Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 24, 2026. This discussion may contain forward-looking statements based upon Lucid’s current expectations, estimates and projections that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors”, in Part II, Item 1A of this Quarterly Report. Unless otherwise noted, the share, per share, and related information in this Quarterly Report has been retrospectively adjusted to reflect the Reverse Stock Split. Overview We are a technology company that is shaping the future of mobility through our innovations, advanced technology, and software-defined vehicle platforms. Our award-winning Lucid Air and Lucid Gravity set new standards with their unmatched combination of performance, range, space, and efficiency. Our focus on in-house hardware and software innovation, vertical integration, and a “clean sheet” approach to engineering and design led to the development of the award-winning Lucid Air and Lucid Gravity, and our upcoming Midsize platform. We sell vehicles directly to consumers through our retail sales network and online channels, including Lucid Financial Services, in North America and the Middle East. We believe that owning and operating our sales network provides the best opportunity to closely manage the customer experience, gather direct feedback, and ensure that every interaction is tailored to customer needs. We are also actively exploring, and have adopted in certain international markets, alternative importer and agency models to enhance flexibility, preserve capital, and optimize our distribution strategy in response to evolving market dynamics. We also own and operate a vehicle service network comprised of service centers in major metropolitan areas and a fleet of mobile service vehicles. In addition to our in-house capabilities, we continue to grow an approved list of specially trained collision repair shops, which in some cases serve as repair hubs for mobile service. Recent Developments Workforce Reduction In June 2026, we announced the June 2026 Plan that was designed to advance our path toward profitability and positive cash flow generation by streamlining our organizational structure, optimizing operating expenses, and aligning production plans with anticipated demand. We expect to substantially complete the June 2026 Plan by the end of the third quarter of 2026, subject to local law and consultation requirements. As a result of the June 2026 Plan, we expect to incur total workforce reduction charges of approximately $34 million, primarily related to severance payments, employee benefits, and employee transition. We expect the Plan to provide us with an annualized cost savings of approximately $158 million. Cash Flow Improvement We identified approximately $1.4 billion in cash flow improvements for 2026. These opportunities span inventory, capital expenditures, and operating expenses, and together are intended to improve liquidity, reduce cash burn, and increase capital efficiency while preserving key growth programs, including our Midsize platform and autonomous commercialization initiatives. As part of such efforts, we have reduced our production volume to better align production plans with anticipated demand to improve working capital. Furthermore, we have in the past reduced the size of our workforce, and recently implemented workforce reduction plans and other actions relating to contractors in the first half of 2026, including the elimination of the second shift of production at our AMP-1 factory. Midsize Platform During the quarter, we continued to make steady progress toward the start of production of our Midsize platform. The next major phases of the program include additional prototype and quality-launch builds, completion of regulatory and homologation activities, expanded manufacturing validation, and preparation for the start and ramp of production. We will provide additional updates as milestones are achieved and we continue to expect to ramp up Midsize production in the second half of 2027. 47 Executive Leadership Changes Effective as of June 1, 2026, Mr. Silvio Napoli has been appointed as our Chief Executive Officer and principal executive officer. Mr. Marc Winterhoff resumed his previous role of our Chief Operating Officer effective as of the same day, and subsequently departed our company following the elimination of the Chief Operating Officer position in June 2026. On July 2, 2026, the Board appointed Alexander De Bock as our incoming Chief Financial Officer. Mr. De Bock will join the Company as its Chief Financial Officer, effective August 5, 2026. Taoufiq Boussaid, the Company’s current Chief Financial Officer, will take on an advisory role for a period of time to help ensure a smooth transition. On July 2, 2026, we also announced several additional organizational and leadership changes. DDTL Credit Facility In July 2026, we borrowed an additional $800.0 million under the DDTL Credit Facility. After giving effect to this borrowing, approximately $1.18 billion remains undrawn under the DDTL Credit Facility. Potential Impact of Adverse Economic Conditions and Trade Policy Uncertainties on our Business A global economic recession, downturn or other adverse economic conditions, whether due to changes or uncertainties in trade policies, the imposition or proposed imposition of tariffs, export controls, threat of a trade war, persistent inflation, political instability, global or regional conflicts or other geopolitical events, public health crises, interest rate increases or other central bank policy actions, bank closures and liquidity concerns at financial institutions, or other factors, have in the past and may in the future have an adverse impact on our business, prospects, financial condition and results of operations. If any of our suppliers, sub-suppliers or partners experience financial distress, insolvency or disruptions in operations, they may be unable to fulfill their obligations or meet our production and quality requirements. Adverse economic conditions and uncertainty about the current and future domestic or global economic conditions may also cause our customers to defer purchases or cancel their orders in response to higher interest rates, limited consumer credit availability, lower cash reserves, fluctuations in foreign currency exchange rates, and weakened consumer confidence. A reduction in demand for our products may result in a decline in product sales, with a corresponding material adverse impact on our business, prospects, financial condition and results of operations. Given our premium brand positioning and pricing, an economic recession or downturn is likely to have a disproportionate adverse effect on us compared to our competitors in the EV and traditional automotive sectors, to the extent that consumer demand for luxury goods declines in favor of more cost-conscious alternatives. In addition, adverse economic conditions and uncertainties surrounding trade policies, tariffs and export controls could also cause supply chain and logistical challenges and operational risks. In particular, the U.S. federal government enacted the law commonly referred to as the OBBBA, which eliminates, limits or phases out certain tax credits that had previously provided significant benefits to lessees and purchasers of EVs and adds new eligibility requirements on manufacturers to continue claiming tax credits on EV components. It also eliminates certain penalties for noncompliance with certain fuel efficiency standards and introduces certain key tax law modifications. Taken together, adverse economic conditions and uncertainties surrounding trade policies, tariffs and export controls, coupled with supply chain challenges and the potential difficulty of passing costs to consumers or sharing the burden with suppliers, could reduce demand for our products and have a material adverse effect on our business, prospects, results of operations and financial condition. In addition, the deterioration of conditions in the financial markets may limit our ability to obtain external financing to fund our operations and capital expenditures for business growth on terms favorable to us, if at all. See “Risk Factors” in Part II, Item 1A of this Quarterly Report for more information regarding risks associated with a global economic downturn or recession, changes or uncertainties in trade policies, or the imposition or proposed imposition of tariffs, including under the captions “A global economic recession, downturn or other adverse economic conditions may have a material adverse impact on our business, prospects, results of operations and financial condition.” and “Changes in U.S. trade policy, including the imposition of or uncertainties surrounding tariffs or revocation of normal trade relations and the resulting consequences, could adversely affect our business, prospects, results of operations and financial condition.” Key Factors Affecting Our Performance We believe that our future success and financial performance depend on a number of factors that present significant opportunities for our business, but also pose risks and challenges, including those discussed below and in the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report. 