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LCID Lucid

Filed: 13 Jun 21, 8:00pm
As filed with the Securities and Exchange Commission on June 11, 2021
Registration No. 333-254543
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CHURCHILL CAPITAL CORP IV
(Exact name of registrant as specified in its charter)
Delaware677085-0891392
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
640 Fifth Avenue, 12th Floor
New York, NY, 10019
Telephone: (212) 380-7500
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Michael Klein
Chief Executive Officer
640 Fifth Avenue, 12th Floor
New York, NY, 10019
Telephone: (212) 380-7500
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Michael J. Aiello
Matthew J. Gilroy
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Tel: (212) 310-8000
Fax: (212) 310-8007
Peter Rawlinson, CEO
Jonathan Butler, General Counsel
Atieva, Inc., d/b/a Lucid Motors
7373 Gateway Blvd.
Newark, CA 94560
Lee Hochbaum
Emily Roberts
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and upon completion of the merger.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:   ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.   ☐
If applicable, place an ☒ in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)   ☐
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)   ☐
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered
Amount
to be
registered(1)
Proposed
maximum
offering price
per unit
Proposed
maximum
aggregate
offering price(2)
Amount of
registration fee(3)(4)
Class A Common Stock, $0.0001 par value per share1,215,000,000$10.00$12,150,000,000.00$1,325,565.00
(1)
Based on the maximum number of shares of Class A common stock, par value $0.0001 per share, of the registrant estimated to be issued in connection with the merger described herein.
(2)
Computed in accordance with Rule 457 of the Securities Act.
(3)
Calculated pursuant to Rule 457 of the Securities Act by calculating the product of (i) the proposed maximum aggregate offering price and (ii) 0.0001091.
(4)
The registrant previously paid the registration fee in connection with a prior filing of this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 
EXPLANATORY NOTE
This proxy statement/prospectus relates to an Agreement and Plan of Merger, dated February 22, 2021 (as it may be amended from time to time, the “Merger Agreement”), by and among Churchill Capital Corp IV, a Delaware corporation (“we,” “us,” “our” or “Churchill”), Air Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Churchill (“Merger Sub”), and Atieva, Inc., d/b/a Lucid Motors, an exempted company incorporated with limited liability under the laws of the Cayman Islands (“Lucid”), a copy of which is attached to this proxy statement/prospectus as Annex A.
Pursuant to the Merger Agreement and in connection therewith, among other things and subject to the terms and conditions contained therein, Merger Sub will merge with and into Lucid, with Lucid surviving such merger as a wholly owned subsidiary of Churchill (the “Merger,” and the transactions contemplated by the Merger Agreement, the Transactions”).
Subject to the terms of the Merger Agreement, the aggregate consideration to be paid to the shareholders of Lucid pursuant to the Merger Agreement will be equal to (a) $11,750,000,000 plus (b) (i) all cash and cash equivalents of Lucid and its subsidiaries less (ii) all indebtedness for borrowed money of Lucid and its subsidiaries, in each case as of two business days prior to the Closing Date (the “Equity Value”). The consideration to Lucid Shareholders will be paid entirely in shares of Churchill’s Class A common stock, par value $0.0001 per share (“Churchill’s Class A common stock”) in an amount equal to $10.00 per share.
Each Lucid Common Share issued and outstanding immediately prior to Closing will be automatically surrendered and exchanged for the right to receive a number of shares of Churchill’s Class A common stock equal to the Exchange Ratio (as defined herein) based on the Equity Value. Assuming a Closing Date of July 23, 2021 and that Lucid will have $325.0 million in net cash as of two business days prior to the Closing Date, among other things, we expect that the Exchange Ratio will be approximately 2.595 shares of Churchill's Class A common stock for each issued and outstanding Lucid Common Share.
This proxy statement/prospectus serves as:

a proxy statement for the special meeting of Churchill, where Churchill stockholders will vote on, among other things, proposals to (i) approve the Merger Agreement and the transactions contemplated thereby, including the Merger, (ii) adopt the proposed second amended and restated certificate of incorporation of Churchill; (iii) approve, on a non-binding basis, certain governance provisions in the second amended and restated certificate of incorporation of Churchill, (iv) approve and adopt the Lucid Group, Inc. 2021 Stock Incentive Plan and the Lucid Group, Inc. 2021 Employee Stock Purchase Plan attached as an appendix thereto, including the authorization of the initial share reserve thereunder, (v) elect nine directors to serve on the Churchill Board for a term ending on the date of the next annual stockholder meeting, (vi) approve the issuance of the Churchill’s Class A common stock in connection with the Transactions pursuant to the applicable provisions of Section 312.03 of the NYSE’s Listed Company Manual; and (vii) approve a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the foregoing proposals; and

a prospectus for the shares of Churchill’s Class A common stock that Lucid’s shareholders will receive as Merger Consideration in the Transactions.
 

The information contained in this document is subject to completion or amendment. A registration statement relating to these securities has been filed with the United States Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
PRELIMINARY — SUBJECT TO COMPLETION, DATED JUNE 11, 2021
CHURCHILL CAPITAL CORP IV
640 Fifth Avenue, 12th Floor
New York, NY 10019
Dear Churchill Capital Corp IV Stockholders,
On behalf of the Churchill board of directors (the “Churchill Board”), we cordially invite you to a special meeting (the “special meeting”) of stockholders of Churchill Capital Corp IV, a Delaware corporation (“Churchill,” “we” or “our”), to be held via live webcast at [•] a.m. Eastern Time, on [•], 2021. The special meeting can be accessed by visiting [•], where you will be able to listen to the meeting live and vote during the meeting. Please note that you will only be able to access the special meeting by means of remote communication.
On February 22, 2021, Churchill entered into an Agreement and Plan of Merger (as the same has been or may be amended, modified, supplemented or waived from time to time, the “Merger Agreement”), by and among Churchill, Air Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Churchill (“Merger Sub”), and Atieva, Inc., d/b/a Lucid Motors, an exempted company incorporated with limited liability under the laws of the Cayman Islands (“Lucid”), a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, which, among other things, provides for the merger of Merger Sub with and into Lucid, with Lucid surviving such merger as a wholly owned subsidiary of Churchill (the “Merger,” and the transactions contemplated by the Merger Agreement, the Transactions”). Following the consummation of the Transactions, Churchill will change its name to Lucid Group, Inc. We refer to the new public entity following the consummation of the Transactions as “Lucid Group.”
Subject to the terms of the Merger Agreement, the aggregate consideration to be paid to the shareholders of Lucid pursuant to the Merger Agreement (the “Merger Consideration”) will be equal to (a) $11,750,000,000 plus (b) (i) all cash and cash equivalents of Lucid and its subsidiaries less (ii) all indebtedness for borrowed money of Lucid and its subsidiaries, in each case as of two business days prior to the Closing Date (as defined below) (the “Equity Value”) and will be paid entirely in shares of Churchill’s Class A common stock, par value $0.0001 per share (“Churchill’s Class A common stock”) in an amount equal to $10.00 per share. Assuming a Closing Date of July 23, 2021 and that Lucid will have $325.0 million in net cash as of two business days prior to the Closing Date, among other things, we expect that the per share Merger Consideration to shareholders of Lucid will be approximately 2.595 shares of Churchill’s Class A common stock in exchange for each issued and outstanding Lucid Common Share (as defined below). See the section entitled “Proposal No. 1 — The Business Combination Proposal — General — Merger Consideration.”
At the special meeting, Churchill stockholders will be asked to consider and vote upon:
(1)
Proposal No. 1 — a proposal to approve the business combination described in the accompanying proxy statement/prospectus, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in the accompanying proxy statement/prospectus — we refer to this proposal as the “business combination proposal”;
(2)
Proposal No. 2 — a proposal to approve and adopt the second amended and restated certificate of incorporation of Churchill in the form attached hereto as Annex B (the “second amended and restated certificate of incorporation”) — we refer to this proposal as the “charter proposal”;
(3)
Proposal No. 3 — a proposal to approve, on a non-binding advisory basis, certain governance provisions in the second amended and restated certificate of incorporation, presented separately in accordance with the United States Securities and Exchange Commission (“SEC”) requirements —  we refer to this proposal as the “governance proposal”;
(4)
Proposal No. 4 — a proposal to approve and adopt the Lucid Group, Inc. 2021 Stock Incentive Plan, including the Lucid Group, Inc. 2021 Employee Stock Purchase Plan attached thereto (the “Incentive Plan”), and the material terms thereof, including the authorization of the initial share reserve thereunder  — we refer to this proposal as the “incentive plan proposal.” A copy of the Incentive Plan is attached to the accompanying proxy statement/prospectus as Annex H;
(5)
Proposal No. 5 — a proposal to elect nine directors to serve on the Churchill Board for a term ending on the date of the next annual stockholder meeting, or until their respective successors are duly elected and qualified — we refer to this proposal as the “director election proposal”;
(6)
Proposal No. 6 — a proposal to approve, for purposes of complying with the applicable provisions of Section 312.03 of the NYSE’s (as defined below) Listed Company Manual, (a) the issuance of

