Lucid Motors ended June with $1.38 billion of inventory on its balance sheet, more than triple the level of eighteen months earlier, after six consecutive quarters in which the company built more vehicles than it delivered.
The figure, disclosed in Tuesday’s second-quarter report, explains why new chief executive Silvio Napoli eliminated the second production shift at the Arizona plant in June.
Additionally, the former Schindler Group chief made a $600 million to $800 million inventory reduction, the largest single component of his $1.4 billion cash improvement plan for 2026.
Lucid carried $407.8 million of inventory at the end of 2024, according to its SEC filings.
The balance climbed to $471.4 million by March 2025 and $713.3 million by June, reached $981.1 million at the end of September and closed the year at $1.11 billion.
The build accelerated in the first quarter of 2026, when inventory jumped to $1.47 billion — a gain of 260.2% from the end of 2024 — before easing 6.1% to $1.38 billion at the end of June as production was pulled back.
Six Quarters
The imbalance is visible in the company’s own volume disclosures.
Lucid produced 17,840 vehicles in 2025 against 15,841 deliveries, leaving roughly 2,000 unsold units at year-end.
The gap widened in the first quarter of 2026, when the company built 5,500 vehicles and handed over just 3,093, and persisted in the second quarter with 4,774 units produced against 3,953 delivered.
Since the start of 2025, the EV maker has built 28,114 vehicles and delivered 22,887 — an excess of 5,227 units, equivalent to more than a full quarter of output at the current delivery pace.
Napoli, who took over in June, told analysts the second shift was cut because “building vehicles faster than we could deliver them was consuming cash and increasing inventory.”
Chief financial officer Taoufiq Boussaid, presenting his final quarter in the role, said in the Q&A that inventory normalization is planned by year-end and described the drawdown as a structural change to the company’s conversion cycle rather than a one-off correction.
Production in the third and fourth quarters is expected to come in below second-quarter levels as the single-shift configuration runs through year-end, with the company declining to give 2026 guidance and warning that consensus estimates sit too high, while deliveries should exceed production as existing stock converts to sales.
The sequential growth into the third quarter is set to be broadly in line with typical seasonality but more moderate than a year ago, when demand pull-forward and the Gravity ramp inflated the comparison.
Write-Downs
The swollen stock has become expensive to carry.
Lucid recorded $299.3 million of inventory and firm purchase commitment write-downs in the second quarter alone, bringing the first-half total to $527.6 million — up from $327.8 million in the same period of 2025.
Those charges pushed the gross margin to negative 105.3% in the quarter, with cost of revenue of $832.1 million against revenue of $405.3 million — the impairment alone accounting for 74 percentage points of the margin drag, according to Boussaid.
The stock accumulated through the first five months of the year, during which Gravity production outpaced demand, before the June reset began working in the opposite direction.
“A large part of our inventory has already consumed cash,” Boussaid told analysts, noting that converting it into deliveries unlocks working capital.
Revenue nonetheless rose 56.2% year over year on stronger Gravity deliveries, which climbed 19.5% from a year earlier.
The cash cost is equally visible in the operating statement: inventory absorbed $845.6 million of operating cash in the first six months of 2026, contributing to a first-half free cash outflow of $2.91 billion.
The composition of the stock shifted during the quarter, according to the earnings presentation: raw materials fell $88 million sequentially to $487 million and work-in-progress declined $54 million to $268 million, while finished goods rose $51 million to $623 million as completed vehicles awaited buyers.
That mix suggests the pipeline is being drained faster than the lots.
Shift Cut Reverses Last Year’s Ramp
The second shift at the AMP-1 plant in Casa Grande had been added in late 2024 to accelerate the Gravity ramp, and its removal in June marks a full reversal of that push.
The move accompanied the elimination of 18% of the US workforce the same month, and Napoli told analysts the two measures combined generated $158 million in projected annualized savings.
Signs of the unsold stock had been accumulating for weeks before the reset.
As reported by EV, a drone flyover in July showed Lucid’s lots around the Arizona factory still full of Gravity units as the company worked to clear 2026 model-year vehicles.
The EV maker also extended 0% financing to the Air in an end-of-July push covering both models, and began selling a $1,500 software unlock to Gravity owners in search of new revenue streams.
Less Room for Error
The inventory reset comes at a delicate moment for the company’s finances.
Lucid ended June with $732.6 million of cash and cash equivalents and $3.0 billion in total liquidity, and stockholders’ equity turned negative at $1.06 billion.
An $800 million credit facility draw on July 6 lifted liquidity to $3.8 billion after quarter-end, and management said recently secured financing provides runway well into 2027.
The company weathered a turbulent July in which EV exclusively reported that adviser AlixPartners had presented going-private and Chapter 11 options to the board, a report the company called “completely false” while confirming the adviser’s engagement with a different scope.
Napoli addressed the speculation directly on the call, saying the adviser’s engagement has been focused solely on the cost savings plan and that the assignment is expected to wrap up at the end of this month.
Napoli framed the inventory discipline as part of a broader cultural reset on Tuesday, telling investors in the results release that “potential is not performance” as he laid out priorities centered on cash, customers and culture.
Slower output also carries a product cost: the midsize vehicle’s production slipped to the second half of 2027 from late 2026, with Napoli saying the launch will come “most likely the second half of ’27” — a delay for the Cosmos prototypes spotted at the former Nikola plant in Coolidge, Arizona in July ahead of an expected summer unveil.
Investors sold the print before management spoke.
Shares plunged 11.3% to $6.90 between the release and the call, pushing the company’s market value below its own $3.0 billion in liquidity.