48 Design and Technology Leadership We believe that we are positioned to be a leader in the EV market by unlocking the potential for advanced, high-performance, and long-range EVs to co-exist. We designed the Lucid Air and the Lucid Gravity with race-proven battery and powertrain technologies, offering robust performance together with a sleek exterior design and expansive interior space due to our miniaturized key drivetrain components. The Lucid Gravity is a groundbreaking new class of SUV, conceived from the ground up. Enabled by our revolutionary technology, the Lucid Gravity provides the interior space and practicality of a full-size SUV within the exterior footprint of a mid-size SUV. As a result, it provides a sophisticated space for up to seven adults, game-changing versatility, and an unparalleled driving experience. The Lucid Air and the Lucid Gravity are software-defined vehicles, designed to improve over time, with OTA software updates and key hardware already in place in the vehicle. This holistic systems approach to the integration of hardware and software is what allows us to provide these continuous OTA updates. We designed the Lucid Gravity to share components with the Lucid Air where possible. These measures enable efficiency in design, engineering, and capital expenditure deployment for the Lucid Gravity. We anticipate continued consumer demand for our vehicles based on their luxurious design, high-performance technology, sustainability leadership, and the acceptance of EVs as substitutes for gasoline-fueled vehicles. We also anticipate that these attributes will drive customer demand for our future models, including our upcoming Midsize platform. Distribution Models We operate a direct-to-consumer sales and service model in North America, which we believe allows us to offer a personalized experience for our customers based on their purchase and ownership preferences. We expect to continue to incur significant expenses in our sales, service and marketing operations for sales of our current vehicles and any future vehicle programs, including the upcoming Midsize platform, that we may offer over the coming decade, including to open additional studios, expand our sales force, grow marketing and brand awareness, and establish a robust service center operation. As of June 30, 2026, we have opened 62 studios and service centers (excluding temporary and satellite service centers): 39 in the U.S. (14 in California, four in New York, three in Florida, two in each of Arizona, Illinois, Massachusetts, New Jersey, Texas, Virginia and Washington, and one in each of Colorado, Georgia, Michigan and Pennsylvania), seven in Germany, five in Canada, four in Saudi Arabia, three in Switzerland, two in Norway, one in the Netherlands, and one in the United Arab Emirates. We also plan to hire additional sales, customer service, and service center personnel. We believe that investing in our direct-to-consumer sales and service model will be critical to delivering and servicing the Lucid EVs we currently manufacture and sell. As we expand globally, our strategy includes establishing third-party distribution partnerships through proven business models such as importer, dealer, agent, and authorized repairer relationships. Introducing these channels is expected to enable growth in these markets while optimizing the capital required to build a comprehensive sales and service network. All third-party partnerships are expected to be governed by robust agreements, standards, and guidelines to ensure compliance and maintain the Lucid customer experience throughout the entire journey. Expanding and Improving Manufacturing Capacity and Processes Achieving commercialization and growth for each generation of our EVs requires us to make significant capital expenditures to scale our production capacity and improve our supply chain processes in the U.S. and internationally. We expect our capital expenditures to increase as we continue constructing and putting into operation the CBU portion of AMP-2 and expanding AMP-1. The amount and timing of our future manufacturing capacity requirements, and resulting capital expenditures, will depend on many factors, including the pace and results of our research and development efforts to meet technological development milestones, our ability to develop and launch new EVs, our ability to achieve sales and meet customer demand at anticipated levels, our ability to utilize planned capacity in our existing facilities and our ability to enter new markets. Technology Innovation We develop in-house battery, powertrain, and software technology, which requires significant capital investment in research and development. The EV market is highly competitive, including both established automotive manufacturers and new entrants. To establish market position and attract customers, we plan to continue making substantial investments in research and development for the commercialization and continued enhancements of our current vehicles where strategically warranted, the development of our Midsize platform, as well as future generations of our EVs and other products. 49 Results of Operations Revenue The following table presents our revenue for the periods presented (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 $ Change % Change 2026 2025 $ Change % Change Revenue $ 405,347 $ 259,432 $ 145,915 56 % $ 687,812 $ 494,480 $ 193,332 39 % We recognize revenue from vehicle sales when the customer obtains control of the vehicle, which is upon delivery. We also generate revenue from non-warranty after-sale vehicle services and parts, sales of battery pack systems, powertrain kits, retail merchandise, regulatory credits, and sales of non-Lucid vehicles acquired as part of the trade-in program. We generate regulatory credits revenue from the sale of tradable credits we earn under various regulations. This includes credits related to ZEVs and GHG, and CAFE credits. Revenue increased by $145.9 million, or 56% and $193.3 million, or 39% for the three and six months ended June 30, 2026, respectively, as compared to the same periods in the prior year. The increases were primarily driven by higher Lucid vehicle deliveries for the three and six months ended June 30, 2026, as compared to the same periods in the prior year. In addition, our ramp-up of the Lucid Gravity, which has a higher average selling price, resulted in a favorable product mix that further contributed to the increases in revenue. The increase in revenue was partially offset by a decrease of $24.8 million in regulatory credit sales for the six months ended June 30, 2026 as compared to the same period in the prior year. We believe the recent proposal to lower the U.S. federal fuel economy standards and eliminate CAFE EV credit trading may create uncertainties regarding our ability to generate future regulatory credit sales. Please see “Risk Factors — Risks Related to Our Business and Operations — The unavailability, reduction or elimination of certain government and economic programs could have a material adverse effect on our business, prospects, financial condition and results of operations”. Cost of Revenue and Gross Profit (Loss) The following table presents our cost of revenue and gross profit (loss) for the periods presented (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 $ Change % Change 2026 2025 $ Change % Change Cost of revenue $ 832,072 $ 531,783 $ 300,289 56 % $ 1,426,242 $ 995,343 $ 430,899 43 % Gross profit (loss) $ (426,725) $ (272,351) $ (154,374) 57 % $ (738,430) $ (500,863) $ (237,567) (47) % Gross margin (105.3) % (105.0) % (107.4) % (101.3) % Cost of vehicle sales includes direct parts, materials, shipping and handling costs, allocable overhead costs such as depreciation of manufacturing related equipment and facilities, information technology costs, personnel costs, including wages and stock-based compensation, estimated warranty costs, charges to reduce inventories to their net realizable value, charges for any excess or obsolete inventories, and losses from firm purchase commitments. Cost of vehicle sales also includes depreciation of operating lease vehicles. Manufacturing credits earned are recorded as a reduction to cost of vehicle sales. Cost of other revenue includes direct parts, material and labor costs, depreciation of tooling costs, shipping and logistic costs. Cost of other revenue also includes costs associated with providing non-warranty after-sales services and costs for retail merchandise. Cost of revenue increased by $300.3 million, or 56% and $430.9 million, or 43% for the three and six months ended June 30, 2026, as compared to the same periods in the prior year. The increases were primarily due to higher deliveries of Lucid vehicles and higher inventory write-downs associated with inventory optimization actions, partially offset by reduction in losses on firm commitment as a result of lower volume for the three and six months ended June 30, 2026, as compared to the same periods in the prior year. The increases were also partially offset by the IEEPA tariff refund of approximately $9.5 million and $62.5 million recorded during the three and six months ended June 30, 2026, following the U.S. Supreme Court’s February 2026 ruling that certain tariffs imposed under the IEEPA were unlawful. In the near term, we expect our production volume of vehicles to continue to be less than our manufacturing capacity. 50 We recorded write-downs of $299.7 million and $537.6 million for the three and six months ended June 30, 2026, respectively, and $184.7 million and $336.3 million for the same periods in the prior year, respectively, to reduce our inventories to their net realizable values, for any excess or obsolete inventories, and losses from firm purchase commitments. The increases in the write-downs were primarily due to higher inventory balances driven by higher Lucid Gravity mix for the three and six months ended June 30, 2026, as compared to the same periods in the prior year. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted with clean energy incentives. The impact of the IRA on our results of operations was not material for the three and six months ended June 30, 2026 and 2025. We will continue to evaluate the expected future impact of the IRA on our business and financial statements upon issuance of additional regulatory guidance. Gross margin for the three months ended June 30, 2026 remained flat as compared to the same period in the prior year, as higher Lucid vehicle deliveries and a favorable product mix were substantially offset by higher inventory write-down. Gross margin worsened slightly for the six months ended June 30, 2026, as compared to the same period in the prior year. The decrease in gross margin was primarily driven by higher inventory write-downs, partially offset by the IEEPA tariff refund of approximately $62.5 million and a favorable product mix, during the six months ended June 30, 2026, as compared to the same period in the prior year. Operating Expenses The following table presents our operating expenses for the periods presented (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 $ Change % Change 2026 2025 $ Change % Change Research and development $ 321,336 $ 273,839 $ 47,497 17 % $ 657,006 $ 525,085 $ 131,921 25 % Selling, general and administrative 300,432 256,857 43,575 17 % 604,608 469,032 135,576 29 % Workforce reduction charges 33,675 — 33,675 *nm 71,609 — 71,609 *nm Total operating expenses $ 655,443 $ 530,696 $ 124,747 24 % $ 1,333,223 $ 994,117 $ 339,106 34 % *nm - not meaningful Research and Development Our research and development efforts have primarily focused on the development of our battery and powertrain technology, the Lucid Air, the Lucid Gravity, future generations of our EVs, including our Midsize platform, and our robotaxi program. Research and development expenses primarily consist of materials, supplies, personnel-related expenses for employees involved in the engineering, designing, and testing of EVs, and contractor fees. Personnel-related expenses primarily include salaries, benefits and stock-based compensation. In addition, research and development expenses include prototype material, engineering, design and testing services, and allocated facilities costs, such as office and rent expense and depreciation expense. Research and development expense increased by $47.5 million, or 17% for the three months ended June 30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $41.1 million in engineering, design and testing services, and prototype materials related mostly to the Midsize platform, $8.4 million in payroll related expenses and $3.9 million in facilities and rental related costs, partially offset with $8.6 million in lower stock-based compensation expenses. Research and development expense increased by $131.9 million, or 25% for the six months ended June 30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $84.0 million in engineering, design and testing services, and prototype materials related mostly to the Midsize platform, $36.0 million in payroll related expenses, and $11.1 million in utilization of contractors and professional fees primarily related to an increase in headcount to support our Midsize platform, partially offset by $5.7 million in lower stock-based compensation expenses. 51 Selling, General, and Administrative Selling, general, and administrative expenses primarily consist of personnel-related expenses for employees involved in general corporate, selling and marketing functions, including executive management and administration, legal, human resources, facilities and real estate, accounting, finance, tax, and information technology. Personnel-related expenses primarily include salaries, benefits and stock-based compensation. Selling, general, and administrative expenses also include allocated facilities costs, such as office, rent and depreciation expenses, professional services fees, sales and marketing expenses and other general corporate expenses. As we continue to grow as a company, build out our sales force, and commercialize the Lucid Air and Lucid Gravity, and future generations of our EVs, including our Midsize platform, we expect an increase to our selling, general and administrative costs. Selling, general, and administrative expense increased by $43.6 million, or 17% for the three months ended June 30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $15.5 million in sales and marketing expenses, $14.7 million in utilization of contractors and professional fees, and $8.5 million in other general corporate expense. Selling, general, and administrative expense increased by $135.6 million, or 29% for the six months ended June 30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $31.3 million in sales and marketing expenses, $26.3 million in stock-based compensation expenses, primarily driven by a reversal of previously recognized expenses for the former CEO’s unvested time-based RSUs during the six months ended June 30, 2025, $24.3 million in payroll related expenses due to our continued commercialization and growth strategy, $19.4 million in facilities and rental related costs and $17.2 million in utilization of contractors and professional fees. Workforce Reduction Charges On June 22, 2026, we announced the June 2026 Plan that was designed to advance our path toward profitability and positive cash flow generation by streamlining our organizational structure, optimizing operating expenses, and aligning production plans with anticipated demand. We expect to substantially complete the June 2026 Plan by the end of the third quarter of 2026, subject to local law and consultation requirements. As a result of the June 2026 Plan, we expect to incur total workforce reduction charges of approximately $34 million. On February 20, 2026, we announced the February 2026 Plan that intended to align with our long-term operating goals as we focus on the start of production of our Midsize platform, expansion into the robotaxi market and development of ADAS technologies, as well as the sale and distribution of our current models in existing and new geographies. We substantially completed the February 2026 Plan in the second quarter of 2026. During the three and six months ended June 30, 2026, we recorded workforce reduction charges of $33.7 million and $71.6 million, respectively, in the condensed consolidated statements of operations and comprehensive loss. The workforce reduction charges are comprised of $33.3 million related to the June 2026 Plan for the three and six months ended June 30, 2026, and $0.4 million and $38.3 million related to the February 2026 Plan for the three and six months ended June 30, 2026, respectively. The workforce reduction charges were primarily related to severance payments, employee benefits, employee transition, and acceleration of stock-based compensation expense. See Note 3 “Workforce Reduction” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. Other Income, net The following table presents our other income, net for the periods presented (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 $ Change % Change 2026 2025 $ Change % Change Other income (expense), net: Change in fair value of common stock warrant liability $ — $ 5,322 $ (5,322) (100) % $ — $ 18,183 $ (18,183) (100) % Change in fair value of equity securities of a related party 549 3,948 (3,399) (86) % (9,672) (9,505) (167) 2 % Change in fair value of derivative liabilities and subscription agreements associated with redeemable convertible preferred stock (related party) 102,790 111,475 (8,685) (8) % 110,165 393,175 (283,010) (72) % Gain on extinguishment of debt — 116,360 (116,360) (100) % — 116,360 (116,360) (100) % Interest income 9,634 44,318 (34,684) (78) % 22,738 96,527 (73,789) (76) % Interest expense (47,817) (23,749) (24,068) 101 % (88,890) (35,632) (53,258) 149 % Other income (expense), net (16,789) 3,572 (20,361) *nm (24,656) 6,537 (31,193) *nm Total other income, net $ 48,367 $ 261,246 $ (212,879) (81) % $ 9,685 $ 585,645 $ (575,960) (98) % *nm - not meaningful 52 Change in Fair Value of Common Stock Warrant Liability Our common stock warrant liability relates to the Private Placement Warrants to purchase shares of our common stock that were effectively issued upon the closing in connection with the Merger. Our common stock warrant liability is subject to remeasurement to fair value at each reporting period. The Private Placement Warrants remained unexercised as of June 30, 2026, and the liability was remeasured to a fair value of nil as of June 30, 2026 and December 31, 2025. The changes in fair value were nil during the three and six months ended June 30, 2026, and resulted in unrealized gains of $5.3 million and $18.2 million for the same periods in the prior year, respectively. The change in fair value was classified within change in fair value of common stock warrant liability in the condensed consolidated statements of operations and comprehensive loss. Change in Fair Value of Equity Securities of a Related Party On November 6, 2023, in connection with the commencement of the Strategic Technology Arrangement with Aston Martin, we received 28,352,273 ordinary shares of Aston Martin. The ordinary shares of Aston Martin are subject to remeasurement to fair value at each reporting period. Such shares were remeasured to fair values of $14.2 million and $24.3 million as of June 30, 2026 and December 31, 2025, respectively. The changes in fair value resulted in an unrealized gain of $0.5 million and an unrealized loss of $9.7 million for the three and six months ended June 30, 2026, respectively, and an unrealized gain of $3.9 million and an unrealized loss of $9.5 million for the same periods in the prior year, respectively, and were classified within change in fair value of equity securities of a related party in the condensed consolidated statements of operations and comprehensive loss. See Note 5 “Fair Value Measurements and Financial Instruments” and Note 15 “Related Party Transactions” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. Change in Fair Value of Derivative Liabilities and Subscription Agreements Associated with Redeemable Convertible Preferred Stock (Related Party) In March 2024, we sold 100,000 shares of our Series A Redeemable Convertible Preferred Stock to Ayar for an aggregate purchase price of $1.0 billion in a private placement. In August 2024, we sold 75,000 shares of our Series B Redeemable Convertible Preferred Stock to Ayar for an aggregate purchase price of $750.0 million in a private placement. On April 14, 2026, we entered into the Series C Subscription Agreement with Ayar. Pursuant to the Series C Subscription Agreement, Ayar agreed to purchase from us 55,000 shares of our Series C Redeemable Convertible Preferred Stock, for an aggregate purchase price of $550.0 million in a private placement. Subsequently, on April 28, 2026, we issued the shares to Ayar pursuant to the Series C Subscription Agreement and received aggregate net proceeds of $548.9 million after deducting issuance costs of $1.1 million. We determined that the Subscription Agreement was required to be accounted for at fair value between the execution date and the