufiq Boussaid, you take the second part CapEx. First of all, I would like to clarify in the question second half of 2026. We always talked about and Taoufiq said that earlier in the prepared remarks, late 2026. And may not be well appreciated by, but the pace at which Lucid has been able to bring Lucid Air and Lucid The gravity to market was already incredibly fast and much faster than most OEMs are capable of.
These were incredibly complex programs with substantial challenges that we had to overcome and are overcoming. The Midsize is just as difficult. And on top of that, uncertainty around tariffs and the supply chain adds an additional layer of complexity. We are in the midst of sourcing and are about to make major sourcing decisions. Hence, we need to take the necessary time to fully evaluate the impact of current developments to ensure we make the right business decisions for the long term, which is difficult to do in a rapidly shifting tariff environment.
We are already working at a pace and a time line that is very aggressive. So I would say, unfortunately, accelerating Midsize isn't possible, particularly in this environment. I want to say so that the distinguishing attributes of the Lucid Air and Lucid Gravity will be definitely coming to Midsize. You can see all of the positive reviews about the Lucid Gravity. I love the Lucid Gravity, but I think the Midsize platform is going to be an even bigger game changer.
But we've got to focus on getting it right, not just getting it out to. Taoufiq?
Taoufiq Boussaid
So on the Nikola assets specifically, I think it's important to make the point that, that was a highly attractive financial deal for us. So just to put things into perspective for hundreds of million in assets, we did pay approximately $17 million in cash plus 2 leases in Arizona that we have assumed. So I think that this could mitigate some of the CapEx that we will need to spend. For the time being, we are maintaining our CapEx guidance of $1.4 billion, but I definitely see opportunity for this to be better in 2025.
Maynard Um
Great. Question number 2 is from John G. And there's actually another question related to the same topic from Are there any plans for Lucid to sell or lease it not technology to other car manufacturers in the future?
Marc Winterhoff
Yes. That always has been the plan. And this is why we actually named the company Lucid Group, not Lucid Motors. In fact, as the margin was our first OEM contract, and as I said multiple times earlier, we are in active discussions with many other companies. But of course, many OEMs today are very preoccupied with tariffs, and this might obviously take some of their focus.
But I mean, encouraged by the amount of the discussions we're having and the progress.
Maynard Um
And question number 3 is again from Karthik A. What is the impact on Lucid supply chain as a result of Chinese curbs on export of rare earth material? To what extent is Lucid exposed to the tariffs?
Marc Winterhoff
I think the second part of the question we already addressed in the prepared remarks, even the first one, but let me -- let me reiterate that this was why designing, developing and manufacturing your own technology is so important. There are very few companies that we are aware of that can do this to this end. Because of our vertical integration, we are able to have more control over various components that go into our vehicles. Not only does our high-power density drive units in the Lucid Air and Lucid Gravity require significantly less materials, including a very low ratio of dysprosium and terbium, but we could potentially use completely different rare worth materials without impacting vehicle performance. We are always evaluating our supply chain, and we will continue to deliver the award-winning performance and experience that our customers expect every time they step into lucid.
Maynard Um
Thanks, Marc. And our last question is from Patrick M. Is it fair to say that Lucid lacks urgency with regard to production ramp and deliveries. Gravity's time line seemed especially slow a year from unveiling to orders opening, 51 more days to make 50 cars for friends and family and nothing to show in the 4 months since.
Marc Winterhoff
Well, we appreciate your passion and share your sense of urgency. Bringing a high-quality vehicle to market, especially one that we believe will be a long-term category leader requires thoughtful execution. Let me start by reiterating that we brought the Lucid Gravity to market at a pace faster than most are capable in the industry. While we encountered a modest supply chain bottleneck that has impact on our time line, the more important point is that we're taking the time to get it right, not just getting it out. Our focus remains on delivering a product that meets the very high standards that our customers expect and that will drive long-term value for our shareholders.
We have line of sight that all the supply chain bottlenecks are being resolved in Q2, and we have made plans to ensure capability to still produce the number of Lucid Gravity we initially expect for 2025. And in fact, we just recently delivered the very first Lucid Gravity green edition, and if deliveries continue today, and we expect to start ramping further soon.
Maynard Um
Great. Thanks. Now we'd like to take questions from the phone lines. Can you give instructions?
Operator
(Operator Instructions)
Stephen Gengaro, Stifel.
Stephen Gengaro
Thank you, and good afternoon, everybody. I think the first one for me is having been lucky enough to experience to Gravity, I would imagine, as you as you get people in the seat, it's going to -- you'll start to see a pretty significant interest. Can you tell us where you stand kind of on test drives and what you're seeing maybe just call it qualitatively from an order perspective at this point?
