Lucid is preparing a midsize electric SUV that will not only expand its lineup beyond the Air sedan but also exploit a manufacturing quirk that shields it from some of the steepest tariffs in the global EV trade war. By anchoring production in Saudi Arabia rather than China, the company is turning a geopolitical constraint into a pricing and margin advantage that rivals cannot easily copy.
That strategy gives Lucid a rare opening in the crowded crossover segment, where cost discipline and supply chain resilience increasingly matter as much as range or acceleration. If it works, the midsize SUV could become the brand’s volume linchpin and a case study in how EV makers navigate a world of fragmented trade blocs and politicized industrial policy.
Lucid’s midsize SUV and the stakes of a tariff-heavy EV market
Lucid’s upcoming midsize SUV is designed to hit the heart of the global EV market, where family-sized crossovers have become the default choice for buyers who want electric practicality without luxury-sedan footprints. I see this vehicle as Lucid’s attempt to move from niche flagship maker to a more mainstream premium player, using a smaller footprint and presumably lower price point to reach customers who admire the Air but cannot justify its cost or size. The company is positioning the SUV as a core product rather than a side project, which makes the economics of how and where it is built central to Lucid’s future.
Those economics are shaped by a tariff environment that has turned EV sourcing into a high-stakes chessboard. The United States has layered significant duties on vehicles and components tied to China, and other regions are tightening their own rules of origin, which can quickly erase the cost benefits of low-cost manufacturing hubs. In that context, the decision to build the midsize SUV at Lucid’s upcoming plant in Saudi Arabia is not just a geographic footnote, it is the foundation of a strategy to avoid the “significant duty” that would apply if the same vehicle were shipped from China into the U.S. or other sensitive markets, a point the company has underscored in its public comments about tariffs and production planning.
How Saudi production creates a unique tariff edge
Lucid’s choice of Saudi Arabia as the production base for its midsize SUV gives the model a structural advantage in a world where Chinese-built EVs face escalating trade barriers. By routing manufacturing through its Saudi facility instead of China, the company can classify exports in a way that sidesteps the most punitive U.S. tariffs that specifically target Chinese origin. That is the core of the “unique tariff edge” for this SUV: the same hardware, built in a different country, can arrive in key markets without triggering the extra costs that weigh on many competitors’ balance sheets.
The company has been explicit that the midsize electric SUV will be made at Lucid’s upcoming plant in Saudi Arabia, a location that, as one analysis put it, “ironically would protect it from heavy tariffs” that apply to Chinese-built vehicles, a dynamic that has become central to how Lucid frames the economics of the program in Dec coverage of its Saudi strategy. In practical terms, that means the SUV can be priced more aggressively or deliver better margins than a comparable model that must absorb tariff costs, giving Lucid room to compete on both sticker price and profitability in markets where trade policy has become a hidden tax on EV adoption.
Saudi Arabia’s plant as Lucid’s second industrial pillar
Lucid’s Saudi facility is not a symbolic outpost, it is emerging as a second industrial pillar alongside its U.S. operations. The company has already reached a milestone of “Lucid Reaches 1,000 EVs Assembled at Saudi Plant Since September 2023 Start”, a figure that signals the site is already moving beyond pilot runs into meaningful output. That production base gives Lucid a platform to localize more of its supply chain in the region over time, which can further strengthen its tariff position and reduce logistics costs for markets closer to the Middle East, Europe, and parts of Asia.
For the midsize SUV specifically, the Saudi plant’s ramp-up means Lucid can plan volumes with a clearer sense of capacity and learning-curve savings. The early batches of 1,000 vehicles assembled since the Saudi Plant Since September Start have helped the company refine processes, train local workforces, and validate quality standards that will be critical once a higher-volume SUV enters the mix. In my view, that experience reduces execution risk when Lucid shifts from building mostly Air sedans to a more complex mix that includes the new midsize model, and it gives the company a stronger story to tell both investors and Saudi stakeholders about the plant’s strategic value.
The CFO’s tariff playbook and the China factor
Lucid’s tariff strategy is not an accident of geography, it is a deliberate playbook articulated by its finance leadership. The company’s Chief Financial Officer has framed Saudi production as a way to “bypass” the U.S. tariffs that would apply if the midsize EV were sourced from China, highlighting that shipping from the Saudi plant allows Lucid to avoid having to “incur the significant duty” that has become a drag on many rivals’ economics. I read that as a clear signal that tariff arbitrage is now a core design parameter for Lucid’s manufacturing footprint, on par with labor costs or supplier proximity.
