Lucid Motors has ambitious plans to defy skeptics and take on Tesla

DETROIT – It’s been nearly a decade since Peter Rawlinson took the stage at the 2011 Detroit auto show to reveal the Tesla Model S sedan. There was a problem though. The car wasn’t ready, so he instead showed the car’s body shell. 

“I was almost a laughing stock. I was derided,” Rawlinson, who was the Model S chief engineer and vice president of engineering at Tesla, told CNBC. “No one took me seriously.”

The show came at an important time for Tesla, which needed to prove itself after going public at $17 a share and purchasing its current Fremont plant in California.

“It’s hard to relate to that time now. Tesla is the most valued car company in the world,” Rawlinson said during a Zoom interview. “Who would have bet on Tesla? Let me tell you, I knew that we had the core engineering talent and the technology in-house and that would come shining through at the end.”

Rawlinson, who left Tesla in 2012,  is now looking to defy skeptics again with a similar playbook as CEO of Lucid Motors, a start-up electric vehicle manufacturer he says has the cash, technology and talent to become one of the first real rivals to his former employer.

Rawlinson is taking lessons learned from his three years at Tesla as well as other experiences with British car manufacturers Lotus and Jaguar in an attempt to differentiate and validate Lucid from a growing list of electric vehicle startups promising to change the world and bring new electric vehicles to market in the coming years.

Sam Abuelsamid, principal research analyst at Navigant Research, said he’s bullish that Lucid has “the prospects to be a successful company.”

“Not necessarily to be the next Volkswagen. I see them as having potential to be small volume, high-end player,” he said. “The challenge right now is there are so many companies trying to break into the auto industry.”

Lucid’s first product is expected to be a luxury sedan – priced “well north” of $100,000 – called the Lucid Air. The company has built about 40 prototypes of the vehicle. It plans to unveil its final version of the car on Sept. 9, followed by production and customer deliveries next year.

Rawlinson, who was named CEO in April 2019, backed up his claims of competing against Tesla earlier this week by announcing the car is estimated to achieve an EPA-rated range of 517 miles on a single charge. That easily tops Tesla’s industry-leading 402 miles with a version of the Model S.

Rawlinson expects the Air to be the catalyst for a lineup of future all-electric vehicles, including an SUV starting production in early 2023 and more affordable vehicles down the line.

“We started with that high-end product because I believe the first product defines the brand, just as Model S defined Tesla,” he said. “And you have to create a technological tour de force to define the brand with your first product and that’s what we’re doing with Lucid Air.”

It’s a plan similar to how Tesla came to market. It’s one many companies have said they would follow with little to no success.

Lucid, like Tesla, also is entering the market with a sedan instead of an SUV or pickup like many other startups are planning to do. While there’s expected to be less competition in the all-electric car market, sedan sales have plummeted in recent years with the rise of crossovers.

Abuelsamid views the Air as what the Model S “could have been” if Tesla and its CEO Elon Musk had the resources and talent throughout the development and production of the vehicle for a “real, high-end electric sedan.”

“For all the good stuff about the Model S in terms of electric drive technology, a lot of which can be credited to Peter Rawlinson … the reality is at its price point, $100,000 they were costing in the early days, it wasn’t much of a luxury car,” he said. “The Air is completely different. It is if you actually tried to build a real 21st century luxury sedan.”

Rawlinson, an engineer who also serves as Lucid’s chief technology officer, knows the company must prove itself before any of those his plans are even close to coming to fruition. He expressed as much ambition as pragmatism when he discussed them.

“We have to approach this with a degree of humility because until we’ve got that car into production, we really haven’t achieved anything,” he repeatedly noted to CNBC. “I tell the team that every day.”

Lucid was founded in 2007 as Atieva, a name it now uses for its engineering and tech arm that supplies batteries to electric racing circuit Formula E. The company first focused on electric battery technology before changing its name and shifting to an electric vehicle manufacturer in 2016, three years after Rawlinson joined the company to lead its technology development.

“Right now, there’s one electric car company in a preeminent position,” Rawlinson said. “No one’s really giving it some serious competition. Competition will improve the world, improve the breed.”

Lucid had some difficulty obtaining capital to fund its plans until September 2018 when it received $1 billion from Saudi Arabia’s sovereign wealth fund.

The investment was expected to fund the construction of a factory in Arizona as well as the launch of the Lucid Air in 2020. But that timeframe was delayed due to the coronavirus pandemic, Rawlinson said.

The car is now expected to begin production early next year at the plant in Casa Grande, Arizona, which is located southeast of Phoenix.

The $700 million facility, including $300 million for the first phase of production, is expected to have an initial vehicle production capacity of 34,000 units, which Rawlinson believes will grow to a maximum capacity of 400,000 units toward the end of the decade.

Lucid, according to Rawlinson, has a four-stage plan to grow the volume of cars produced at the plant as well as a “Lucid manufacturing process” that takes lessons learned from his experiences at Tesla.

“Tesla is process adverse. I welcome process where it’s appropriate,” he said. “We will have a production cosmos, not production chaos.”

Rawlinson, speaking opportunistically, expressed aspirations for the company to build 1 million vehicles a year by 2027, which would mean the addition of at least one additional manufacturing facility and several new products.

Lucid plans to start producing additional prototypes of the Air at the factory by the end of the month, followed by full pre-production test models in December.

The California-based company recently hired Peter Hochholdinger, a longtime Audi executive who most recently led Tesla’s production, to head manufacturing operations.

Companies have come up with creative ways to describe their battery cells and packs. Rawlinson describes Lucid’s as “Lego blocks.”

Battery cells go into the packs to power the vehicle. The greater number of cells a pack has, the further the vehicle can typically go on a single charge.

Rawlinson said Lucid has labored over every detail of the batteries to get the greatest efficiency to achieve a higher range with less cells. He also cited a “nerd-like” obsession regarding the company’s in-house electric motors and design and aerodynamics of the Air, among other things.

“The real measure of an EV company’s technology isn’t range per se, it’s efficiency,” he said. “By that I mean how many miles can I travel per kilowatt hour.”

Lucid’s is about 4 miles per kilowatt hour, according to Rawlinson. That compares to the Tesla Model S Long Range Plus at 3.4 miles per kwh, according to the Environmental Protection Agency.

Rawlinson said Lucid was able to achieve this because it brought as much technology in-house as possible for the Air, something he also did at Tesla, but even more so now. The company is acquiring battery cells from LG Chem.

“They have put a lot of emphasis of maximizing that overall system efficiency,” Navigant Research’s Abuelsamid said. “That’s going to be key for everybody to be successful in the EV space.”

Abuelsamid said the power electronics to convert energy from the grid to power for the batteries is “one of the most crucial areas” a company can gain efficiency. Rawlinson said the company has a highly-efficient “wonder box” to do this.

Rawlinson said the company would eventually like to license its electric vehicle technologies, but for the time being, he’s concentrated on launching the Air.  

“Others are really giving grand visions, but it’s not really based on anything. I’m kind of the nerdy engineer who doesn’t ever go and promote anything,” he said. “But this is where we’re at today, and we haven’t’ done anything yet. But look, when we’ve done that, this is what I want to do.”

— CNBC’s Lora Kolodny contributed to this article.