more than 20% of Churchill’s issued and outstanding shares of common stock in connection with the Transactions, including, without limitation, the PIPE Investment (as described below) and the issuance of more than 20% of Churchill’s issued and outstanding shares to a single holder (which may constitute a change of control under the NYSE’s Listed Company Manual) and (b) the issuance of shares of Churchill’s Class A common stock to a Related Party (as defined in Section 312.03 of the NYSE’s Listed Company Manual) in connection with the Transactions — we refer to this proposal as the “NYSE proposal”; and
(7)
Proposal No. 7 — a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal or the NYSE proposal — we refer to this proposal as the “adjournment proposal.”
Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting. Only holders of record of Churchill common stock at the close of business on [•], 2021 are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements thereof.
After careful consideration, the Churchill Board has determined that the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal, the NYSE proposal and the adjournment proposal are fair to and in the best interests of Churchill and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the business combination proposal, “FOR” the charter proposal, “FOR” the governance proposal, “FOR” the incentive plan proposal, “FOR” the director election proposal, “FOR” the NYSE proposal and “FOR” the adjournment proposal, if presented. When you consider the Churchill Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Transactions that are different from, or in addition to, the interests of Churchill stockholders generally. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information. The Churchill Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the Churchill stockholders that they vote in favor of the proposals presented at the special meeting.
Consummation of the Transactions is conditioned on the approval of each of the business combination proposal, the charter proposal, the incentive plan proposal and the NYSE proposal. If any of those proposals are not approved, we will not consummate the Transactions.
To raise additional proceeds to fund the Transactions, Churchill has entered into subscription agreements with certain investment funds (the “PIPE Investors”) (containing commitments to funding that are subject only to conditions that are generally aligned with the conditions set forth in the Merger Agreement), pursuant to which Churchill has agreed to issue and sell to the PIPE Investors $2.5 billion of Churchill’s Class A common stock at a purchase price of $15.00 per share, which we refer to as the “PIPE Investment”.
All Churchill stockholders are cordially invited to attend the special meeting and we are providing the accompanying proxy statement/prospectus and proxy card in connection with the solicitation of proxies to be voted at the special meeting (or any adjournment or postponement thereof). To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote, obtain a proxy from your broker or bank.
Churchill’s units, Class A common stock and warrants are currently listed on the New York Stock Exchange (the “NYSE”) under the symbols CCIV.U, CCIV and CCIV WS, respectively. In connection with the Transactions, Churchill has applied to have Churchill's Class A common stock and warrants listed on The Nasdaq Stock Market LLC (“Nasdaq”), and it will change its name to Lucid Group, Inc. Upon the closing of the Transactions, we expect that Churchill’s Class A common stock and warrants will begin trading on Nasdaq under the symbols “LCID” and “LCID.WS” respectively. As a result, Churchill’s publicly traded units will separate into the component securities upon consummation of the business combination and will no longer trade as a separate security.
Pursuant to Churchill’s current certificate of incorporation, a holder of public shares may demand that Churchill redeem such shares for cash if the business combination is consummated. Holders of public shares will be entitled to receive cash for these shares only if they demand that Churchill redeem their shares for cash no later than the second business day prior to the vote on the business combination proposal by delivering their stock to Churchill’s transfer agent prior to the vote at the meeting. If the business combination is not completed, these shares will not be redeemed. If a holder of public shares properly demands redemption,

Churchill will redeem each public share for a full pro rata portion of the trust account holding the proceeds from Churchill’s initial public offering, calculated as of two business days prior to the consummation of the business combination.
Churchill is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and has elected to comply with certain reduced public company reporting requirements.
Churchill will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the Churchill IPO, (b) in which Churchill has total annual gross revenue of at least $1.07 billion, or (c) in which Churchill is deemed to be a large accelerated filer, which means the market value of Churchill’s common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which Churchill has issued more than $1.00 billion in non-convertible debt during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
This proxy statement/prospectus provides you with detailed information about the Transactions and other matters to be considered at the special meeting of Churchill’s stockholders. We encourage you to carefully read this entire document, including the Annexes attached hereto. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 58.
Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
The Transactions described in the accompanying proxy statement/prospectus have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the merits or fairness of the business combination or related Transactions, or passed upon the accuracy or adequacy of the disclosure in this proxy statement/prospectus. Any representation to the contrary is a criminal offense.
Thank you for your participation. We look forward to your continued support.
By Order of the Board of Directors
Michael Klein
Chairman of the Board of Directors
[•], 2021
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST ELECT TO HAVE CHURCHILL REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CHURCHILL’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT AND WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. PLEASE SEE THE SECTION ENTITLED “SPECIAL MEETING OF CHURCHILL STOCKHOLDERS —  REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.
This proxy statement/prospectus is dated [•], 2021 and is first being mailed to Churchill stockholders on or about [•], 2021.

 
ADDITIONAL INFORMATION
No person is authorized to give any information or to make any representation with respect to the matters that this proxy statement/prospectus describes other than those contained in this proxy statement/prospectus, and, if given or made, the information or representation must not be relied upon as having been authorized by Churchill or Lucid. This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy securities or a solicitation of a proxy in any jurisdiction where, or to any person to whom, it is unlawful to make such an offer or a solicitation. Neither the delivery of this proxy statement/prospectus nor any distribution of securities made under this proxy statement/prospectus will, under any circumstances, create an implication that there has been no change in the affairs of Churchill or Lucid since the date of this proxy statement/prospectus or that any information contained herein is correct as of any time subsequent to such date.
 

 
CHURCHILL CAPITAL CORP IV
640 Fifth Avenue, 12th Floor
New York, NY 10019
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [•], 2021
TO THE STOCKHOLDERS OF CHURCHILL CAPITAL CORP IV
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Churchill Capital Corp IV, a Delaware corporation (“Churchill,” “we” or “our”), will be held via live webcast at [•] a.m. Eastern Time, on [•], 2021. The special meeting can be accessed by visiting [•], where you will be able to listen to the meeting live and vote during the meeting. Please note that you will only be able to access the special meeting by means of remote communication.
On behalf of Churchill’s board of directors (the “Churchill Board”), you are cordially invited to attend the special meeting, to conduct the following business items:
(1)
Proposal No. 1 — To consider and vote upon a proposal to approve the business combination described in the accompanying proxy statement/prospectus, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in the accompanying proxy statement/prospectus — we refer to this proposal as the “business combination proposal”;
(2)
Proposal No. 2 — To consider and vote upon a proposal to approve and adopt the second amended and restated certificate of incorporation of Churchill in the form attached hereto as Annex B (the “second amended and restated certificate of incorporation”) — we refer to this proposal as the “charter proposal”;
(3)
Proposal No. 3 — To consider and vote upon, on a non-binding advisory basis, certain governance provisions in the second amended and restated certificate of incorporation, presented separately in accordance with the United States Securities and Exchange Commission (“SEC”) requirements — we refer to this proposal as the “governance proposal”;
(4)
Proposal No. 4 — a proposal to approve and adopt the Lucid Group, Inc. 2021 Stock Incentive Plan, including the Lucid Group, Inc. 2021 Employee Stock Purchase Plan attached thereto (the “Incentive Plan”), and the material terms thereof, including the authorization of the initial share reserve thereunder — we refer to this proposal as the “incentive plan proposal.” A copy of the Incentive Plan is attached to the accompanying proxy statement/prospectus as Annex H;
(5)
Proposal No. 5 — To consider and vote upon a proposal to elect nine directors to serve on the Churchill Board for a term ending on the date of the next annual stockholder meeting, or until their respective successors are duly elected and qualified — we refer to this proposal as the “director election proposal”;
(6)
Proposal No. 6 — To consider and vote upon a proposal to approve, for purposes of complying with the applicable provisions of Section 312.03 of the NYSE’s Listed Company Manual, (a) the issuance of more than 20% of Churchill’s issued and outstanding shares of common stock in connection with the Transactions, including, without limitation, the PIPE Investment (as described below) and the issuance of more than 20% of Churchill’s issued and outstanding shares to a single holder (which may constitute a change of control under the NYSE’s Listed Company Manual) and (b) the issuance of shares of Churchill’s Class A common stock to a Related Party (as defined in Section 312.03 of the NYSE’s Listed Company Manual) in connection with the Transactions — we refer to this proposal as the “NYSE proposal”; and
(7)
Proposal No. 7 — To consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business
 

