Feb 22 (Reuters) – (This Feb. 22 story has been corrected to change period to third quarter from second quarter in paragraph 8)

Lucid Group Inc (LCID.O) on Wednesday forecast 2023 production well short of analysts’ expectations and reported a major drop in orders during the fourth quarter amid weakening demand, sending the electric carmaker’s shares down 11% after hours.

The Newark, California-based company, which was already battling supply chain and logistics issues and struggling to deliver cars, was hit by aggressive price cuts sparked by Tesla Inc (TSLA.O) that lured consumers away from its luxury cars amid rising interest rates and soaring inflation.

« There’s a lot more competition than a year ago … a lot more EVs becoming available at lower price points than the Lucid Air vehicle, » said Garrett Nelson, an analyst at CFRA Research. « There’s probably a lot of frustration from customers having to wait for so long to get the vehicles they ordered. »

Lucid said it expects to produce 10,000 to 14,000 luxury electric vehicles this year. Analysts on average expected the company to make 21,815 cars, according to Visible Alpha.

The company, backed by Saudi Arabia’s sovereign wealth fund, Public Investment Fund, delivered 4,369 cars last year, far below the 7,180 units it produced.

« We’ve gotten past the major bottlenecks limiting manufacturing, but this had some impact on the demand we generated early on, and this has been exacerbated by the challenging macroeconomic environment, » Lucid CEO Peter Rawlinson said on a call with analysts, after the company reported fourth-quarter revenue that missed expectations.

Price cuts by Tesla and Ford Motor Co (F.N) have made it harder for rivals such as Rivian Automotive Inc (RIVN.O) and Lucid to grab share in an industry competing for shrinking consumer wallets.

Lucid said it had more than 28,000 orders as of Feb. 21, down 6,000 reservations from the third quarter, after it delivered about 1,900 vehicles and saw cancellations. That was despite Lucid’s offering a discount of $7,500 on Feb. 9 for purchases of certain variants of the Air sedan before March 31.

Finance chief Sherry House said Lucid would not publish quarterly reservation numbers going ahead.

This year, the company will focus on improving production and deliveries, and will take a « vigorous and comprehensive » look at driving down operating and manufacturing costs.

House said Lucid would incur capital expenditures of between $1.5 billion and $1.75 billion in 2023. That’s a 40% jump from 2022, but well below analysts’ expectations of $2.24 billion.

Lucid reported a cash balance of $1.74 billion in the fourth quarter, after raising $1.52 billion in December. At the end of the third quarter, it had $1.26 billion in cash reserves.

Revenue rose to $257.7 million in the quarter ended Dec. 31 from $26.4 million a year earlier. Analysts on average had expected sales of $302.6 million, according to IBES data from Refinitiv.

The company’s net loss narrowed to $472.6 million, or 28 cents per share, from a loss of $1.05 billion, or 64 cents per share, a year earlier.

Shares of Lucid fell as much 10.6% in extended trading. The stock fell 82% last year after Lucid halved its production forecast due to supply chain issues.

Reporting by Akash Sriram in Bengaluru and Abhirup Roy in San Francisco; Editing by Shinjini Ganguli, David Gregorio, Lincoln Feast and Leslie Adler

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