Written by Cláudio Afonso | LinkedIn | X
Electric vehicle maker Lucid Motors is facing a shareholder lawsuit that accuses CEO Peter Rawlinson and several current and former board members of misleading investors about the company’s ability to meet ambitious production targets, leading to a sharp decline in its stock price.
The lawsuit, filed in Delaware Chancery Court, accuses the chief executive of exaggerating Lucid’s production targets for 2022 shortly after the company went public in July 2021 through a SPAC merger.
In February 2022, Lucid announced a reduction in its annual production guidance, lowering the target to between 12,000 and 14,000 units of its luxury Air sedan, down from the previous estimate of 20,000 vehicles.
The EV maker produced 7,180 vehicles in 2022 and 8,428 in 2023. For this year, Lucid expects to manufacture “approximately 9,000 vehicles,” the company said earlier this month
The complaint alleges that Rawlinson was aware the company could not meet these targets due to internal logistics issues and supply chain challenges but failed to disclose these limitations to shareholders.
Shares of electric vehicle maker hit a new all-time low earlier this Friday at $1.93, extending year to date losses to about 53%.
According to the transcript of the fourth quarter 2021 earnings call reviewed on Monday by EV, Peter Rawlinson said in February 2022 that he “believed” the company would “move past the key bottlenecks we’re experiencing in the next few months with further improvement in the second half.”
The lawsuit claims that the misleading forecasts enabled Rawlinson to secure substantial personal compensation, including a $379 million package in 2022, making the CEO the highest-paid automotive executive that year.
“As alleged herein, the truth was that: (a) Rawlinson knew all along that Lucid could not meet the aggressive production targets announced on November 15, 2021; (b) Rawlinson knew the purported added production capacity of the new factory was irrelevant because the Company could not come close to reaching it in the near term; and (c) Rawlinson knew the Company was having unique production problems beyond those being suffered by other auto manufacturers,” it can be read in the document.
The plaintiff argues that Lucid’s board failed to investigate the allegations and secure tolling agreements to protect the company’s legal claims, despite court rulings in related securities fraud cases.
“The Board’s refusal of the Litigation Demand and failure to timely secure tolling agreements were wrongful. Plaintiff therefore sues on Lucid’s behalf to protect and enforce its claims,” the document says.
The derivative suit seeks to hold Rawlinson and other defendants accountable for breach of fiduciary duties and unjust enrichment, demanding compensation for damages sustained by the company.
Lucid Motors CEO Peter Rawlinson said last week that production of the Gravity SUV is set to begin “imminently” at the company’s plant in Casa Grande, Arizona.
Earlier this month, Lucid started accepting orders in the U.S. for the higher trim of its second model, which starts at $94,500. The highly awaited $80,000-trim arrives in about a year, in late 2025.
Peter Rawlinson has recently commented on Chinese competitors in a new interview released this weekend where he reiterated that the companies are “certainly heavily subsidized by central governments.”
In the same interview, Lucid’s CEO criticized the quality of electric vehicles available in the U.S., stating that many Americans have found their experiences with EVs underwhelming.
Written by Cláudio Afonso | LinkedIn | X