 
combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal or the NYSE proposal - we refer to this proposal as the “adjournment proposal.”
Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting. Only holders of record of Churchill common stock at the close of business on [•], 2021 are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements thereof.
After careful consideration, the Churchill Board has determined that the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal, the NYSE proposal and the adjournment proposal are fair to and in the best interests of Churchill and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the business combination proposal, “FOR” the charter proposal, “FOR” the governance proposal, “FOR” the incentive plan proposal, “FOR” the director election proposal, “FOR” the NYSE proposal and “FOR” the adjournment proposal, if presented. When you consider the Churchill Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Transactions that are different from, or in addition to, the interests of Churchill stockholders generally. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information. The Churchill Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the Churchill stockholders that they vote in favor of the proposals presented at the special meeting.
Consummation of the Transactions is conditioned on the approval of each of the business combination proposal, the charter proposal, the incentive plan proposal and the NYSE proposal. If any of those proposals are not approved, we will not consummate the Transactions.
To raise additional proceeds to fund the Transactions, Churchill has entered into subscription agreements with certain investment funds (the “PIPE Investors”) (containing commitments to funding that are subject only to conditions that are generally aligned with the conditions set forth in the Merger Agreement), pursuant to which Churchill has agreed to issue and sell to the PIPE Investors $2.5 billion of Churchill’s Class A common stock at a purchase price of $15.00 per share, which we refer to as the “PIPE Investment.
Pursuant to Churchill’s current certificate of incorporation, a holder of public shares may demand that Churchill redeem such shares for cash if the business combination is consummated. Holders of public shares will be entitled to receive cash for these shares only if they demand that Churchill redeem their shares for cash no later than the second business day prior to the vote on the business combination proposal by delivering their stock to Churchill’s transfer agent prior to the vote at the meeting. If the business combination is not completed, these shares will not be redeemed. If a holder of public shares properly demands redemption, Churchill will redeem each public share for a full pro rata portion of the trust account, calculated as of two business days prior to the consummation of the business combination.
All Churchill stockholders are cordially invited to attend the special meeting and we are providing the accompanying proxy statement/prospectus and proxy card in connection with the solicitation of proxies to be voted at the special meeting (or any adjournment or postponement thereof). To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote, obtain a proxy from your broker or bank.
Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
 

 
Thank you for your participation. We look forward to your continued support.
By Order of the Board of Directors
Michael Klein
Chairman of the Board of Directors
[•], 2021
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST ELECT TO HAVE CHURCHILL REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CHURCHILL’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT AND WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. PLEASE SEE THE SECTION ENTITLED “SPECIAL MEETING OF CHURCHILL STOCKHOLDERS —  REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.
 

 
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FREQUENTLY USED TERMS
Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, references to:
2009 Plan” are to the Atieva, Inc. 2009 Share Plan duly adopted by the board of directors of Lucid on December 17, 2009;
2014 Plan” are to the Atieva, Inc. 2014 Share Plan duly adopted by the board of directors of Lucid on May 14, 2014;
2021 Plan” are to the Atieva, Inc. 2021 Stock Incentive Plan duly adopted by the Compensation Committee of the board of directors of Lucid on January 13, 2021 and approved by Lucid’s shareholders on January 21, 2021;
amended and restated bylaws” are to the form of amended and restated bylaws of Lucid Group, Inc., attached as Annex C;
Assumed Warrants” are to warrants of Lucid that are issued and outstanding immediately prior to the Effective Time and not exercised or terminated pursuant to its terms at or immediately prior to the Effective Time, by virtue of the Merger and without any action on the part of any party or the holders thereof, which are assumed by Churchill and to be converted into warrants to acquire Churchill’s Class A common stock;
Available Closing SPAC Cash” are to (x) all amounts in the trust account (after reduction for the aggregate amount of payments required to be made in connection with any valid stockholder redemptions), plus (y) the aggregate amount of cash that has been funded to and remains with Churchill pursuant to the PIPE Subscription Agreements as of immediately prior to the Closing;
Ayar” are to Ayar Third Investment Company, an affiliate of PIF;
Churchill” are to Churchill Capital Corp IV, a Delaware Corporation;
Churchill IPO” are to the initial public offering by Churchill which closed on August 3, 2020;
Churchill’s Class A common stock” are, prior to consummation of the Transactions, to Churchill’s Class A common stock, par value $0.0001 per share and, following consummation of the Transactions, to the Class A common stock, par value $0.0001 per share of Lucid Group;
Churchill’s Class B common stock” are to Churchill’s Class B common stock, par value $0.0001 per share;
CICA” are to the Companies Act (as amended) of the Cayman Islands;
Closing” are to the consummation of the Transactions;
Closing Date” are to the date on which the Transactions are consummated;
common stock” are to Churchill’s Class A common stock and Churchill’s Class B common stock;
Company Share Plans” are to the 2009 Plan, the 2014 Plan, the 2021 Plan, in each case as amended from time to time in accordance with their terms, and any other share incentive plan or similar equity-based compensation plan maintained for employees of Lucid or its subsidiaries that may be adopted from time to time;
completion window” are to the period following the completion of Churchill’s IPO at the end of which, if Churchill has not completed an initial business combination, it will redeem 100% of the public shares at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and certain conditions. The completion window ends on August 3, 2022 (or November 3, 2022 if Churchill has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination by August 3, 2022);
 
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current bylaws” are to Churchill’s bylaws in effect as of the date of this proxy statement/ prospectus;
current certificate of incorporation” are to Churchill’s amended and restated certificate of incorporation in effect as of the date of this proxy statement/prospectus;
DGCL” are to the Delaware General Corporation Law, as amended;
Earnback Period” are to the time period between the Closing and the five-year anniversary of the Closing;
“Earnback Triggering Event I” are to the earliest of the following during the Earnback Period: (i) the date on which the volume-weighted average trading sale price of one share of Lucid Group Common Stock quoted on Nasdaq is greater than or equal to $20.00 for any 40 trading days within any 60 consecutive trading day period or (ii) a change in control of Lucid Group pursuant to which stockholders of Lucid Group have the right to receive consideration implying a value per share greater than or equal to $20.00;
“Earnback Triggering Event II” are to the earliest of the following during the Earnback Period: (i) the date on which the volume-weighted average trading sale price of one share of Lucid Group Common Stock quoted on Nasdaq is greater than or equal to $25.00 for any 40 trading days within any 60 consecutive trading day period or (ii) a change in control of Lucid Group pursuant to which stockholders of Lucid Group have the right to receive consideration implying a value per share greater than or equal to $25.00;
“Earnback Triggering Event III” are to the earliest of the following during the Earnback Period: (i) the date on which the volume-weighted average trading sale price of one share of Lucid Group Common Stock quoted on Nasdaq is greater than or equal to $30.00 for any 40 trading days within any 60 consecutive trading day period or (ii) a change in control of Lucid Group pursuant to which stockholders of Lucid Group have the right to receive consideration implying a value per share greater than or equal to $30.00;
“Earnback Triggering Events” are to Earnback Trigger Event I, Earnback Trigger Event II, and Earnback Trigger Event III;
Effective Time” are to the date and time that the Merger becomes effective;
Equity Value” are to the sum of (a) $11,750,000,000.00 plus (b) (i) all cash and cash equivalents of Lucid and its subsidiaries less (ii) all indebtedness for borrowed money of Lucid and its subsidiaries, in each case as of two business days prior to the Closing Date;
“Exchange Ratio” are to the quotient, rounded to the nearest thousandth (0.001), obtained by dividing (i) the Per Share Equity Value by (ii) ten dollars ($10.00);
Exchange Act” are to the Securities Exchange Act of 1934, as amended;
founder shares” are to shares of Churchill’s Class B common stock and Churchill’s Class A common stock issued upon the automatic conversion thereof at the time of Churchill’s initial business combination. The founder shares are held of record by the Sponsor as of the record date;
GAAP” are to accounting principles generally accepted in the United States of America;
HSR Act” are to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; “Holdings” are to Polaris Investment Holdings, L.P.;
Incentive Plan” are to the Lucid Group, Inc. 2021 Stock Incentive Plan, including the Lucid Group, Inc. 2021 Employee Stock Purchase Plan (the “ESPP Addendum”) attached thereto;
Insiders” are to Michael Klein, Jay Taragin, Glenn R. August, William J. Bynum, Bonnie Jonas, Mark Klein, Malcolm S. McDermid and Karen G. Mills;
Investor Rights Agreement” are to the Investor Rights Agreement, dated as of February 22, 2021, by and among Churchill, the Sponsor, Ayar and certain other parties thereto;
Lucid” are to Atieva, Inc., d/b/a Lucid Motors, an exempted company incorporated with limited liability under the laws of the Cayman Islands;
 
