03/04/2026 08:25 AST
Marc Winterhoff, the acting CEO of Public Investment Fund-owned Lucid Motors, stated that the main pressures on profit margins are linked to several overlapping factors, most notably supply chain disruptions, rising logistics costs, and geopolitical changes affecting shipping and component flows.
In exclusive statements to Al-Eqtisadiah, Winterhoff stated that these challenges have become an integral part of the company's ongoing daily operations.
He explained that any disruption to supply chains, whether due to geopolitical tensions, the closure of some logistics corridors, or even security risks, directly leads to higher production and transportation costs, which puts pressure on overall profit margins.
He added that such disruptions often force the company to rethink how it manages production processes and supply chains, and to rearrange its supply sources and manufacturing plans. This, in turn, leads to additional costs, but it also provides the company with operational flexibility.
In a related context, Winterhoff stated on the sidelines of an exclusive online media roundtable, held to provide deeper insights following the recent "World Investor Day" event, that having manufacturing and production facilities in both Saudi Arabia and the US gives the company the ability to redirect production in response to changes in global supply chains and logistical conditions.
He noted, in the presence of Faisal Sultan, president of Lucid Middle East, who oversees expansion strategy and operations in the region, and Emad Dalal, senior vice president of Lucid's Powertrain and Motion Systems division, that this operating model is not easy and entails additional costs, but it allows the company to mitigate the impact of disruptions and make swift decisions based on surrounding variables.
Sufficient funding until mid-2027
Regarding funding, Winterhoff explained that the company has sufficient funding until the end of the first half of 2027 and is on a clear path to profitability. He indicated that discussions are ongoing with investors and financiers, but the company cannot disclose specific details at this time.
Winterhoff confirmed that the firm will turn to the market for additional financing when needed, stating: "We will seek additional funding from the market as required, depending on market conditions and our future expansion plans."
Localization, expansion in Saudi Arabia
For his part, Sultan, president of Lucid Middle East and head of expansion strategy and operations in the region, said that the largest and most important production lines for mid-size cars will begin in the Kingdom, and that the localization strategy will start from the very first stage of production.
According to Sultan, several suppliers have already localized some components near the factory, with plans to significantly increase the number of locally sourced components over the next two years.
He explained that the automotive industry cannot be built solely through car assembly; rather, it requires developing an integrated system that includes suppliers, supply chains, and supporting industries. He pointed out that the goal is not to ship all components from abroad, but to gradually build a local industrial base.
He added that discussions are underway regarding the localization of additional components, including battery cells, which represent a significant portion of a car's cost. This will increase the local added value of cars manufactured in Saudi Arabia.
He noted that PIF was a key factor in attracting suppliers and building the industrial base associated with the electric vehicle industry, emphasizing that localization will gradually increase as production expands.
Electric vehicle winter
Acting CEO Mark Winterhoff stated that the electric vehicle market continues to grow globally in absolute terms, despite talk of a slowdown or what is being called an "EV winter" in some markets.
He explained that the company's entry into the mid-range vehicle segment represents a significant strategic shift, as it opens up a much larger market compared to the luxury EV market in which it currently operates.
The CEO indicated that launching mid-range vehicles will enable the business to reach a new customer segment with lower prices, which will be a major driver of growth in the coming years.
Winterhoff pointed out that the discontinuation of some competing luxury models in the US market presents an additional opportunity for the company, particularly for the Lucid Air and Lucid Gravity models, which could replace some of the discontinued vehicles.
Production capacity at the Saudi plant
Returning to Sultan, he explained that the firm's plant in the Kingdom currently operates on a semi-knocked-down assembly system, where cars are shipped from the US and then assembled within the Saudi market, with a production capacity of approximately 5,000 vehicles annually. This was the projected production capacity for 2025.
Sultan indicated that by the end of this year, the complete assembly plant, whose buildings have been finished and where equipment is currently being installed, will begin operations. It will be ready to launch the mid-size car program, with a production capacity of up to 150,000 cars annually.
The plant's total production will reach approximately 155,000 vehicles annually, including 150,000 fully assembled cars and 5,000 semi-assembled cars, representing a significant increase in production volume.
Sultan emphasized that the Saudi plant will be the main manufacturing facility for the mid-size car platform and will serve local, regional, and global markets through exports. This means that the Kingdom will become a key industrial hub in the company's global strategy.
Strategy: from car company to 'mobility technology'
At the roundtable, the company emphasized that its current strategy focuses on accelerating profitability by increasing production, reducing costs, and improving manufacturing efficiency, in addition to expanding into software, autonomous driving, and robotic taxi services.
The firm clarified that it sees itself not only as an electric vehicle company but also as a mobility technology organization, working on developing software-defined vehicles, autonomous driving, and smart transportation services. This opens up new markets and additional revenue streams, especially with the expansion of autonomous taxi services in the coming years.
It added that the company's strategy is based on increasing production volume, as this leads to lower costs per vehicle by distributing fixed costs across a larger number of units, improving manufacturing efficiency, and reducing material costs. This will contribute to improved profit margins in the medium term.
It confirmed that its plans in Saudi Arabia remain unchanged despite the geopolitical challenges in the region, and that it is monitoring the situation daily, but has not made any changes to its production or expansion plans.
It indicated that the launch of the mid-size vehicle is still on schedule and that the Saudi factory will be the company's main growth hub in the coming years.
Arab News
Please wait...