settlement date as it represented a contract to sell redeemable stock. As a result, we recognized a gain of $142.2 million reflecting the change in fair value of the contract as measured upon settlement based on the difference between the fair value of the Series C Redeemable Convertible Preferred Stock at issuance versus the cash purchase price negotiated at fair value at contract inception, such that the Series C Redeemable Convertible Preferred Stock is initially recognized at fair value of $292.4 million on the issuance date. We concluded that the conversion features, inclusive of all settlement outcomes where the pay-off is indexed to the if-converted value, meets all the requirements to be separately accounted for as a bifurcated derivative. As a result, we bifurcated the Redeemable Convertible Preferred Stock between (i) the host contracts which are accounted for within mezzanine equity, and (ii) the bifurcated derivative liabilities related to the conversion features. The bifurcated derivatives are remeasured to fair value at each reporting period with changes in fair value recorded in the condensed consolidated statement of operations and comprehensive loss. The derivative liabilities of the Redeemable Convertible Preferred Stock were remeasured to a fair value of $163.7 million and $16.2 million as of June 30, 2026 and December 31, 2025, respectively. We recognized gains of $102.8 million and $110.2 million for the three and six months ended June 30, 2026, respectively, and gains of $111.5 million and $393.2 million for the same periods in the prior year, respectively, primarily driven by changes in our stock price. The gains for the three and six months ended June 30, 2026 includes $142.2 million of gain from Series C Subscription Agreement. The change in fair value are recorded within change in fair value of derivative liabilities and subscription agreements associated with redeemable convertible preferred stock (related party) in the condensed consolidated statements of operations and comprehensive loss. See Note 7 “Redeemable Convertible Preferred Stock” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. Gain on Extinguishment of Debt In April 2025, we repurchased $1,052.5 million aggregate principal amount of the 2026 Notes, using $931.4 million of the net proceeds of the 2030 Notes. The repurchases of the 2026 Notes were accounted for as a debt extinguishment. The difference between the consideration paid to repurchase a portion of the 2026 Notes and the then carrying value of the 2026 Notes resulted in a gain of $116.4 million, and was recorded within gain on extinguishment of debt in the condensed consolidated statement of operations and comprehensive loss during the three and six months ended June 30, 2025. 53 Interest Income Interest income decreased by $34.7 million, or 78% for the three months ended June 30, 2026, as compared to the same period in the prior year, primarily due to lower average cash and investment balances and lower interest rates on investments. Interest income decreased by $73.8 million, or 76% for the six months ended June 30, 2026, as compared to the same period in the prior year, primarily due to lower average cash and investment balances. Interest Expense Interest expense primarily consists of contractual interest and amortization of debt discounts and debt issuance costs incurred related to the 2026 Notes, the 2030 Notes, and the 2031 Notes, commitment fees and amortization of deferred issuance costs from the ABL Credit Facility and the DDTL Credit Facility, interest on borrowings from the DDTL Credit Facility, GIB credit facility and on our finance leases, and capitalized interest on construction in progress related to significant capital asset construction. Interest expense increased by $24.1 million, or 101% and $53.3 million, or 149% for the three and six months ended June 30, 2026, respectively, as compared to the same periods in the prior year. The increases were primarily due to higher interest expense of $18.1 million and $48.9 million from the issuances of the 2030 Notes and the 2031 Notes in April 2025 and November 2025, respectively, and higher interest expense of $16.1 million and $21.6 million from the GIB credit facility and DDTL Credit Facility resulting from higher average borrowings, partially offset by increases of $7.8 million and $15.9 million in interest capitalized on construction in progress related to significant capital asset construction during the three and six months ended June 30, 2026, respectively, as compared to the same periods in the prior year. Other Income (Expense), net Other income (expense), net primarily consists of foreign currency gains and losses, changes in residual value guarantee reserve, and realized gains or losses on the sale of available-for-sale securities. Our foreign currency exchange gains and losses relate to transactions and monetary asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates. Other income (expense), net changed by $20.4 million and $31.2 million for the three and six months ended June 30, 2026, as compared to the same periods in the prior year, primarily due to changes in foreign exchange rates and residual value guarantee reserve. The change for the six months ended June 30, 2026 is also due to realized gains on the sale of available-for-sale securities. Provision for (Benefit from) Income Taxes The following table presents our provision for (benefit from) income taxes for the periods presented (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 $ Change % Change 2026 2025 $ Change % Change Provision for (benefit from) income taxes $ 1,050 $ (2,369) $ 3,419 *nm $ 1,227 $ (3,732) $ 4,959 *nm *nm - not meaningful Our provision for (benefit from) income taxes consists primarily of U.S., state and foreign income taxes in jurisdictions in which we operate. We maintain a valuation allowance against the full value of our U.S. and state net deferred tax assets because we believe it is more likely than not that the recoverability of these deferred tax assets will not be realized. On July 4, 2025, the OBBBA was signed into law. We elected to fully amortize our previously capitalized domestic research and development expenses. Due to the full valuation allowance on our U.S. deferred tax assets, the net tax impact of the legislation is immaterial. 54 Liquidity and Capital Resources Sources of Liquidity As of June 30, 2026, we had $775.5 million of cash, cash equivalents, and investments. We also had $1.98 billion, $270.4 million, and $2.3 million of unused available credit amounts from the DDTL Credit Facility, the ABL Credit Facility, and the 2025 GIB Credit Facility, respectively, as of June 30, 2026. Our existing sources of liquidity include cash, cash equivalents, investments, and unused available credit amounts from credit facilities. We funded operations primarily with issuances of common stock, convertible preferred stock, convertible notes, and loans. We expect that our current sources of liquidity together with our projection of cash flows from operating activities will provide us with adequate liquidity for at least the next 12 months, including investment in funding (i) ongoing operations, (ii) research and development projects for new products/ technologies, (iii) further expansion of AMP-1 in Casa Grande, Arizona, (iv) construction of the CBU portion of AMP-2 in Saudi Arabia, (v) vendor tooling, (vi) expansion of retail studios and service centers, and (vii) other initiatives related to the sale of vehicles or technology. We anticipate our cumulative spending on capital expenditures to be approximately $1.0 billion for the fiscal year 2026 to support our continued commercialization and growth objectives as we strategically invest in manufacturing capacity and capabilities, our retail studios and service center capabilities throughout North America and across the globe, development of different products and technologies, and other areas supporting the growth of Lucid’s business. We expect to continue to receive financing and support for certain capital expenditures in connection with AMP-2 construction and purchases of machinery, tooling, and equipment. Refer to Note 6 “Debt”, Note 15 “Related Party Transactions” and Note 17 “Subsequent Events” to the condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. Our future capital expenditures may vary and will depend on many factors including the timing and extent of spending and other growth initiatives. In addition, we expect our operating expenses to increase in order to grow and support the operations of a global technology automotive company targeting volumes in line with Lucid’s aspirations. As of June 30, 2026, our total minimum lease payments are $630.0 million, of which $55.3 million is due in fiscal year 2026. We also have non-cancellable long-term commitments of approximately $2.55 billion, primarily relating to certain inventory component purchases. For details regarding these obligations, refer to Note 10 “Leases” and Note 11 “Commitments and Contingencies” to the condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. 2026 Notes In December 2021, we issued $2,012.5 million of the 2026 Notes. The 2026 Notes accrue interest at a rate of 1.25% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2022. The 2026 Notes will mature on December 15, 2026, unless earlier repurchased, redeemed or converted. Before the close of business on the business day immediately before September 15, 2026, noteholders will have the right to convert their 2026 Notes only upon the occurrence of certain events. From and after September 15, 2026, noteholders may elect at any time to convert their 2026 Notes until the close of business on the second scheduled trading day immediately before the maturity date. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The initial conversion rate is 1.8255 shares of common stock per $1,000 principal amount of the 2026 Notes, which represents an initial conversion price of approximately $547.80 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events, including a reverse stock split. In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. As of June 30, 2026 and December 31, 2025, we were in compliance with applicable covenants under the indenture governing the 2026 Notes. In April 2025, contemporaneously with the 2030 Notes offering, we repurchased $1,052.5 million aggregate principal amount of the 2026 Notes, using $931.4 million of the net proceeds of the 2030 Notes. In November 2025, we repurchased $755.7 million aggregate principal amount of the 2026 Notes, using $748.2 million of the net proceeds of the 2031 Notes. Following the redemption, our outstanding principal balance of the 2026 Notes was $204.3 million. 55 2030 Notes and Capped Call Transactions 2030 Notes In April 2025, we issued $1,100.0 million of the 2030 Notes. Contemporaneously with the 2030 Notes offering, we entered into privately negotiated transactions with certain holders of the 2026 Notes to repurchase $1,052.5 million aggregate principal amount of the 2026 Notes, using $931.4 million of the net proceeds of the 2030 Notes. The 2030 Notes accrue interest at a rate of 5.00% per annum, payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2025. The 2030 Notes will mature on April 1, 2030, unless earlier repurchased, redeemed or converted. Before the close of business on the business day immediately before January 1, 2030, noteholders will have the right to convert their 2030 Notes only upon the occurrence of certain events. From and after January 1, 2030, noteholders may elect at any time to convert their 2030 Notes until the close of business on the second scheduled trading day immediately before the maturity date. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The initial conversion rate is 33.3333 shares of common stock per $1,000 principal amount of the 2030 Notes, which represents an initial conversion price of approximately $30.00 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events, including a reverse stock split. In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. As of June 30, 2026 and December 31, 2025, we were in compliance with applicable covenants under the indenture governing the 2030 Notes. Capped Call Transactions In connection with the 2030 Notes offering, we paid $118.3 million to enter into the Capped Call Transactions with certain financial institutions. The Capped Call Transactions cover, subject to anti-dilution adjustments, the number of shares of our common stock initially underlying the 2030 Notes. The Capped Call Transactions have an expiration date of April 1, 2030. We expect the Capped Call Transactions generally would reduce the potential dilution to our common stock upon conversion of the notes and/or offset any cash payments that we could be required to make in excess of the principal amount of any converted notes, as the case may be, in the event that the market price per share of our common stock, as measured under the terms of the Capped Call Transactions, is greater than the strike price of the Capped Call Transactions. The initial strike price of the Capped Call Transactions corresponds to the initial conversion price of the 2030 Notes, or approximately $30.00 per share of our common stock. The initial cap price of the Capped Call Transactions was $48.00 per share of our common stock and is subject to customary anti-dilution adjustments. 2031 Notes In November 2025, we issued $975.0 million of the 2031 Notes. Contemporaneously with the 2031 Notes offering, we entered into privately negotiated transactions with certain holders of the 2026 Notes to repurchase $755.7 million aggregate principal amount of the 2026 Notes, using $748.2 million of the net proceeds of the 2031 Notes. The 2031 Notes accrue interest at a rate of 7.00% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2026. The 2031 Notes will mature on November 1, 2031, unless earlier repurchased, redeemed or converted. The holders may require us to repurchase the 2031 Notes on November 1, 2029. Before the close of business on the business day immediately before August 1, 2031, noteholders will have the right to convert their 2031 Notes only upon the occurrence of certain events. From and after August 1, 2031, noteholders may elect at any time to convert their 2031 Notes until the close of business on the second scheduled trading day immediately before the maturity date. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The initial conversion rate is 48.0475 shares of common stock per $1,000 principal amount of the 2031 Notes, which represents an initial conversion price of approximately $20.81 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events, including a reverse stock split. In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. As of June 30, 2026 and December 31, 2025, we were in compliance with applicable covenants under the indenture governing the 2031 Notes. International Manufacturing Expansion On February 27, 2022, we announced the selection of KAEC in Saudi Arabia as the location of our first international manufacturing plant and signed related agreements with the MISA, the SIDF, and the Economic City at KAEC. We started the AMP-2 operations with re-assembly of the Lucid Air vehicle “kits” pre-manufactured in the U.S. and we expect to commence production of complete vehicles in 2027. 56 SIDF Loan Agreement On February 27, 2022, Lucid LLC entered into the SIDF Loan Agreement with SIDF, a related party of the PIF, which is an affiliate of Ayar. Under the SIDF Loan Agreement, SIDF has committed to provide SIDF Loans to Lucid LLC in an aggregate principal amount of up to SAR 5.19 billion (approximately $1.4 billion); provided that SIDF may reduce the availability of SIDF Loans under the facility in certain circumstances. SIDF Loans will be subject to repayment in semi-annual installments in amounts ranging from SAR 25 million (approximately $6.7 million) to SAR 350 million (approximately $93.2 million). SIDF Loans are financing and will be used to finance certain costs in connection with the development and construction of AMP-2. Lucid LLC may repay SIDF Loans earlier than the maturity date without penalty. Obligations under the SIDF Loan Agreement do not extend to us or any of our other subsidiaries. SIDF Loans will not bear interest. Instead, Lucid LLC will be required to pay SIDF service fees, consisting of follow-up and technical evaluation fees, ranging, in aggregate, from SAR 415 million (approximately $110.5 million) to SAR 1.77 billion (approximately $471.1 million), over the term of the SIDF Loans. SIDF Loans will be secured by security interests in the equipment, machines and assets funded thereby. The SIDF Loan Agreement contains certain restrictive financial covenants and imposes annual caps on Lucid LLC’s payment of dividends, distributions of paid-in capital, or certain capital expenditures. The SIDF Loan Agreement also defines customary events of default, including abandonment of or failure to commence operations at the plant in KAEC, and drawdowns under the SIDF Loan Agreement are subject to certain conditions precedent. As of June 30, 2026 and December 31, 2025, no amount was outstanding under the SIDF Loan Agreement. MISA Agreements In February 2022, Lucid LLC entered into agreements with MISA, a related party of the PIF, which is an affiliate of Ayar, pursuant to which MISA has agreed to provide economic support for certain capital expenditures in connection with Lucid LLC’s ongoing design and construction of AMP-2. The support by MISA is subject to Lucid LLC’s completion of certain milestones related to the construction and operation of AMP-2. Following the commencement of construction, if operations at the plant do not commence within 30 months, or if the agreed scope of operations is not attained within 55 months, MISA may suspend availability of subsequent support. Pursuant to the agreements, MISA has the right to require Lucid LLC to transfer the ownership of AMP-2 to MISA, at the fair market value thereof, reduced by an amortized value of the support provided in the event of customary events of default including abandonment or material and chronically low utilization of AMP-2. Alternatively, Lucid LLC is entitled to avoid the transfer of the ownership of AMP-2 by electing to pay such amortized value. The agreements will terminate on the fifteenth anniversary of the commencement of CBU operations at AMP-2 at the latest. During the year ended December 31, 2023, we received support of SAR 366 million (approximately $97.5 million) in cash. As of December 31, 2024, we recorded $97.5 million as a deduction in calculating the carrying amount of the related assets in the consolidated balance sheet. During the year ended December 31, 2025 and three and six months ended June 30, 2026, there were no further deductions to the carrying value of the related assets in the condensed consolidated balance sheets. There were no unfulfilled conditions and contingencies attached to the payments received. GIB Facility Agreement On April 29, 2022, Lucid LLC entered into the GIB Facility Agreement with GIB, maturing on February 28, 2025. GIB is a related party of the PIF, which is an affiliate of Ayar. The GIB Facility Agreement provided for two committed revolving credit facilities in an aggregate principal amount of SAR 1.0 billion (approximately $266.1 million). On March 12, 2023, Lucid LLC entered into the 2023 Amended GIB Facility Agreement to combine the two committed revolving credit facilities into a committed SAR 1.0 billion (approximately $266.1 million) 2023 GIB Credit Facility which may be used for general corporate purposes. Loans under the 2023 Amended GIB Facility Agreement had a maturity of no more than 12 months and bore interest at a rate of 1.40% per annum over SAIBOR (based on the term of borrowing) and associated fees. Under the 2023 Amended GIB Facility Agreement, we were required to pay a quarterly commitment fee of 0.15% per annum based on the unutilized portion of the 2023 GIB Credit Facility. On February 24, 2025, Lucid LLC entered into the 2025 GIB Credit Facility maturing on February 24, 2028 to increase the credit facility committed amount from SAR 1.0 billion (approximately $266.1 million) to SAR 1.9 billion (approximately $505.7 million). Loans under the 2025 GIB Credit Facility may be used for general corporate purposes, have a maturity of no more than 12 months, and bear interest at a rate of 1.40% per annum over SAIBOR (based on the term of borrowing) and associated fees. We are required to pay a quarterly commitment fee of 0.25% per annum based on the unutilized portion of the 2025 GIB Credit Facility. Commitments under the 2025 GIB Credit Facility will terminate, and all amounts then outstanding thereunder would become payable, on the maturity date of the 2025 GIB Credit Facility. The 2025 GIB Credit Facility contains certain conditions precedent to drawdowns, representations and warranties and covenants of Lucid LLC and events of default. 