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Lucid Common Shares” are to the common shares, par value $0.0001 per share, of Lucid;
Lucid Equity Awards” are to all issued and outstanding stock options, restricted stock units or other compensatory equity securities in respect of shares of Lucid outstanding as of immediately prior to the closing of the Merger, including, without limitation, any Lucid Options and Lucid RSUs;
Lucid Group” are to the new public entity following the consummation of the Transactions;
Lucid Group Awards” are to Lucid Group Options and Lucid Group RSUs;
Lucid Group Common Stock” are to shares of common stock, par value $0.001 per share, of Lucid Group;
Lucid Group Options” are to all issued and outstanding options to purchase shares of Lucid Group Common Stock immediately following the Closing of the Merger;
Lucid Group RSUs” are to all issued and outstanding restricted stock unit awards with respect to shares of Lucid Group Common Stock immediately following the Closing of the Merger;
Lucid Group Warrants” are to all issued and outstanding warrants to purchase shares of Lucid Group Common Stock immediately following the Closing of the Merger;
Lucid Options” are to all issued and outstanding options to purchase or otherwise acquire Lucid Common Shares (whether or not vested) held by any person, including Lucid share options granted under any Company Share Plan;
Lucid Preferred Shares” are to, collectively, Lucid Series A Preferred Shares, Lucid Series B Preferred Shares, Lucid Series C Preferred Shares, Lucid Series D Preferred Shares and Lucid Series E Preferred Shares;
Lucid RSUs” are to all issued and outstanding restricted stock unit awards with respect to Lucid Common Shares that are outstanding under any Company Share Plan;
Lucid Series A Preferred Shares” are to the Series A preferred shares, par value $0.0001 per share, of Lucid;
Lucid Series B Preferred Shares” are to the Series B preferred shares, par value $0.0001 per share, of Lucid;
Lucid Series C Preferred Shares” are to the Series C preferred shares, par value $0.0001 per share, of Lucid;
Lucid Series D Preferred Shares” are to the Series D preferred shares, par value $0.0001 per share, of Lucid;
Lucid Series E Preferred Shares” are to the Series E preferred shares, par value $0.0001 per share, of Lucid;
Lucid Shares” are to the Lucid Common Shares, Lucid Series A Preferred Shares, Lucid B Preferred Shares, Lucid C Preferred Shares, Lucid Series D Preferred Shares and Lucid Series E Preferred Shares;
Lucid Total Shares” are to the sum of (i) the aggregate number of issued and outstanding Lucid Shares as of immediately prior to the Effective Time after giving effect to the conversion set forth in Section 3.01 of the Merger Agreement, (ii) the aggregate number of Lucid Shares issuable upon the exercise of all vested Lucid Options as of immediately prior to the Effective Time (including after giving effect to any acceleration of any unvested Lucid Options in connection with the consummation of the Merger), (iii) the aggregate number of Lucid Shares that are subject to vested Lucid RSUs, if any, as of immediately prior to the Effective Time and (iv) the aggregate number of Lucid Shares issuable upon the exercise of all outstanding Lucid Warrants as of immediately prior to the Effective Time;
Lucid Warrants” are to all issued and outstanding warrants entitling the holder to purchase Lucid Common Shares;
 
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memorandum and articles of association” are to Lucid’s Memorandum and Articles of Association, as may be amended from time to time;
M. Klein and Company” are to M. Klein and Company, LLC, a Delaware limited liability company, and its affiliates;
Merger” are to the merger of Merger Sub and Lucid, with Lucid surviving such merger as a wholly owned subsidiary of Churchill;
Merger Agreement” are to that certain Agreement and Plan of Merger, dated as of February 22, 2021, by and among Churchill, Lucid and Merger Sub, as the same has been or may be amended, modified, supplemented or waived from time to time;
Merger Consideration” are to the aggregate consideration to be paid to the shareholders of Lucid pursuant to the Merger Agreement;
Nasdaq” are to The Nasdaq Stock Market LLC;
Note” are to the unsecured promissory note issued by Churchill to the Sponsor in an aggregate principal amount of $1,500,000. The Sponsor has the option to convert any unpaid balance of the Note into Working Capital Warrants;
Per Share Equity Value” are to the quotient, rounded to the nearest cent ($0.01), obtained by dividing (i) the sum of (A) the Equity Value plus (B) the aggregate exercise price of all vested Lucid Options as of immediately prior to the Effective Time (including after giving effect to any acceleration of any unvested Lucid Options in connection with the consummation of the Merger) plus (C) the aggregate exercise price of all outstanding Lucid Warrants as of immediately prior to the Effective Time by (ii) the Lucid Total Shares;
PIF” are to the Public Investment Fund;
PIPE Investment” are to the private placement pursuant to which Churchill entered into PIPE Subscription Agreements (containing commitments to funding that are subject only to conditions that generally align with the conditions set forth in the Merger Agreement) with certain investors whereby Churchill has agreed to issue and sell to the PIPE Investors $2.5 billion of Churchill’s Class A common stock at a purchase price of $15.00 per share;
PIPE Investors” are to the investors participating in the PIPE Investment;
PIPE Subscription Agreements” are to the common stock subscription agreements entered into by and among Churchill, and the investors party thereto, in each case, dated as of February 22, 2021 and entered into in connection with the PIPE Investment;
private placement warrants” are to Churchill’s warrants issued to the Sponsor in a private placement simultaneously with the closing of the Churchill IPO;
pro forma” are to giving pro forma effect to the Transactions and the other related events contemplated by the Merger Agreement;
public shares” are to shares of Churchill’s Class A common stock sold as part of the units in the Churchill IPO (whether they were purchased in the Churchill IPO or thereafter in the open market);
public stockholders” are to the holders of Churchill’s public shares, including the Sponsor and Churchill’s officers and directors to the extent the Sponsor and Churchill’s officers or directors purchase public shares, provided that each of their status as a “public stockholder” shall only exist with respect to such public shares;
public warrants” are to Churchill’s warrants sold as part of the units in the Churchill IPO (whether they were purchased in the Churchill IPO or thereafter in the open market);
SEC” are to the United States Securities and Exchange Commission;
“Securities Act” are to the Securities Act of 1933, as amended;
 
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Sponsor” are to Churchill Sponsor IV LLC, a Delaware limited liability company and an affiliate of M. Klein and Company in which certain of Churchill’s directors and officers hold membership interests;
Sponsor Agreement” are to the Amended and Restated Sponsor Agreement, dated as of February 22, 2021, by and among Churchill, the Sponsor and the Insiders;
Sponsor Earnback Shares” are to are to those 17,250,000 issued and outstanding shares of Lucid Group Common Stock, comprised of three separate tranches of 5,750,000 shares per tranche, held by the Sponsor that will remain restricted from transfer and subject to potential forfeiture to Lucid Group for no consideration, subject to the occurrence of the applicable Earnback Triggering Events during the Earnback Period;
Sponsor Earnback Warrants” are to those 14,283,333 issued and outstanding warrants to purchase shares of Lucid Group Common Stock, comprised of three separate tranches of 4,761,111 warrants per tranche, held by the Sponsor that will remain restricted from transfer and subject to potential forfeiture to Lucid Group for no consideration, subject to the occurrence of the applicable Earnback Triggering Events during the Earnback Period;
Transactions” are to the Merger, together with the other transactions contemplated by the Merger Agreement and the related agreements;
trust account” are to the trust account of Churchill that holds the proceeds from the Churchill IPO;
Voting and Support Agreement” are to Voting and Support Agreement, dated as of February 22, 2021, by and among Churchill, Lucid and Ayar;
warrants” are to the public warrants, the private placement warrants and the Working Capital Warrants; and
Working Capital Warrants” are to the warrants to purchase Churchill’s Class A common stock pursuant to the terms of the Note, on terms identical to the terms of the private placement warrants.
 
