How Lucid could beat Tesla to the $25,000 electric car for the masses
- EV startup Lucid wants to make cars for the mass market, but has a ways to go.
- The Dream Edition of its flagship luxury sedan, the Air, starts at $169,000.
- CEO Peter Rawlinson says that’s just for now — and that he’ll soon crack the $25,000 range.
One of the biggest barriers to mass adoption of electric vehicles is cost. EVs might not reach cost parity with gas-powered cars until 2025, McKinsey estimated. So companies like Tesla and nascent industry players like Lucid Motors are racing to make their cars more affordable for the mass market.
Lucid has a ways to go. The Dream Edition of its flagship luxury sedan, the Air, starts at $169,000. But it’s a necessary step in the startup’s goal to build a more affordable EV, CEO Peter Rawlinson said. Unlike legacy automakers working to boost the range of their EVs, Lucid plans to do the opposite: Go from the longest-range vehicle in the world to one with the smallest (and most affordable) battery.
“Lexus did it. Tesla did it,” Rawlinson told Insider this summer. “Great brands have started with a high-end product and gradually made that more accessible.”
Indeed, you can now purchase a standard-range Tesla Model 3 for about $40,000 — a long drop from the Model S, which starts at $88,740. In 2019, Tesla made good on CEO Elon Musk’s long-standing promise to offer a $35,000 version of the Model 3. The car had 220 miles of range and a 5-star safety rating, but Tesla soon pulled it. Shortly thereafter, Musk said it had attracted little customer interest.
Rawlinson wants to follow suit, but he’s pressing to do so faster. The trick is ramping up volume and driving down battery costs. A typical battery costs just over $100 per kilowatt-hour, and the Lucid Air uses a 113-kilowatt-hour battery pack.
BloombergNEF has predicted that prices will drop to about $92 per kWh by 2024, a threshold that would make EVs more cost-competitive.
“Step one of that plan is we use efficiency to create long range. But then the next thing: We turn that on its head,” Rawlinson said. “We can then produce a product like Air Pure,” the company’s base model, set to start at $77,400.
That means dialing back a vehicle’s range to reduce its price. This is key, especially given that range is such a sticking point for consumers — even though packing more range and energy into a battery has long meant a more expensive car.
“We do need to get the cost of the battery pack and battery cells down through mass industrialization through the economy of scale,” Rawlinson said. “Because the battery pack is the most expensive single component in an electric car, it means that we can go for a competitive range — say, at 400 miles in the future — with a smaller pack, which is going to cost us less.”
The next step would be further reducing range — and experts say that given growing charging infrastructure and driving habits, most drivers need only about 250 to 300 miles.
“If I don’t need to have such range in the car — maybe 150 miles is all right,” if fast-chargers are plentiful and plugging in at home is easy, Rawlinson said. “And just imagine if I could get 6 miles for every kilowatt-hour.”
At that rate, a 150-mile-range car would mean a 25-kWh battery, which would be far smaller than anything powering a car today. (Electric motorcycles from Zero and Harley-Davidson use roughly 15-kWh packs.)
“I could buy cells at, say, under $100 a kilowatt-hour, maybe $90,” Rawlinson said. “I could buy the cells for that pack for $2,300. I could build a pack for under $3,000. And then I could have a $25,000 car. That’s the future.”