Sources have revealed that American tech and automotive company Lucid may be considering either going private or filing for Chapter 11 bankruptcy after it hired a consultancy firm to help improve its performance.
Lucid tapped the services of AlixPartners, a financial advisory and consulting company that has advised major firms like General Motors and Enron Corp., to review strategic options that included filing for bankruptcy protection or going private. The automaker has struggled to achieve notable sales for the past couple of years and operates at a loss amidst falling stock prices, dwindling sales, and employee cuts.
Facing such a grim picture, Lucid is reportedly considering the two aforementioned options, with AlixPartners expected to provide its findings before the next Lucid board meeting. The anonymous sources revealed that the consulting firm has advised the Lucid board to put the company through an additional restructuring round in the U.S. and European markets.
Furthermore, the firm reportedly urged Lucid to concentrate on the Gravity SUV, a luxury electric SUV launched in late 2024. Production of the crossover SUV has been hampered by delivery pauses, quality control issues, and supply chain volatility.
Sources say the Lucid board is still undecided between going private and filing for Chapter 11 bankruptcy protection. With Lucid shares crashing to an all-time low of $2.37 after the automaker tapped AlixPartners, Lucid is in an extremely precarious position. The gap between Lucid’s share price and the amount of money invested in the firm by its Saudi backers, coupled with Lucid’s continued losses, means it has to make a move quickly if it wants to continue competing against both established automakers and new market entrants like Tesla.
According to AlixPartners, Lucid should focus on improving the quality of the Gravity SUV, streamlining its production pipeline, and temporarily holding back production of the mid-size SUV Cosmos EV.
Furthermore, the consultancy reportedly advised the Lucid board to make the automaker’s robotaxi partnership with Uber and its second Saudi Arabian car plant a priority. A major point of AlixPartners’ plan is delivering the Lucid Cosmos on schedule while maintaining the highest quality standards.
The sources also note that the consultancy advised Lucid to halt its expansion into the European market for the time being, as recent quality issues have impacted Lucid’s brand reception and made it harder for sales agents to sell Lucid EVs.
However, Lucid has denied that it is considering either filing for Chapter 11 bankruptcy or going private and says it has enough liquidity to keep its operations running well into 2027. The Saudi-backed automaker notes that it contracted AlixPartners to help it improve its operations and execution.
Other players in the electric vehicle segment, such as Massimo Group (NASDAQ: MAMO), will regard the challenges that Lucid is facing as a cautionary tale that should drive them to double down on the execution of their production and marketing plans so that a similar fate never befalls them.
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