57 As of June 30, 2026 and December 31, 2025, we had outstanding borrowings of SAR 1,890.0 million (approximately $503.1 million) and SAR 1,755.0 million (approximately $468.0 million), respectively. The outstanding borrowings were recorded within current portion of debt in the condensed consolidated balance sheets. The weighted average interest rate on the outstanding borrowings was 6.18% and 6.44% as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026 and December 31, 2025, availability under the GIB credit facility was SAR 8.7 million (approximately $2.3 million) and SAR 143.5 million (approximately $38.3 million), respectively, after giving effect to the outstanding letters of credit. As of June 30, 2026 and December 31, 2025, we were in compliance with applicable covenants under the GIB credit facility. ABL Credit Facility In June 2022, we entered into the ABL Credit Facility with a syndicate of banks that may be used for working capital and general corporate purposes. The ABL Credit Facility provides for an initial aggregate principal commitment amount of up to $1.0 billion (including a $350.0 million letter of credit subfacility and a $100.0 million swingline loan subfacility) and has a stated maturity date of June 9, 2027. Borrowings under the ABL Credit Facility bear interest at the applicable interest rates specified in the credit agreement governing the ABL Credit Facility. In June 2024, we amended the ABL Credit Facility to update the Canadian reference rate. Availability under the ABL Credit Facility is subject to the value of eligible assets in the borrowing base and is reduced by outstanding loan borrowings and issuances of letters of credit which bear customary letter of credit fees. Subject to certain terms and conditions, we may request one or more increases in the amount of credit commitments under the ABL Credit Facility in an aggregate amount up to the sum of $500.0 million plus certain other amounts. We are required to pay a quarterly commitment fee of 0.25% per annum based on the unutilized portion of the ABL Credit Facility. The ABL Credit Facility contains customary covenants that limit our ability and the ability of our restricted subsidiaries to, among other activities, pay dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, dispose of certain assets, consummate acquisitions or other investments, prepay certain debt, engage in transactions with affiliates, engage in sale and leaseback transactions or consummate mergers and other fundamental changes. The ABL Credit Facility also includes a minimum liquidity covenant which, at our option following satisfaction of certain pre-conditions, may be replaced with a springing, minimum fixed charge coverage ratio financial covenant, in each case on terms set forth in the credit agreement governing the ABL Credit Facility. As of June 30, 2026 and December 31, 2025, we were in compliance with applicable covenants under the ABL Credit Facility. As of June 30, 2026 and December 31, 2025, we had no outstanding borrowings under the ABL Credit Facility. Outstanding letters of credit under the ABL Credit Facility were $136.2 million and $104.1 million as of June 30, 2026 and December 31, 2025, respectively. Availability under the ABL Credit Facility was $413.3 million (including $142.9 million cash and cash equivalents) and $596.0 million (including $199.2 million cash and cash equivalents) as of June 30, 2026 and December 31, 2025, respectively, after giving effect to the borrowing base and the outstanding letters of credit. DDTL Credit Facility In August 2024, we entered into the DDTL Credit Facility with Ayar that may be used for working capital and general corporate purposes. The DDTL Credit Facility provides for a delayed draw term loan credit facility in an aggregate principal amount of $750.0 million and has a stated maturity date of August 4, 2029. Borrowings under the DDTL Credit Facility bear interest at the applicable interest rates specified in the credit agreement governing the DDTL Credit Facility. In November 2025, we increased the aggregate principal amount of the DDTL Credit Facility from $750.0 million to $1.98 billion. In April 2026, we borrowed $500.0 million under the DDTL Credit Facility. In April 2026, we also entered into the DDTL Amendment, pursuant to which the aggregate undrawn delayed commitments under the DDTL Credit Facility were increased by $500.0 million, such that, after giving effect to such increase, the aggregate sum of outstanding delayed draw term loans and aggregate undrawn commitments was increased to approximately $2.48 billion. In July 2026, we borrowed an additional $800.0 million under the DDTL Credit Facility. We are required to pay a quarterly undrawn fee of 0.50% per annum based on the unutilized portion of the DDTL Credit Facility. The DDTL Credit Facility contains customary covenants that limit our ability and the ability of our restricted subsidiaries to, among other activities, pay dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, dispose of certain assets, consummate acquisitions or other investments, prepay certain debt, engage in sale and leaseback transactions or consummate mergers and other fundamental changes. The DDTL Credit Facility also included a minimum liquidity covenant, which was eliminated under the DDTL Amendment. The DDTL Amendment also removed the requirement that we fully utilize the borrowing availability under the ABL Credit Facility prior to making borrowings under the DDTL Credit Facility. As of June 30, 2026 and December 31, 2025, we were in compliance with applicable covenants under the DDTL Credit Facility. As of June 30, 2026 and December 31, 2025, we had outstanding borrowings of $500.0 million and nil, respectively, under the DDTL Credit Facility. The outstanding borrowings were recorded within debt, net of current portion in the condensed consolidated balance sheet. The interest rate on the outstanding borrowings was 9.54% as of June 30, 2026. As of June 30, 2026 and December 31, 2025, availability under the DDTL Credit Facility was $1.98 billion. 58 Subscription Agreements and Underwriting Agreements In March 2024, we issued 100,000 shares of our Series A Redeemable Convertible Preferred Stock to Ayar pursuant to the Series A Subscription Agreement and received aggregate net proceeds of $997.6 million after deducting issuance costs. In August 2024, we issued 75,000 shares of our Series B Redeemable Convertible Preferred Stock to Ayar pursuant to the Series B Subscription Agreement and received aggregate net proceeds of $749.4 million after deducting issuance costs. In April 2026, we also issued 55,000 shares of our Series C Redeemable Convertible Preferred Stock to Ayar pursuant to the Series C Subscription Agreement and received aggregate net proceeds of $548.9 million after deducting issuance costs. See Note 7 “Redeemable Convertible Preferred Stock” to the condensed consolidated financial statements included elsewhere in this Quarterly Report, for more information. In October 2024, we completed the public offering pursuant to the 2024 Underwriting Agreement and received net proceeds of $718.4 million and also consummated the private placement of shares to Ayar pursuant to the 2024 Subscription Agreement for net proceeds of $1,025.7 million after deducting issuance costs. See Note 15 “Related Party Transactions” to the condensed consolidated financial statements included elsewhere in this Quarterly Report, for more information. In April 2026, we also completed the public offering pursuant to the 2026 Underwriting Agreement for aggregate net proceeds of $291.5 million. See Note 8 “Stockholder’s Equity” to the condensed consolidated financial statements included elsewhere in this Quarterly Report, for more information. In September 2025, we consummated the private placement of shares to SMB pursuant to the 2025 Subscription Agreement for aggregate net proceeds of $299.7 million after deducting issuance costs. In April 2026, we also consummated the private placement of shares to SMB pursuant to the 2026 Subscription Agreement for aggregate net proceeds of $199.8 million after deducting issuance costs. See Note 8 “Stockholders’ Equity” to the condensed consolidated financial statements included elsewhere in this Quarterly Report, for more information. We have generated significant losses from our operations as reflected in our accumulated deficit of $17.7 billion and $15.6 billion as of June 30, 2026 and December 31, 2025, respectively. Additionally, we have generated significant negative cash flows from operations and investing activities as we continue to support the growth of our business. The expenditures associated with the development and commercial launch of our vehicles, the anticipated increase in manufacturing capacity, and the international expansion of our business operations are subject to significant risks and uncertainties, many of which are beyond our control, and therefore, may affect the timing and magnitude of these anticipated expenditures. These risk and uncertainties are described in more detail in the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report. Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Six Months Ended June 30, 2026 2025 Cash used in operating activities $ (2,407,890) $ (1,258,854) Cash provided by investing activities 592,847 1,308,024 Cash provided by financing activities 1,581,096 141,676 Net increase (decrease) in cash, cash equivalents, and restricted cash $ (233,947) $ 190,846 Cash Used in Operating Activities Our cash flows used in operating activities to date have been primarily comprised of cash outlays to support overall growth of the business, especially the costs related to inventory and sale of our vehicles, costs related to research and development, payroll and other general and administrative activities. As we continue to ramp up after starting commercial operations, we expect our cash used in operating activities to increase before it starts to generate any material cash flows from our business. Net cash used in operating activities increased by $1,149.0 million to $2,407.9 million during the six months ended June 30, 2026, as compared to the same period in the prior year. The increase was primarily due to increases in net operating assets and liabilities of $688.4 million and net loss excluding non-cash expenses and gains of $460.6 million during the six months ended June 30, 2026, as compared to the same period in the prior year. The increase in net operating assets and liabilities was primarily attributable to higher inventory purchases driven by the Lucid Gravity production ramp-up. 59 Cash Provided by Investing Activities Our cash flows provided by investing activities primarily relate to proceeds from sales and maturities of investments, net of purchases of investments and capital expenditures to support our growth. Net cash provided by investing activities decreased by $715.2 million to $592.8 million during the six months ended June 30, 2026, as compared to the same period in the prior year. The decrease was primarily attributable to lower volume of investment sales and maturities compared to investment purchases during the six months ended June 30, 2026, as compared to the same period in the prior year. Cash Provided by Financing Activities We have financed our operations primarily from the issuances of equity and equity-linked securities and debt financings, the private placements to Ayar and SMB, convertible preferred stock, the proceeds of the Merger, the 2026 Notes, the 2030 Notes, and the 2031 Notes. Net cash provided by financing activities increased by $1,439.4 million to $1,581.1 million during the six months ended June 30, 2026, as compared to the same period in the prior year. We received net proceeds of $549.3 million from the issuance of Series C Redeemable Convertible Preferred Stock, $500.0 million from borrowings from the DDTL Credit Facility, $291.9 million from issuance of common stock under 2026 Underwriting Agreement and $200.0 million from issuance of common stock under 2026 Subscription Agreement during the six months ended June 30, 2026. We received net proceeds of $1.1 billion from the issuance of the 2030 Notes and repurchased a portion of the 2026 Notes using $931.4 million during the six months ended June 30, 2025. Recently Issued Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of specified information about certain costs and expenses (such as purchases of inventory, employee compensation, depreciation, and amortization) within the relevant expense captions presented on the face of the statements of operations and comprehensive loss. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and should be applied either prospectively or retrospectively. We are evaluating the impact of this amendment to the related financial statement disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU removed references to prescriptive and sequential software development stages. The ASU requires us to start capitalizing eligible software costs when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. The ASU does not change the types of costs eligible for capitalization. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted and may be applied using a prospective, retrospective or modified transition approach. We are evaluating the impact of this amendment to the financial statements. In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The ASU requires us to recognize a government grant when it is probable that we will comply with the conditions attached to the grant and the grant will be received, and we meet the recognition guidance for a grant related to an asset or a grant related to income. The ASU requires a grant related to an asset to be recognized as we incur the related costs for which the grant is intended to compensate, either as deferred income or as an adjustment to the cost basis in determining the carrying amount of the asset. The ASU also requires a grant related to income and a grant related to an asset for which the deferred income approach is elected to be recognized in earnings on a systematic and rational basis. When we elect the cost accumulation approach for a grant related to an asset, there is no separate subsequent recognition of the government grant proceeds in earnings. We are required to continue providing disclosures on the nature of the government grant received, the accounting policies used to account for the grant, and significant terms and conditions of the grant. The guidance is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted, and may be applied using a modified prospective, modified retrospective or retrospective approach. We are evaluating the impact of this amendment to the financial statements. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU provides clarity on the current interim reporting disclosures and introduces a disclosure principle which requires us to disclose events since the end of the last annual reporting period that have a material impact on us. The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and may be applied using a prospective or retrospective approach. We are evaluating the impact of this amendment to the financial statements. 60 In December 2025, the FASB issued ASU 2025-12, Codification Improvements. The ASU represents changes to the Codification that clarify, correct errors, or make minor improvements. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted and we may elect the transition method on an issue-by-issue basis. We are evaluating the impact of this amendment to the financial statements. In April 2026, the FASB issued ASU 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock, which requires that paid-in-kind (“PIK”) dividends on equity-classified preferred stock, including preferred stock that is classified as temporary equity, be initially measured on the basis of the PIK dividend rate stated in the preferred stock agreement. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted and may be applied using a prospective or modified retrospective approach. We are evaluating the impact of this amendment to the financial statements. In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), which establishes recognition, measurement, presentation and disclosure requirements for environmental credits and environmental credit obligations. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted, and should be applied retrospectively. We are evaluating the impact of this amendment to the related financial statement disclosures. We have considered all other recently issued accounting pronouncements and do not believe the adoption of such pronouncements will have a material impact on our financial statements or notes thereto. Critical Accounting Estimates The condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report are prepared in accordance with U.S. GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and related disclosures in our financial statements and accompanying notes. We base our estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions due to the inherent uncertainty involved in making those estimates and any such differences may be material. We believe that the following accounting policies involve a high degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our condensed consolidated financial condition and results of our operations. Revenue Recognition We follow a five-step process in which we identify the contract, identify the related performance obligations, determine the transaction price, allocate the transaction price to the identified performance obligations, and recognize revenue when (or as) the performance obligations are satisfied. Vehicle Sales Vehicle sales revenue is generated from the sale of EVs to customers. The performance obligations identified in vehicle sale arrangements include delivery of the vehicle equipped with an onboard ADAS, the provision of maintenance services, the remarketing activities, and the right to unspecified OTA software updates as they become available over the term of the basic vehicle warranty, which is generally four years. Shipping and handling provided by us is considered a fulfillment activity. Payment is typically received at the time of delivery or shortly after delivery of the vehicle to the customer, except for vehicle sales under the EV Purchase Agreement. Generally, control transfers to the customer at the time of delivery when the customer takes physical possession of the vehicle, which may be at a Lucid studio or other destination chosen by the customer. Our vehicle contracts do not contain a significant financing component. We have elected to exclude sales taxes from the measurement of the transaction price. We estimate the standalone selling price of all performance obligations by considering costs used to develop and deliver the good or service, third-party pricing of similar goods or services and other information that may be available. The transaction price is allocated among the performance obligations in proportion to the standalone selling price of our performance obligations. 