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SUMMARY OF THE MATERIAL TERMS OF THE TRANSACTIONS
This summary term sheet, together with the sections entitled “Questions and Answers About the Proposals” and “Summary of the Proxy Statement/Prospectus,” summarizes certain information contained in this proxy statement/prospectus, but does not contain all of the information that is important to you. You should read carefully this entire proxy statement/prospectus, including the attached Annexes, for a more complete understanding of the matters to be considered at the special meeting. In addition, for definitions used commonly throughout this proxy statement/prospectus, including this summary term sheet, please see the section entitled “Frequently Used Terms.”

Churchill Capital Corp IV, a Delaware corporation, which we refer to as “Churchill,” “we,” “us,” or “our,” is a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

On August 3, 2020, Churchill consummated its initial public offering of 207,000,000 units, including 27,000,000 units under the underwriters’ over-allotment option, with each unit consisting of one share of Churchill’s Class A common stock and one-fifth of one warrant, each whole warrant to purchase one share of Churchill’s Class A common stock. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $2,070,000,000. Simultaneously with the consummation of the initial public offering, Churchill consummated the private placement of 42,850,000 warrants at a price of $1.00 per warrant, generating total proceeds of $42,850,000. Transaction costs amounted to $109,714,885 consisting of $36,403,600 of underwriting fees, $72,450,000 of deferred underwriting fees and $861,285 of other offering costs.

Following the consummation of the Churchill IPO, $2,070,000,000 was deposited into a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee. Except as described in the prospectus for the Churchill IPO, these proceeds will not be released until the earlier of the completion of an initial business combination and Churchill’s redemption of 100% of the outstanding public shares upon its failure to consummate a business combination within the completion window.

Atieva, Inc., d/b/a Lucid Motors, an exempted company incorporated with limited liability under the laws of the Cayman Islands, which we refer to as “Lucid,” is a vertically-integrated technology and automotive company that (i) designs, engineers, and builds electric vehicles, electric vehicle powertrains and battery systems in-house using its own equipment and factory, (ii) plans to offer a refined customer experience at its own geographically-distributed retail and service locations and through direct-to-consumer and retail sales, and (iii) boasts a strong product roadmap of future vehicle programs and technologies. Lucid’s focus on in-house technological innovation and a “clean-sheet” approach to engineering and design have led to the development of its groundbreaking electric vehicle, the Lucid Air, which Lucid expects to go into production in the second half of 2021. See the sections entitled “Information About Lucid,” “Lucid’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Management after the Business Combination.”

On February 22, 2021, Churchill entered into an Agreement and Plan of Merger with Lucid and Merger Sub, pursuant to which, among other things, Merger Sub will merge with and into Lucid, with Lucid surviving such merger as a wholly owned subsidiary of Churchill.

Subject to the terms of the Merger Agreement, the aggregate consideration to be paid to the shareholders of Lucid will be equal to (a) $11,750,000,000 plus (b) (i) all cash and cash equivalents of Lucid and its subsidiaries less (ii) all indebtedness for borrowed money of Lucid and its subsidiaries, in each case as of two business days prior to the Closing Date (the “Equity Value”). The consideration to Lucid shareholders will be paid entirely in shares of Churchill’s Class A common stock, in an amount equal to $10.00 per share. Each Lucid Common Share issued and outstanding immediately prior to Closing will be automatically surrendered and exchanged for the right to receive a number of shares of Churchill's Class A common stock equal to the Exchange Ratio based on the Equity Value. Assuming a Closing Date of July 23, 2021 and that Lucid will have $325.0 million in net cash as of two business days prior to the Closing Date, among other things, we expect that the Exchange Ratio will be approximately 2.595 shares of Churchill's Class A common stock for each issued and outstanding Lucid Common Share. See the section entitled “Proposal No. 1 — The Business Combination Proposal — General — Merger Consideration.”
 
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Pursuant to the PIPE Investment, Churchill has agreed to issue and sell to the PIPE Investors, and the PIPE Investors have agreed to buy from Churchill $2.5 billion of Churchill’s Class A common stock, in reliance on an exemption from registration under Section 4(a)(2) under the Securities Act, at a purchase price of $15.00 per share.

Upon completion of the Transactions, we anticipate that: (1) Lucid shareholders (without taking into account shares of Lucid Group Common Stock issuable to holders of Lucid Group Awards) are expected to hold an ownership interest of 73.4% of the issued and outstanding Lucid Group Common Stock, (2) the Sponsor is expected to hold an ownership interest of 3.2% of the issued and outstanding Lucid Group Common Stock, (3) Churchill’s public stockholders (other than the PIPE Investors) will retain an ownership interest of 13.0% of the issued and outstanding Lucid Group Common Stock and (4) the PIPE Investors are expected to hold an ownership interest of 10.4% of the issued and outstanding Lucid Group Common Stock. These levels of ownership interest assume (i) that no public stockholders exercise their redemption rights in connection with the Transactions, (ii) no exercises of warrants to purchase Lucid Group Common Stock, (iii) no forfeitures of any shares or warrants of Lucid Group Common Stock in connection with the Sponsor Earnback Shares and Sponsor Earnback Warrants, (iv) that Lucid Group reserves 108,703,877 shares of Lucid Group Common Stock for potential future issuance upon the exercise of Lucid Group Options or settlement of Lucid Group RSUs, (v) Lucid Group sells and issues 166,666,667 shares of Lucid Group Common Stock to the PIPE Investors pursuant to the PIPE Investment and (vi) Lucid will have $325.0 million in net cash as of two business days prior to the Closing Date. If the actual facts are different from these assumptions, the percentage ownership retained by the current Churchill stockholders in Lucid Group will be different.

Upon the completion of the Transactions, Lucid’s majority shareholder, Ayar, will hold 62.5% of Lucid Group Common Stock, assuming that no public stockholders exercise their redemption rights in connection with the Transactions and subject to certain other assumptions as set forth in the section entitled “Beneficial Ownership of Securities.” As a result, Lucid Group will be a “controlled company” within the meaning of Nasdaq rules and, as a result, will qualify for exemptions from certain corporate governance requirements. The stockholders of Lucid Group will not have the same protections afforded to stockholders of companies that are subject to such requirements. Ayar will also have the ability to nominate five of the nine directors to the Lucid Group board of directors.

Churchill management and the Churchill Board considered various factors in determining whether to approve the Merger Agreement and the Transactions contemplated thereby, including the Merger. For more information about the reasons that the Churchill Board considered in determining its recommendation, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Churchill’s Board of Directors’ Reasons for Approval of the Transactions.” When you consider the Churchill Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Transactions that are different from, or in addition to, the interests of Churchill stockholders generally. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information. The Churchill Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the Churchill stockholders that they vote “FOR” the proposals presented at the special meeting.

At the special meeting, Churchill’s stockholders will be asked to consider and vote on the following proposals:

a proposal to approve the business combination described in this proxy statement/prospectus, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in this proxy statement/prospectus. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal”;

a proposal to approve and adopt the second amended and restated certificate of incorporation of Churchill in the form attached hereto as Annex B. Please see the section entitled “Proposal No. 2 — The Charter Proposal”;
 
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a proposal to vote upon, on a non-binding advisory basis, certain governance provisions in the second amended and restated certificate of incorporation, presented separately in accordance with requirements of the SEC. Please see the section entitled “Proposal No. 3 — The Governance Proposal”;

a proposal to approve and adopt the Incentive Plan, including the ESPP Addendum, and the material terms thereof, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 4 — The Incentive Plan Proposal”;

a proposal to elect nine directors to serve on the Churchill Board for a term ending on the date of the next annual stockholder meeting, or until their respective successors are duly elected and qualified. Please see the section entitled “Proposal No. 5 — The Director Election Proposal”;

a proposal to approve, for purposes of complying with the applicable provisions of Section 312.03 of the NYSE’s Listed Company Manual, (a) the issuance of more than 20% of Churchill’s issued and outstanding shares of common stock in connection with the Transactions, including, without limitation, the PIPE Investment and the issuance of more than 20% of Churchill’s issued and outstanding shares to a single holder (which may constitute a change of control under the NYSE’s Listed Company Manual) and (b) the issuance of shares of Churchill’s Class A common stock to a Related Party (as defined in Section 312.03 of the NYSE’s Listed Company Manual) in connection with the Transactions. Please see the section entitled “Proposal No. 6 — The NYSE Proposal”; and

a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal or the NYSE proposal. Please see the section entitled “Proposal No. 7 — The Adjournment Proposal.”

