Electric vehicle maker Lucid last month bought assets and facilities from another car marker, Nikola Motors; the latter had filed Chapter 11 bankruptcy. Both companies have, or had, major presences in Arizona.
As part of the deal, Lucid bought a Nikola manufacturing site in Coolidge and a development center in the Valley. Lucid will also hire an estimated 300 former Nikola employees.
Tony Quiroga, editor-in-chief of Car and Driver, joined The Show to discuss the deal and what it may mean for the EV market and Arizona’s place in it, starting with how significant this deal could be.
Full conversation
TONY QUIROGA: Well, you know, I think it gives them some ability to manufacture more product, and Nikola has their fuel cell technology, which I think they also bought into. So I don't know where that's going. I mean, right now, Lucid is an entirely battery electric vehicle manufacturer, so I'm not really sure what it means that they've purchased this. But that said, there's probably a lot of know-how there locally. And a lot of smart people work there, so they probably wanted to tap into that workforce.
MARK BRODIE: What does it say about the EV landscape that, you know, Nikola was not allowed to just sort of fade into obscurity, but that Lucid at least saw some value in continuing or or you know, acquiring this company.
QUIROGA: Well, I imagine they see that there's a lot of smart people over there that know what they're doing. I'm not sure exactly why, but yeah, I mean, they recognize that there's smart people working there and they want to see what they know.
A lot of people that work at Lucid, for example, are former Tesla employees. Their former CEO came from Tesla, and you can sort of think of the Lucid Air as a Tesla Model S, like Version 2, like the Model S that Tesla, the second generation Model S that Tesla never created. So everybody, it's not a huge amount of people that are working in the space, so they probably recognize that there's a lot of knowledge there for them to tap into.
BRODIE: Does this sort of solidify Lucid as maybe the challenger or maybe the prime challenger to Tesla in the EV space?
QUIROGA: I think they have been, at least, you know, Lucid probably thinks of themselves that way, and, with a lot of former Tesla employees, they definitely see they definitely Lucid definitely sees Tesla as the target, and I think that's what the first Lucid Air was. I mean, that's what the Lucid Air is. It's a competitor to Tesla's Model S, and now the Gravity coming out, it sort of is in between the Tesla Model X and the Tesla Model Y, which is Tesla's SUVs, that sort of priced it in between.
BRODIE: What do you think this deal means for Arizona as a car manufacturing hub, maybe an EV hub that, you know, these two companies, both of whom had major presences here, one of them was acquired by the other and not allowed to go under. What does that say about Arizona?
QUIROGA: Yeah, it is interesting. So, the manufacturing plant in Casa Grande that Lucid has to build the Gravity, which is their new SUV, which is their second model. They've done a great expansion. They've done a huge expansion there because essentially they're going to be doubling their output, if not more, you know. The sedan is not the force in the marketplace that it once was. Most consumers buy SUVs, crossovers trucks, and that's what the Gravity fills, and they see that as a huge opportunity and so they've expanded their production footprint in Casa Grande already.
BRODIE: So, I'm curious how electric vehicle companies, manufacturers, maybe the suppliers, like, how are they viewing the market right now? We keep seeing and hearing that demand for EVs isn't what maybe what it was, maybe not what a lot of the car companies are hoping it would be, and some manufacturers, some car companies are scaling back their their EV options. I'm curious how people who are in this world are seeing this current moment.
QUIROGA: Well, it takes a long time to plan and develop a car, so it's difficult to derail that even if there are, you know, some government interactions into that about incentives, about tariffs, etc. So, it's difficult to derail them quickly and you already, if you've spent one year or two years developing a car, typically it takes, you know, three to four years to get a car from, you know, the design stage into production. It's pretty difficult to shut that off, and you've already spent so much money that you should, you know, basically the manufacturers just choose to continue building them. It's pretty rare that they cancel something, you know, in the middle of the production.
So yeah, so they're going to end up selling a lot of EVs. Now, they, a lot of manufacturers have backed off of promises that were, "hey, by 2030, hey, by 2031, by 2028, whatever it is, whatever year it was, we're not going to build any more internal combustion engine cars or we'll be fully electrified." And that has sort of meant different things to different manufacturers. Some manufacturers that means they will truly be battery electric vehicle makers. Some manufacturers that means they'll be hybrids and battery electric vehicles, plug-in hybrids, etc.
There's a mix of things, but they've sort of backed off those who are making the claims about being full 100% battery electric vehicles by whatever date. Most of them have backed off of that. And as they launch new electrics into the market, they are sort of just waiting and seeing what consumers want and giving consumers the options that they want.
BRODIE: Does it seem as though there are more companies trying to get into the EV market? I'm thinking specifically of, you know, a company like a Lucid or a Tesla that really that's all they do. Or does it seem as though that the companies that are in this space now, that that's who's going to be there?
QUIROGA: Not necessarily. I mean, Slate, which is an entirely new startup company, a new startup EV company, they announced that they are going to be selling a small pickup truck that can be converted into an SUV. The starting price is supposed to be below $28,000, so with the $7,500 incentive, you're down to about $20,000 with that truck. And they are positioning it in hopes of finding, you know, a lot of first-time EV buyers who couldn't necessarily afford an EV before.
So, there's a lot of interest in EVs as long as they're inexpensive. I mean there are some trade-offs to them in terms of practicality. Like you can't necessarily as easily go on a, you know, five-, six-, seven-, eight-hour road trip. They're a little bit more complicated for that. They require a little more planning. But if you have charging at home, EVs make a lot of sense for a lot of people. So, I don't think we've seen the end of startups.
In a lot of ways it is a bit easier to build an EV than it is to build an internal combustion car. Developing an engine for an internal combustion car is hideously expensive, and then you have to go through all the emissions regulations. With an EV, yes, battery technology is very expensive. Buying batteries is expensive. Some of the stuff is roughly off the shelf, not necessarily tailored for that particular vehicle, and the motors are also something of a commodity where you can buy them. And so you can build an EV a little bit more easily than you could an internal combustion car, so we may not be seeing the end of this.
And I think people will also want to follow in the footsteps of Tesla and build, you know, an electric car company with a huge valuation out of absolutely nothing and build electric vehicles and, you know, fill that need for the future, yeah.