Marc Winterhoff
Yes, I can take that. From the orders perspective, we continue to see strong order inflow -- we only have opened so far the ordering for our higher Grant Touring And we actually see very good numbers continuing way above the GT of the Air. We also have launched a kind of a little bit off the record, a limited edition, the Dream addition, which is almost sold out. There are only a few available until we reach the limited number that we wanted to do. So all in all, we still see very high demand and interest in the vehicle.
And as you rightfully said, it only increases when people are actually sitting in the car. And when it comes to test drives and studio cars, we are about to roll this out. Not all of the studios have built test drives and studio cars, but we are basically delivering those cars as we speak.
Stephen Gengaro
Great. And then I might have missed this on the call, but do you have an update on where the Atlas drivetrain sits right now?
Marc Winterhoff
Yes, I do. We're not actually announcing something today, but that is something for maybe the next few months or quarters where we then announced the Atlas drivetrain. We actually are actively discussing when are we doing this.
Operator
Andres Sheppard, Cantor Fitzgerald.
Andres Sheppard-Slinger
Congratulations on the quarter. I want to just maybe touch on the 2025 outlook. So guidance is reaffirmed or unchanged at 20,000. I guess like how should we think about the breakdown between the sedans and the Gravity, both in terms of maybe production and deliveries for this year. I think in the past, you had mentioned, I think, the sedans will be relatively flat to last year, and the delta perhaps coming from the Gravity.
Just any color you can give us there? Basically, we're trying to figure out what's the best way to think about ASPs for the rest of the year.
Marc Winterhoff
Yes, I can take that. I mean, the expectation has not changed from what we said last time. I mean, we're expecting the Air -- actually, it sells pretty well right now. And in the prepared remarks, I said that in March, we were actually the best-selling car in our segment, not only EV, best-selling car in our segment. So Air is going well.
But in general, we're not expecting the Air to drastically increase in sales. So then the balance will have to come from Gravity. How is this now exactly turns out by the end of the year remains to be seen, but that's kind of what we are planning for right now.
Taoufiq Boussaid
And maybe Andreas just to me -- because you also had a question about the ASPs. So I mean, the expectation is that you should see the ASP is improving towards the second half of the year with the Gravity's representing higher volume in our overall mix.
Andres Sheppard-Slinger
Okay. When you say improving in this case, you mean lowering correct? The blended is the...
Taoufiq Boussaid
No, no. ASPs will go up. Yes, they will increase.
Andres Sheppard-Slinger
Okay. Got it. Super helpful. And then just as a maybe a quick follow-up. On liquidity.
So total liquidity is just shy of about $6 billion. You touched on this before, but can you remind us again kind of the plan to address the convertible bonds maturing in 2026. I believe the recent capital injection will be used to offset that. But can you maybe just remind us what you've said there and kind of what the plan is?
Marc Winterhoff
Well, I mean, we didn't really specify the plan and the timing in terms of execution. I mean, what we have always said is that, I mean, historically, we have been very opportunistic. We will continue to be very opportunistic. The way we have executed the funding for the convertible bond or half of the convert, I mean, does demonstrate the fact that we are very nimble when it comes to executing this kind of transaction. It was a very successful transaction.
Very well executed, well received by the market and that was very encouraging for us. So it gives us confidence for us to be able to drive the next phase of what we need to do. We are not communicating about the timing because, again, as I said, we want to be in a position to choose the right timing and do things when we think it's the right time, not when we have to do them.
Operator
Davis Sunderland, Baird.
Davis Sunderland
Maybe just to start going back to your prepared remarks, Marc, about the KAUST partnership. Could you just expand maybe a bit on the resources, either financial or through personnel that you and your partner might be committing, where are the R&D focus might be out of all those different areas you outlined? And then I have 1 follow-up.
Marc Winterhoff
Yes. So the financial -- there's actually not much financial commitment involved from our side, and that is actually going to be further discussed. I mean, right now, we are in MOU phase, but I want to reiterate how much benefits that brings to us. I mean, the KAUST University has very strong resources across many, many areas. But for us, one of the major things is really about the compute power that we can have access to in a very efficient -- cost-efficient way for us particularly around AI models for ADAS and autonomous driving.
But that's not the only thing. Developing new materials and simulation be it fluid related. There's a lot of things that we can do together, which will increase our capability to further develop our leadership in EV technology, but also then leadership in the areas of autonomous driving and ADAS. So it's really -- I cannot stress enough how beneficial that is for us. It's a little bit similar like the Nikola deal.
And we said this earlier, maybe a little bit underappreciated how valuable that was for us. And this is another, let's say, stepping stone of things where we make smart choices in order to help our business.