Upon consummation of the Transactions, nine directors will be elected to serve on the Churchill Board for a term ending on the date of the next annual stockholder meeting, or in each case until their respective successors are duly elected and qualified, or until their earlier resignation, removal or death. Please see the sections entitled “Proposal No. 5 — The Director Election Proposal” and “Management After the Business Combination” for additional information.

An assumed Closing Date of July 23, 2021 has been used throughout this proxy statement/prospectus for illustrative purposes only and is not intended to be a projection of the actual Closing Date.
 
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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS
The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the special meeting and the proposals to be presented at the special meeting, including with respect to the proposed business combination. The following questions and answers do not include all the information that is important to Churchill stockholders. Stockholders are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the proposed business combination and the voting procedures for the special meeting.
Q.
Why am I receiving this proxy statement/prospectus?
A.
Churchill and Lucid have agreed to a business combination under the terms of the Merger Agreement that is described in this proxy statement/prospectus. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A, and Churchill encourages its stockholders to read it in its entirety. Churchill’s stockholders are being asked to consider and vote upon a proposal to adopt the Merger Agreement and approve the transactions contemplated thereby, which, among other things, includes provisions for the Merger of Merger Sub with and into Lucid, with Lucid surviving such merger as a wholly owned subsidiary of Churchill. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal.”
This proxy statement/prospectus and its Annexes contain important information about the proposed business combination and the other matters to be acted upon at the special meeting. You should read this proxy statement/prospectus and its Annexes carefully and in their entirety.
Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its Annexes.
Q.
When and where is the Special Meeting?
A.
The special meeting will be held via live webcast on [•], 2021 at [•] a.m. Eastern Time. The special meeting can be accessed by visiting [•], where you will be able to listen to the meeting live and vote during the meeting. Please note that you will only be able to access the special meeting by means of remote communication.
Q.
What are the proposals on which I am being asked to vote at the special meeting?
A.
The stockholders of Churchill will be asked to consider and vote on the following proposals at the special meeting:
1.
a proposal to approve the business combination described in this proxy statement/prospectus, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in this proxy statement/prospectus. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal”;
2.
a proposal to approve and adopt the second amended and restated certificate of incorporation of Churchill in the form attached hereto as Annex B. Please see the section entitled “Proposal No. 2 — The Charter Proposal”;
3.
a proposal to vote upon, on a non-binding advisory basis, certain governance provisions in the second amended and restated certificate of incorporation, presented separately, in accordance with the requirements of the SEC. Please see the section entitled “Proposal No. 3 — The Governance Proposal”;
4.
a proposal to approve and adopt the Incentive Plan, including the ESPP Addendum, and the material terms thereof, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 4 — The Incentive Plan Proposal”;
 
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5.
a proposal to elect nine directors to serve on the Churchill Board for a term ending on the date of the next annual stockholder meeting, or until their respective successors are duly elected and qualified. Please see the section entitled “Proposal No. 5 — The Director Election Proposal”;
6.
a proposal to approve, for purposes of complying with the applicable provisions of Section 312.03 of the NYSE’s Listed Company Manual, (a) the issuance of more than 20% of Churchill’s issued and outstanding shares of common stock in connection with the Transactions, including, without limitation, the PIPE Investment (as described below) and the issuance of more than 20% of Churchill’s issued and outstanding shares to a single holder (which may constitute a change of control under the NYSE’s Listed Company Manual) and (b) the issuance of shares of Churchill’s Class A common stock to a Related Party (as defined in Section 312.03 of the NYSE’s Listed Company Manual) in connection with the Transactions. Please see the section entitled “Proposal No. 6 — The NYSE Proposal”; and
7.
a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal or the NYSE proposal. Please see the section entitled “Proposal No. 7 — The Adjournment Proposal.”
Churchill will hold the special meeting of its stockholders to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the proposed business combination and the other matters to be acted upon at the special meeting. Stockholders should read it carefully.
Consummation of the Transactions is conditioned on the approval of each of the business combination proposal, the charter proposal, the incentive plan proposal and the NYSE proposal. If any of those proposals are not approved, we will not consummate the Transactions.
The vote of stockholders is important. Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.
Q.
Why is Churchill proposing the business combination?
A.
Churchill was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses or entities.
On August 3, 2020, Churchill completed its initial public offering of units, with each unit consisting of one share of its Churchill’s Class A common stock and one-fifth of one warrant, each whole warrant to purchase one share of Churchill’s Class A common stock at a price of $11.50, raising total gross proceeds of approximately $2,070,000,000. Since the Churchill IPO, Churchill’s activity has been limited to the evaluation of business combination candidates.
Lucid is a vertically-integrated technology and automotive company that (i) designs, engineers, and builds electric vehicles, electric vehicle powertrains and battery systems in-house using its own equipment and factory, (ii) plans to offer a refined customer experience at its own geographically-distributed retail and service locations and through direct-to-consumer and retail sales, and (iii) boasts a strong product roadmap of future vehicle programs and technologies. Lucid’s focus on in-house technological innovation and a “clean-sheet” approach to engineering and design have led to the development of its groundbreaking electric vehicle, the Lucid Air, which Lucid expects to go into production in the second half of 2021.
The Churchill Board conducted extensive due diligence on Lucid’s business, financial condition, management team, and future growth prospects in executing upon and achieving its business plan. The Churchill Board considered the results of the diligence review, including Lucid’s innovative, validated technologies, its in-house manufacturing capabilities, direct to consumer sales, model, robust product pipeline, the untapped potential in battery storage solutions and hardware technology licensing, its large addressable market, as well as the Lucid management team’s track record of bringing disruptive
 
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products to market. As a result, Churchill believes that a business combination with Lucid will provide Churchill stockholders with an opportunity to participate in the ownership of a company with significant growth potential. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Churchill Board of Directors’ Reasons for Approval of the Transactions.
Q.
Why is Churchill providing stockholders with the opportunity to vote on the business combination?
A.
Under our current certificate of incorporation, we must provide all holders of public shares with the opportunity to have their public shares redeemed upon the consummation of our initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, we have elected to provide our stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote rather than a tender offer. Therefore, we are seeking to obtain the approval of our stockholders of the business combination proposal in order to allow our public stockholders to effectuate redemptions of their public shares in connection with the closing of the business combination.
Q.
What will happen in the business combination?
A.
Pursuant to the Merger Agreement, and upon the terms and subject to the conditions set forth therein, Churchill will acquire Lucid in a series of transactions we collectively refer to as the “business combination” or the “Transactions.” At the closing of the business combination contemplated by the Merger Agreement, among other things, Merger Sub will merge with and into Lucid, with Lucid surviving the Merger as a wholly owned subsidiary of Churchill.
Q.
Following the business combination, will Churchill’s securities continue to trade on a stock exchange?
A.
Yes. We have applied to have Churchill’s Class A common stock and public warrants listed on Nasdaq. In connection with the business combination, Churchill will change its name to Lucid Group, Inc., and upon the Closing, we expect that and Churchill’s Class A common stock and warrants will begin trading on Nasdaq under the symbols “LCID” and “LCID.WS” respectively. As a result, Churchill’s publicly traded units will separate into the component securities upon consummation of the business combination and will no longer trade as a separate security.
Q.
How will the business combination impact the shares of Churchill outstanding after the business combination?
A.
Upon completion of the Transactions, we anticipate that: (1) Lucid shareholders (without taking into account shares of Lucid Group Common Stock issuable to holders of Lucid Group Awards) are expected to hold an ownership interest of 73.4% of the issued and outstanding Lucid Group Common Stock, (2) the Sponsor is expected to hold an ownership interest of 3.2% of the issued and outstanding Lucid Group Common Stock, (3) Churchill’s public stockholders (other than the PIPE Investors) will retain an ownership interest of 13.0% of the issued and outstanding Lucid Group Common Stock and (4) the PIPE Investors are expected to hold an ownership interest of 10.4% of the issued and outstanding Lucid Group Common Stock. These levels of ownership interest assume (i) that no public stockholders exercise their redemption rights in connection with the Transactions, (ii) no exercises of warrants to purchase Lucid Group Common Stock, (iii) no forfeitures of any shares or warrants of Lucid Group Common Stock in connection with the Sponsor Earnback Shares and Sponsor Earnback Warrants, and (iv) that Lucid Group reserves 108,703,877 shares of Lucid Group Common Stock for potential future issuance upon the exercise of Lucid Group Options or settlement of Lucid Group RSUs, (v) Lucid Group sells and issues 166,666,667 shares of Lucid Group Common Stock to the PIPE Investors pursuant to the PIPE Investment and (vi) Lucid will have $325.0 million in net cash as of two business days prior to the Closing Date. If the actual facts are different from these assumptions, the percentage ownership retained by the current Churchill stockholders in Lucid Group will be different.
Q.
Will the management of Lucid change in the business combination?
A.
We anticipate that all of the executive officers of Lucid will remain with Lucid Group. In addition, Peter Rawlinson, Turqi Alnowaiser, Glenn R. August, Nancy Gioia, Frank Lindenberg, Andrew Liveris,
 
