Lucid cuts U.S. prices, joining Rivian and Tesla as EV startups face easing demand

Lucid Motors said it's cutting the U.S. price of its base Air sedan by $7,500 and adding new incentives, including a $1,000 credit for the purchase of a home charger and free scheduled maintenance for two years.

Lucid's move to spur demand comes after Rivian Automotive cut the base price of its vehicles by $3,100 last week, and Tesla Inc. announced a $1,000 discount this week on some Model Y trims through the end of February.

"With an expanded ownership experience, Lucid is directly addressing the reasons people most commonly cite as barriers to purchasing or leasing electric vehicles: price and ease of ownership," the company said Thursday.

An oversupply of battery-electric vehicles and a price war started by Tesla 13 months ago have pressured prices across the full-EV segment, analysts say.

Cox Automotive reported Tuesday that Tesla's average transaction price was down 20 percent in January compared with the year-earlier month and EV transaction prices were down 11 percent across the industry.

"Higher inventory and slowing sales have pushed automakers and dealers to layer on the discounts in an effort to spur sales," Cox said in its Feb. 12 report on new-vehicle transaction prices.

Lucid's entry-level Air Pure trim with rear-wheel drive now starts at $71,400 with shipping, Lucid said. The Touring trim with all-wheel drive gets an $8,000 reduction to $79,400 with shipping. And the Air Grand Touring with 819 hp gets a $1,000 price cut to $111,400 with shipping, the automaker said.

The Air is not eligible for the $7,500 federal tax incentive because sedans have a price cap of $55,000 under the IRS rules for consumer sales. There is an exception for leasing, however, allowing Lucid to pass on the $7,500 to buyers as part of a lease agreement.

Lucid plans to launch its second vehicle, the Gravity crossover, later this year with a starting price below $80,000 before shipping. Lucid CEO Peter Rawlinson said in November that the Gravity will significantly expand the brand's market potential since crossovers are more popular in the U.S. than sedans.

In December, Lucid reworked trim levels for the Air to reduce base prices by making some standard content optional. The new structure also allows buyers more flexibility to choose a lower trim and add premium content rather than being required to move up a trim level for the extra features, Lucid said.

According to the most recent data from S&P Global, the Air had 675 U.S. registrations in December, a 33 percent gain compared with the year-earlier month. For the 2023 calendar year, the Air had 6,254 registrations for an 87 percent increase over 2022. Nonetheless, Lucid's 2023 results fell below the automaker's own forecast.

Lucid, Rivian and Tesla are all direct-to-consumer brands, making their price adjustments more obvious than automakers that use dealer incentives to spur demand.

Cox Automotive said in its report this week that incentives have risen more than threefold in the last year for some popular EV models.

For example, Cox cited incentives on the Volkswagen ID4 crossover that rose from about 6 percent of its average transaction price in January 2023 to nearly 17 percent last month, and incentives on the Hyundai Ioniq 5 crossover that rose from about 3 percent of its average transaction price to 18 percent in the same period.

"First and foremost, the overall narrative is unchanged — EV prices have come down significantly in the U.S. in the past year, led by price cuts at Tesla," said Mark Strand, senior director of business intelligence at Cox Automotive.

The average transaction price for the Tesla Model Y crossover, the bestselling EV in the U.S., fell to less than $50,000 last month from about $63,000 in January 2023, Cox said.

Rivian resisted price reductions last year, citing a healthy order backlog and the value proposition of its R1T pickup and R1S crossover. But it pushed down the prices of base models by $3,100 last week.

The R1T with dual motors and the standard battery now starts at $71,700 with shipping, and the R1S in the same configuration starts at $76,700. Rivian said the models qualify for a $3,750 federal tax incentive, half the maximum. Rivian launched vehicle leasing in November, allowing it to pass on the full $7,500 incentive.

"We're leveraging our product portfolio to offer something new to customers who want to make the transition to electric today," Rivian said in a press release announcing the price cuts. "This opens Rivian ownership up to more and more people, which is vital to our mission."