61 We recognize revenue related to the vehicle when the customer obtains control of the vehicle which occurs at a point in time either upon completion of delivery to the agreed-upon delivery location or upon pick up of the vehicle by the customer. As the unspecified OTA software updates are provided when-and-if they become available, revenue related to OTA software updates is recognized ratably over the basic vehicle warranty term, commencing when control of the vehicle is transferred to the customer. Payments received before the customer obtains control of the vehicle are recorded within other current liabilities in the condensed consolidated balance sheets. At the time of revenue recognition, we reduce the transaction price and record a sales return reserve against revenue for estimated variable consideration related to future returns. Such return rate estimates are based on historical experience. We provide a manufacturer’s warranty on all vehicles sold. The warranty covers the rectification of reported defects via repair, replacement, or adjustment of faulty parts or components. The warranty does not cover any item where failure is due to normal wear and tear. This assurance-type warranty does not create a performance obligation separate from the vehicle. The estimated cost of the assurance-type warranty is accrued at the time of vehicle sale. We provide a residual value guarantee to our commercial banking partners in connection with their vehicle leasing programs. Under the vehicle leasing program, we do not bear casualty and credit risks during the lease term, and are contractually obligated (or entitled) to share a portion of the shortfall (or excess) between the resale value realized by the commercial banking partners and a predetermined resale value. At the lease inception, we are required to deposit cash collateral equal to a contractual percentage of the residual value of the leased vehicles with the commercial banking partners. The cash collateral is held in a restricted bank account owned by the commercial banking partner until it is used, as applicable, in settlement of the RVG at the end of the lease term. Cash collateral is recorded in other noncurrent assets, subject to an asset impairment review at each reporting period. We account for the vehicle leasing program in accordance with ASC 842, Leases, ASC 460, Guarantees and ASC 606, Revenue from Contracts with Customers. We are the lessor at inception of a lease and immediately transfer the lease as well as the underlying vehicle to our commercial banking partners, with the transaction being accounted for as a sale under ASC 606. We recognize revenue when control transfers upon delivery when the consumer-lessee takes physical possession of the vehicle, and bifurcate the RVG at fair value and account for it as a reduction to revenue and a guarantee liability. The remaining amount of the transaction price is allocated among the performance obligations. Any fees or incentives that are paid or payable by us to commercial banking partners are recognized as a reduction to vehicle sales revenue. The guarantee liability represents the estimated amount we expect to pay at the end of the lease term. We are released from residual risk upon either expiration or settlement of the RVG. We evaluate variables such as third-party residual value publications, risk of future price deterioration due to changes in market conditions and reconditioning costs to determine the estimated residual value guarantee liability. RVG liability is assessed subsequently for any changes on a quarterly basis. As we accumulate more data related to the resale value of our vehicles or as market conditions change, there could be material changes to the estimated guarantee liabilities. The maximum potential amount of future payments (in excess of RVG liabilities recorded) that we could be required to make was $724.5 million and $705.9 million as of June 30, 2026 and December 31, 2025, respectively. Vehicle Operating Lease Revenue We account for sales of vehicles with repurchase obligations as operating leases. We sell vehicles primarily to rental companies with an obligation to repurchase the vehicles at an agreed-upon repurchase price. We record the difference between the proceeds received and the agreed-upon repurchase price as vehicle leasing revenue on a straight-line basis over the term of the lease. Deferred leasing revenue and repurchase obligation were recorded in other current liabilities and other long-term liabilities in the condensed consolidated balance sheets. Sale and Leaseback Transactions We enter into sale and leaseback transactions in which we transfer control of vehicles to rental companies and simultaneously lease them back as operating leases. We recognize revenue related to the vehicles under the arrangement when the rental companies obtain control of the vehicles and separately recognize the leaseback obligations based on the present value of the future payments to the rental companies within other current liabilities and other long-term liabilities. We also record right-of-use assets which are amortized over the term of the leaseback. Operating lease expense is recognized on a straight-line basis over the term of the leaseback. Inventory Valuation Inventories are stated at the lower of cost or net realizable value. Cost is computed using standard cost for vehicles, which approximates actual cost on a first-in, first-out basis. We record inventory write-downs for excess or obsolete inventories based upon assumptions about current and future demand forecasts. If inventory on-hand is in excess of future demand forecast and market conditions, the excess amounts are written-off. 62 Inventory is also reviewed to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory. This requires an assessment to determine the selling price of the vehicles less the estimated cost to convert the inventory on-hand into a finished product. Once inventory is written down, a new lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. In the event there are changes in our estimates of future selling prices or production costs, we might be required to record additional and potentially material write-downs. A small change in our estimates may result in a material change in our reported financial results. We periodically review and record write-downs for excess or obsolete inventories based upon assumptions about current and future demand forecasts, considering shelf-life and technological obsolescence of certain inventories. Our current and future demand forecasts are based on our historical sales, market share performance, macroeconomic factors and trends in quantities or prices of orders for our products. We evaluate whether raw materials are approaching the end of their shelf-lives or becoming technologically obsolete, and the likelihood that we will be able to use the raw materials in production. If our inventory on-hand is in excess of future demand forecast and market conditions, the excess amounts are provisioned or written-down. Redeemable Convertible Preferred Stock Accounting for the redeemable convertible preferred stock requires an evaluation to determine if liability classification is required under ASC 480-10. Liability classification is required for freestanding financial instruments that are (1) subject to an unconditional obligation requiring the issuer to redeem the instrument by transferring assets, such as those that are mandatorily redeemable, (2) instruments other than equity shares that embody an obligation of the issuer to repurchase its equity shares, or (3) certain types of instruments that obligate the issuer to issue a variable number of equity shares. Securities that do not meet the scoping criteria to be classified as a liability under ASC 480 are subject to redeemable equity guidance, which prescribes securities that may be subject to redemption upon an event not solely within the control of the issuer to be classified as temporary equity. Securities classified in temporary equity are initially measured at the proceeds received, net of issuance costs and excluding the fair value of bifurcated embedded derivatives, and change in fair value of the redeemable convertible preferred stock contract as measured upon settlement based on the difference between the fair value of the redeemable convertible preferred stock at issuance versus the cash purchase price negotiated at fair value at contract inception, if any. Subsequent measurement of the carrying value of the redeemable convertible preferred stock is required as the instrument is probable of becoming redeemable. We accrete the redeemable convertible preferred stock to its redemption value. In certain circumstances, the redemption price may vary based on changes in stock price, in which case we will recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the then current maximum redemption value at the end of each reporting period. Derivative Liabilities In connection with the issuance of the redeemable convertible preferred stock, we evaluated the instruments for any features that must be bifurcated and separately accounted for as embedded derivatives. We concluded that the conversion features, inclusive of all settlement outcomes where the pay-off is indexed to the if-converted value, meets all the requirements to be separately accounted for as a bifurcated derivative. As a result, we bifurcated the redeemable convertible preferred stock between (i) the host contracts which are accounted for within mezzanine equity, and (ii) the bifurcated derivative liabilities. The proceeds from issuance are first allocated to the fair value of the bifurcated derivatives with the residual being allocated to the host contracts. The bifurcated derivatives are remeasured to fair value each reporting period with changes in fair value recorded in earnings. We estimated the fair value of the derivative liabilities using a binomial lattice model. Inherent in a binomial lattice model are unobservable inputs and assumptions. The inputs for the valuation of the derivative liabilities included the volatility, credit spread, and term. Assumptions used in the valuation also consider the contractual terms as well as the quoted price of our common stock in an active market. Significant changes in any of those inputs in isolation would result in significant changes to the fair value measurement. We remeasure the derivative liabilities at each reporting period and recognize the changes in fair value in the condensed consolidated statement of operations and comprehensive loss. 63