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Nichelle Maynard-Elliott, Tony Posawatz and Janet Wong have each been nominated to serve as directors of Lucid Group following completion of the business combination. Please see the sections entitled “Proposal No. 5 — The Director Election Proposal” and “Management After the Business Combination” for additional information.
Q:
What equity stake will current Churchill stockholders and Lucid shareholders hold in Lucid Group immediately after the consummation of the Transactions?
A:
As of the date of this proxy statement/prospectus, there are (i) 258,750,000 shares of common stock issued and outstanding, which includes the 51,750,000 founder shares held by the Sponsor and the 207,000,000 public shares, (ii) 84,250,000 warrants issued and outstanding, which includes the 42,850,000 private placement warrants held by the Sponsor and the 41,400,000 public warrants, and (iii) up to 1,500,000 additional warrants that may be issued pursuant to the Sponsor’s option to convert any unpaid balance of the issued and outstanding Note into Working Capital Warrants at a price of $1.00 per warrant. Each whole warrant entitles the holder thereof to purchase one share of Churchill’s Class A common stock and, following the Transactions, will entitle the holder thereof to purchase one share of Lucid Group Common Stock. Therefore, as of the date of this proxy statement/prospectus (without giving effect to the Transactions) the Churchill fully diluted share capital would be 344,500,000 common stock equivalents.
Upon completion of the Transactions, we anticipate that: (1) Lucid shareholders (without taking into account shares of Lucid Group Common Stock issuable to holders of Lucid Group Awards) are expected to hold an ownership interest of 73.4% of the issued and outstanding Lucid Group Common Stock, (2) the Sponsor is expected to hold an ownership interest of 3.2% of the issued and outstanding Lucid Group Common Stock, (3) Churchill’s public stockholders (other than the PIPE Investors) will retain an ownership interest of 13.0% of the issued and outstanding Lucid Group Common Stock and (4) the PIPE Investors are expected to hold an ownership interest of 10.4% of the issued and outstanding Lucid Group Common Stock. These levels of ownership interest assume (i) that no public stockholders exercise their redemption rights in connection with the Transactions, (ii) no exercises of warrants to purchase Lucid Group Common Stock, (iii) no forfeitures of any shares or warrants of Lucid Group Common Stock in connection with the Sponsor Earnback Shares and Sponsor Earnback Warrants, and (iv) that Lucid Group reserves 108,703,877 shares of Lucid Group Common Stock for potential future issuance upon the exercise of Lucid Group Options or settlement of Lucid Group RSUs, (v) Lucid Group sells and issues 166,666,667 shares of Lucid Group Common Stock to the PIPE Investors pursuant to the PIPE Investment and (vi) Lucid will have $325.0 million in net cash as of two business days prior to the Closing Date. If the actual facts are different from these assumptions, the percentage ownership retained by the current Churchill stockholders in Lucid Group will be different.
The following table illustrates varying ownership levels in Lucid Group immediately following the consummation of the Transactions based on the assumptions above:
Pro Forma Combined
(Assuming No Redemptions)
Pro Forma Combined
(Assuming Maximum
Redemptions)(5)
Number of
Shares
%
Ownership
Number of
Shares
%
Ownership
Lucid shareholders(1)
1,170,324,70473.4%1,170,324,70482.6%
Churchill Sponsor(2)
51,750,0003.2%51,750,0003.6%
Churchill public stockholders207,000,00013.0%29,973,2712.1%
PIPE Investors(3)
166,666,66710.4%166,666,66711.7%
Total(4)1,595,741,371100.0%1,418,714,642100.0%
(1)
Excludes an estimated 108,703,877 shares of Lucid Group Common Stock to be reserved for potential future issuance upon the exercise of Lucid Group Options or settlement of Lucid Group RSUs.
(2)
The 51,750,000 shares beneficially owned by the Sponsor includes the 17,250,000 Sponsor Earnback Shares, which will be restricted from transfer, subject to the occurrence of the Earnback Triggering
 
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Events during the Earnback Period. Any such shares not released from these transfer restrictions during the Earnback Period will be forfeited back to Lucid Group for no consideration.
(3)
Reflects the sale and issuance of 166,666,667 shares of Lucid Group Common Stock to the PIPE Investors at $15.00 per share, of which Ayar has agreed to purchase 13,333,333 of such shares.
(4)
Excludes the 84,250,000 warrants issued and outstanding, which includes the 42,850,000 private placement warrants held by the Sponsor and the 41,400,000 public warrants, and up to 1,500,000 additional warrants that may be issued pursuant to the Sponsor’s option to convert any unpaid balance of the issued and outstanding Note into Working Capital Warrants at a price of $1.00 per warrant. The 42,850,000 private warrants beneficially owned by the Sponsor includes the 14,283,333 Sponsor Earnback Warrants, which will be restricted from transfer, subject to the occurrence of the Earnback Triggering Events during the Earnback Period. Any such warrants not released from these transfer restrictions during the Earnback Period will be forfeited back to Lucid Group for no consideration.
(5)
Assumes maximum redemptions of 177,026,729 public shares of Churchill’s Class A common stock in connection with the Transactions at approximately $10.00 per share based on trust account figures as of March 31, 2021.
See the subsection entitled “Summary of the Proxy Statement/Prospectus —  Impact of the Business Combination on Lucid Group’s Public Float” and section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.
Q.
Will Churchill obtain new financing in connection with the Transactions?
A.
Yes. Churchill has entered into subscription agreements (containing commitments to funding that are subject only to conditions that generally align with the conditions set forth in the Merger Agreement) with the PIPE Investors, pursuant to which Churchill has agreed to issue and sell to the PIPE Investors and the PIPE Investors have agreed to buy from Churchill $2.5 billion of Churchill’s Class A common stock at a purchase price of $15.00 per share. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Sources and Uses of Funds for the Transactions.”
Q.
What conditions must be satisfied to complete the Business Combination?
A.
There are a number of closing conditions in the Merger Agreement, including the expiration or termination of the applicable waiting period under the HSR Act (which occured on April 7, 2021) and the approval by the stockholders of Churchill of the business combination proposal, the NYSE proposal, the charter proposal, the incentive plan proposal and the director proposal. For a summary of the conditions that must be satisfied or waived prior to completion of the business combination, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Certain Agreements Related to the Business Combination — Merger Agreement.”
Q.
Are there any arrangements to help ensure that Churchill will have sufficient funds, together with the proceeds in its trust account and from the PIPE Investment, to fund the aggregate purchase price?
A.
The Merger Agreement provides that the consummation of the Transactions is conditioned upon, among other things, Churchill having at least $5,000,001 of net tangible assets as of the closing of the Transactions. Additionally, the obligations of Lucid to consummate the Transactions are conditioned upon, among others, the amount of cash available in Churchill’s trust account plus the aggregate amount of cash that has been funded to and remains with Churchill pursuant to the PIPE Investment as of immediately prior to closing being least $2.8 billion.
Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Sources and Uses of Funds for the Transactions.”
Q.
What happens if I sell my shares of Churchill’s Class A common stock before the special meeting?
A.
The record date for the special meeting is earlier than the date that the business combination is expected to be completed. If you transfer your shares of Churchill’s Class A common stock after the record date, but before the special meeting, unless the transferee obtains from you a proxy to vote those
 