Taoufiq Boussaid
And maybe just to reiterate what Marc has said, I mean, from a financial standpoint, I think that we need to look at this partnership as an asset-light way for us to accelerate our go-to-market. And I think it's really important to remind everyone about that because it gives us access again to compute power with actually no financial commitment from our side with the strong benefit of allowing us to accelerate our go-to-market.
Davis Sunderland
That's super helpful. And then maybe just for my second -- totally acknowledge your points about other OEMs being preoccupied with tariffs. But I just wanted to ask, do you see a scenario potentially where all the global uncertainty and the tariff talk actually increases interest in some of your technology just as OEMs want to increase their use of U.S. components. And I know you talked in the past about a licensing model specifically, but would you guys ever consider being a manufacturer of certain components for a customer, given your excess capacity and maybe some of the new Nikola assets.
Marc Winterhoff
Actually, this is as part of our The first one that we signed, we are actually a supplier or a manufacturer for the powertrain or the whole drivetrain technology for them. And so we're not opposed. I guess when it comes to doing this in a broader scale, we always have to consider, well, we want to build our own cars and we need our capacity for that, and we want to focus on that. But it's not out of the picture. And glad you brought the Nikola topic up because yes, absolutely.
I mean, this gives us now more options to do things like that. And as a matter of fact, I mentioned that in the prepared remarks, we had several players reaching out to us, exploring joint manufacturing in the U.S., given that we have now additional assets that we can leverage. So yes, we can envision that, absolutely.
Operator
[Operator Instructions] Our next question comes from the line of Tobias Beith with Redburn
Tobias Beith
Great. Good afternoon. Thank you for your time to speak, Marc. I have 2 questions, which I'll ask separately, if that's okay. In the near term, not to be philosophical, but total type work hours can be thought of as being a semi-fixed resource.
And I was wondering if Lucid would divert time to re-architect existing supply chains for the Air and the Gravity, the potential detriment to the Midsize platform time line.
Marc Winterhoff
The answer is no. No, we are working right now with a very strong focus on Midsize and we are not making decisions to rework supply chain on our existing products to hamper anything on Midsize. So I want to be crystal clear on this. It doesn't mean that we're not working on Air and Gravity supply chain. We actually do that.
But particular to your point, at the detriment of midsize, the answer is a clear no.
Tobias Beith
All right. That does help to have confirmation. Secondly, the event in April has mostly positive feedback on the Gravity, which is great, but several reviews, some of which you highlighted in your opening remarks mentioned it finishing technology issues. And then enthusiast form also indicates that many studios are yet to receive permanent test deals. My question is whether the state of the vehicle and its derivative to the Touring and whatever else that follows are on track versus your expectations at the start of 2025.
Marc Winterhoff
Yes. I mean, the -- I think we stated or I stated that also that we now actually continued deliveries to customers. Following this very, very closely. As a matter of fact, this morning, I checked how many we had this morning. So deliveries are still happening.
It is true that we had some technical issues that we had to overcome around software, but also on the topic around the head-up display. You probably have heard that we basically entangled the technology package and took the -- made the optional because that is one area where we had issues with the supplier not ramping up at the level our customers wanted actually the technology package, now that we have untangled that we can continue to build vehicles because it's not only the itself involved, it's also different harnesses and other things that you have to change. And so with that move, we are now able to continue and scale up our deliveries. And other things were around software updates that we had to do, which are now -- have been done as well. So yes, there have been some hiccups, to be quite frank.
I think this is absolutely normal in the beginning of launching a vehicle and -- but we are now -- we are basically one after the other, knocking those out. And that's also why we delivered less vehicles to studios and for test drives because we want to only do that if we have the standard that we promise to our customers. And we rather push it out a few days or weeks rather than putting half-baked product in front of the customer.
Tobias Beith
Sure. I completely understand and get that ramp-ups have a natural learning curve. Thanks for your time, both look forward to speaking soon.
Marc Winterhoff
Thank you.
Operator
Stephen Gengaro, Stifel.
Stephen Gengaro
I'm not sure you all want to comment directly on this, but I'm curious, can you talk about with the Gravity production ramping, like how do you think about the sort of the timing and the puts and takes towards gross margin -- gross margins moving towards breakeven and profitability. Is there anything you can kind of talk about that helps frame that for us?
Taoufiq Boussaid
Well, I mean, we didn't specifically guide about the timing of us reaching the breakeven. But I think that it's important as well to insist on the fact that the key lever for us to reach the breakeven is the scale. So Gravity will definitely contribute to PAT to allow us to reach that scale, which will lead us to the breakeven. But the real program, which will allow us to have to mitigate the fixed cost under absorption is the Midsize.
Operator
Ladies and gentlemen, due to the interest of time, that concludes today's conference call. Thank you for your participation. You may now disconnect.
