Lucid Motors will be producing its upcoming midsize crossover in Saudi Arabia, a manufacturing decision that allows the electric vehicle maker to source components from China without facing tariffs.
Chief Financial Officer Taoufiq Boussaid said Wednesday the Saudi production strategy positions Lucid to avoid the significant duty burden that would apply to parts imported from China.
However, the executive did not say whether the California-based company plans to produce its third model exclusively in the Middle East plant.
“We didn’t obviously looked at it that way before we find out about all the implication that the shifting policy had in terms of impact, in terms of tariffs and so forth,” Boussaid said at the UBS Conference.
Lucid opened in September 2023 its assembly plant in Saudi Arabia with an initial capacity of 5,000 vehicles annually.
“But we found ourselves in a fortunate space having the option to manufacture a car in KSA [Kingdom of Saudi Arabia]. And what it does is that it allows us basically to import from China part of the bill of material without having to incur the significant duty.”
In April, the US briefly raised tariffs on Chinese goods to 145% during an escalating trade dispute.
A month later, both countries reached an agreement reducing US tariffs on Chinese goods to 30% and Chinese tariffs on US goods to 10%, though certain sectors like automobiles, steel, aluminum, and pharmaceuticals remain subject to higher rates.
By producing in Saudi Arabia, they avoid the 45% tariff on Chinese auto parts that would apply if they imported those parts to their US facility.
Saudi Manufacturing Plan
In August 2024, Lucid’s former Chief Operating Officer Marc Winterhoff, who is serving as interim CEO since February, said “a significant amount” of the midsize model’s production would take place in Saudi Arabia.
“We look forward to starting production of the Lucid Gravity SUV and are excited about the new mid-sized model currently under development, as we aim to roll out this type on a large scale. A significant amount of its production will take place in Saudi Arabia,” Winterhoff said at the time.
While the company currently produces vehicles and its proprietary motors at its US facility, the next-generation platform will have motors “manufactured and mounted in KSA,” the CFO said Wednesday.
Chinese-sourced components extend beyond batteries to include “many other equipments,” Boussaid stated, without providing specific details on the parts list.
The CFO acknowledged the broader industry shift as automakers and suppliers work to relocate production to North America in response to tariff pressures.
“It’s not something that can happen overnight. It will take some time,” he said. “But for the time being and given the time frame that we have to get this car ready, we find ourselves in a very comfortable spot being able to import this bill of material.”
The CFO emphasized the unit economics advantage of the Saudi manufacturing option. “For the time being, this is the best option that it gives us the flexibility, at least things might change over time,” he said.
Purpose-Built Ecosystem
The Saudi facility will be “full automated” and operate within what Boussaid described as “a purpose-built ecosystem” being developed by Kingdom authorities.
“We will not be alone there,” the CFO said. “The authorities in KSA are very adamant about their plans to develop a fully dedicated ecosystem. So over time, we will have access to Tier 1s and Tier 2s just next door.”
He said the new plant will take time to reach full utilization.
“In terms of challenges, so I mean between the brand new plants, it would be full automated. So I mean it will take some time to maximum the capacity usage and the ramp up,” Boussaid stated.
The company plans to begin production in late 2026, with a gradual ramp-up through 2027 and 2028, reaching full capacity in 2029, according to initial guidance provided by the CFO.