That stance is reinforced by comments from the CFO, Taoufiq Boussaid, who has been identified as the executive explaining how Lucid Motors will manufacture its midsize EV in Saudi rather than China in order to sidestep U.S. tariffs that specifically target Chinese-made vehicles, a strategy that has been detailed in reporting on how the Luxury EV maker Lucid Motors sidesteps US tariffs at Saudi plant. By elevating tariff avoidance to a board-level talking point, Lucid is acknowledging that the China factor is no longer just about supply chain resilience or political optics, it is a direct line item in the cost structure of every vehicle it sells into the U.S. and other markets that have hardened their stance on Chinese industrial policy.
Why this tariff edge matters in the midsize SUV segment
The midsize SUV segment is brutally competitive, with models like the Tesla Model Y, Hyundai Ioniq 5, Kia EV6, and Ford Mustang Mach-E all fighting for the same buyers. In that environment, a few thousand dollars of tariff-driven cost can be the difference between a profitable sale and a loss-making one, especially as incentives fluctuate and consumers become more price sensitive. Lucid’s ability to avoid the heaviest U.S. tariffs by building in Saudi Arabia gives it a lever that many rivals, particularly those relying on Chinese plants, simply do not have.
That advantage could show up in several ways. Lucid can choose to pass some of the savings through to customers in the form of lower prices or richer standard equipment, making the midsize SUV more compelling against established players. Alternatively, it can bank the tariff savings to shore up margins and fund further product development, which is critical for a company that is still scaling and has to prove it can generate sustainable cash flow. Either way, the tariff edge is not an abstract policy win, it is a concrete tool that can shape how aggressively Lucid positions the SUV in showrooms and how much financial runway it has to iterate on the product over time.
Saudi backing, industrial policy, and Lucid’s long game
Lucid’s Saudi strategy is intertwined with the kingdom’s broader push to diversify its economy and build a domestic EV ecosystem. By committing to manufacture its midsize SUV in Saudi Arabia, the company is aligning itself with a host government that has both the capital and the political will to support large-scale industrial projects. That backing can translate into incentives, infrastructure, and patient investment that soften the upfront costs of building a new plant and help Lucid weather the inevitable volatility of the EV market.
From my perspective, this alignment also gives Lucid a geopolitical buffer. As trade tensions between the U.S. and China intensify, Saudi Arabia offers a relatively neutral production base that is not the primary target of Western tariff regimes. That does not make Lucid immune to future policy shifts, but it does diversify its risk away from a single contested geography. In the long game, that could prove as important as any single model launch, because it positions Lucid Motors as a global Luxury EV manufacturer that can flex production between the U.S. and Saudi depending on where demand and policy winds are blowing.
Risks and limits of the Saudi tariff strategy
For all its advantages, Lucid’s Saudi-centric tariff strategy carries real risks and constraints. Building a complex EV in a relatively new manufacturing hub requires deep investment in workforce training, supplier development, and logistics, all of which can erode some of the cost savings that come from avoiding tariffs. There is also the challenge of shipping finished vehicles from Saudi Arabia to core markets like North America and Europe, which adds transport time and cost that domestic competitors do not face.
On top of that, trade policy is a moving target. The same governments that crafted tariffs aimed at Chinese EVs could, in theory, tighten rules of origin or adjust trade agreements in ways that blunt the advantage of Saudi production. Lucid is betting that its current configuration, with the midsize SUV built in Saudi Arabia to avoid the most punitive duties, will remain favorable long enough to recoup its investment and establish the model in the market. That is a rational bet given today’s rules, but it is not a guarantee, and investors will need to watch how quickly Lucid can scale volumes and lock in customer loyalty before the policy landscape shifts again.
What Lucid’s move signals for the wider EV industry
I see Lucid’s midsize SUV strategy as an early signal of how the next phase of the EV industry will be shaped as much by trade maps as by battery chemistry. By using Saudi Arabia as a tariff-safe manufacturing base, the company is effectively treating industrial policy as a design constraint, just like range targets or crash standards. That mindset is likely to spread as other automakers confront the same reality that Lucid’s CFO, Taoufiq Boussaid, has articulated: where you build an EV can be as important as how you build it when it comes to final cost.
If Lucid’s approach pays off, it could encourage more EV makers to explore production in countries that sit outside the main tariff crossfire, especially for models aimed at sensitive markets like the U.S. and Europe. It may also push policymakers to refine their rules to distinguish between genuine local value creation and what some might see as tariff arbitrage. For now, though, Lucid’s midsize SUV enjoys a rare structural edge, one rooted not in a breakthrough technology but in a shrewd reading of the global trade landscape and a willingness to build where the tariff math works in its favor.
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