13

 
shares, you will retain your right to vote at the special meeting. However, you will not be able to seek redemption of your shares of Churchill’s Class A common stock because you will no longer be able to deliver them for cancellation upon consummation of the business combination. If you transfer your shares of Churchill’s Class A common stock prior to the record date, you will have no right to vote those shares at the special meeting or redeem those shares for a pro rata portion of the proceeds held in our trust account.
Q.
What constitutes a quorum at the special meeting?
A.
A majority of the voting power of all issued and outstanding shares of common stock entitled to vote as of the record date at the special meeting must be present via the virtual meeting platform, or represented by proxy, at the special meeting to constitute a quorum and in order to conduct business at the special meeting. Abstentions will be counted as present for the purpose of determining a quorum. As of the record date for the special meeting, [•] shares of our common stock would be required to be present at the special meeting to achieve a quorum.
Churchill’s bylaws permit the chair of the special meeting to adjourn the special meeting, whether or not there is a quorum, to a later date, time, and place. Notice of such adjournment need not be given if the date, time, and place (or means of remote communication, if any) of the adjourned meeting are announced at the special meeting.
Q.
What vote is required to approve the proposals presented at the special meeting?
A.
The approval of each of the business combination proposal, the governance proposal (which is a non-binding advisory vote), the incentive plan proposal, the NYSE proposal and the adjournment proposal require the affirmative vote of a majority of the votes cast by holders of Churchill’s outstanding shares of common stock represented at the special meeting by attendance via the virtual meeting website or by proxy and entitled to vote at the special meeting. Accordingly, if a valid quorum is established, a Churchill stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the business combination proposal, the governance proposal, the incentive plan proposal, the NYSE proposal and the adjournment proposal will have no effect on such proposals.
The approval of the charter proposal requires the affirmative vote of holders of a majority of Churchill’s outstanding shares of common stock entitled to vote thereon at the special meeting. Accordingly, if a valid quorum is established, a Churchill stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the charter proposal will have the same effect as a vote “against” such proposal.
Directors are elected by a plurality of all of the votes cast by holders of shares of Churchill’s common stock represented at the special meeting by attendance via the virtual meeting website or by proxy and entitled to vote thereon at the special meeting. This means that the nine director nominees who receive the most affirmative votes will be elected. Churchill stockholders may not cumulate their votes with respect to the election of directors. Accordingly, if a valid quorum is established, a Churchill stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the director election proposal will have no effect on such proposal.
Q.
How many votes do I have at the special meeting?
A.
Our stockholders are entitled to one vote on each proposal presented at the special meeting for each share of common stock held of record as of [•], 2021, the record date for the special meeting. As of the close of business on the record date, there were [•] outstanding shares of our common stock.
Q.
Why is Churchill proposing the governance proposal?
A.
As required by applicable SEC guidance, Churchill is requesting that its stockholders vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the second amended and restated certificate of incorporation that materially affect stockholder rights. This separate vote is not otherwise required by Delaware law separate and apart from the charter proposal, but pursuant to SEC guidance, Churchill is required to submit these provisions to its stockholders
 
14

 
separately for approval. However, the stockholder vote regarding this proposal is an advisory vote, and is not binding on Churchill and the Churchill Board (separate and apart from the approval of the charter proposal). Furthermore, the business combination is not conditioned on the separate approval of the governance proposal (separate and apart from approval of the charter proposal). Please see the section entitled “Proposal No. 3 — The Governance Proposal.”
Q.
Do I have redemption rights?
A.
If you are a holder of public shares, you have the right to demand that Churchill redeem such shares for a pro rata portion of the cash held in Churchill’s trust account. Churchill sometimes refers to these rights to demand redemption of the public shares as “redemption rights.”
Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom such holder is acting in concert or as a “group” ​(as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption with respect to more than 15% of the public shares. Accordingly, all public shares in excess of 15% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed.
Under Churchill’s current certificate of incorporation, the business combination may be consummated only if Churchill has at least $5,000,001 of net tangible assets after giving effect to all holders of public shares that properly demand redemption of their shares for cash.
Q.
How do I exercise my redemption rights?
A.
If you are a holder of public shares and wish to exercise your redemption rights, you must demand that Churchill redeem your shares into cash no later than the second business day preceding the vote on the business combination proposal by delivering your stock to Churchill’s transfer agent physically or electronically using Depository Trust Company’s DWAC (Deposit and Withdrawal at Custodian) system prior to the vote at the special meeting. Any holder of public shares will be entitled to demand that such holder’s shares be redeemed for a full pro rata portion of the amount then in the trust account (which, for illustrative purposes, was approximately $[•] or $[•] per share, as of [•], 2021, the record date for the special meeting). Such amount, less any owed but unpaid taxes on the funds in the trust account, will be paid promptly upon consummation of the business combination. However, under Delaware law, the proceeds held in the trust account could be subject to claims which could take priority over those of Churchill’s public stockholders exercising redemption rights, regardless of whether such holders vote for or against the business combination proposal. Therefore, the per-share distribution from the trust account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal other than the business combination proposal will have no impact on the amount you will receive upon exercise of your redemption rights.
Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the time the vote is taken with respect to the business combination proposal at the special meeting. If you deliver your shares for redemption to Churchill’s transfer agent and later decide prior to the special meeting not to elect redemption, you may request that Churchill’s transfer agent return the shares (physically or electronically). You may make such request by contacting Churchill’s transfer agent at the address listed at the end of this section.
Any corrected or changed proxy card or written demand of redemption rights must be received by Churchill’s transfer agent prior to the vote taken on the business combination proposal at the special meeting. No demand for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to the transfer agent prior to the vote at the special meeting.
If a redemption demand is properly made as described above, then, if the business combination is consummated, Churchill will redeem these shares for a pro rata portion of funds deposited in the trust account. If you exercise your redemption rights, then you will be exchanging your shares of Churchill common stock for cash.
 
15

 
Q.
Do I have appraisal rights if I object to the proposed business combination?
A.
No. Neither Churchill stockholders nor its unit or warrant holders have appraisal rights in connection with the business combination under the DGCL. Please see the section entitled “Special Meeting of Churchill Stockholders — Appraisal Rights.
Q.
What happens to the funds deposited in the trust account after consummation of the business combination?
A.
The net proceeds of the Churchill IPO, a total of $2,070,000,000, were placed in the trust account immediately following the Churchill IPO. After consummation of the business combination, the funds in the trust account will be used to pay holders of the public shares who exercise redemption rights, to pay fees and expenses incurred in connection with the business combination (including aggregate fees of up to $72,450,000 as deferred underwriting commissions) and to fund the Merger Consideration. Please see the section entitled “Proposal No. 1 — The Business Combination — Sources and Uses of Funds for the Transactions.”
Q.
What happens if a substantial number of public stockholders vote in favor of the business combination proposal and exercise their redemption rights?
A.
Churchill’s public stockholders may vote in favor of the business combination and still exercise their redemption rights. Accordingly, the business combination may be consummated even though the funds available from the trust account and the number of public stockholders are substantially reduced as a result of redemptions by public stockholders.
Q.
What happens if the business combination is not consummated?
A.
If Churchill does not complete the business combination with Lucid for whatever reason, Churchill would search for another target business with which to complete a business combination. If Churchill does not complete a business combination with Lucid or another target business by August 3, 2022 (or November 3, 2022 if Churchill has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination by August 3, 2022), Churchill must redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the amount then held in the trust account divided by the number of outstanding public shares. The Sponsor and the Insiders have no redemption rights in the event a business combination is not effected in the completion window, and, accordingly, their founder shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to Churchill’s outstanding warrants. Accordingly, the warrants will be worthless.
Q.
How does the Sponsor intend to vote on the proposals?
A.
The Sponsor owns of record and is entitled to vote an aggregate of 20% of the outstanding shares of Churchill’s common stock as of the record date. The Sponsor and the Insiders have agreed to vote any founder shares and any public shares held by them as of the record date, in favor of the Transactions. The Sponsor and Insiders may have interests in the Transactions that may conflict with your interests as a stockholder, see the sections entitled “Summary of the Proxy statement/prospectus — Interests of Certain Persons in the Business Combination” and “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination.
Q.
When do you expect the business combination to be completed?
A.
It is currently anticipated that the business combination will be consummated promptly following the Churchill special meeting which is set for [•], 2021, subject to the satisfaction of customary closing conditions; however, such meeting could be adjourned, as described above. For a description of the conditions to the completion of the business combination, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Merger Agreement — Conditions to Closing of the Transactions.
 
16

 
Q.
What do I need to do now?
A.
Churchill urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the Annexes, and to consider how the business combination will affect you as a stockholder and/or warrant holder of Churchill. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card, or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or other nominee.
Q.
How do I vote?
A.
The special meeting will be held via live webcast at [•] a.m. Eastern Time, on [•], 2021. The special meeting can be accessed by visiting [•], where you will be able to listen to the meeting live and vote during the meeting. Please note that you will only be able to access the special meeting by means of remote communication.
If you are a holder of record of Churchill common stock on [•], 2021, the record date for the special meeting, you may vote at the special meeting via the virtual meeting platform or by submitting a proxy for the special meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the meeting and vote, obtain a proxy from your broker, bank or nominee.
Q.
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
A.
No. Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-routine matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. We believe the proposals presented to the stockholders at the special meeting will be considered non-routine and, therefore, your broker, bank or nominee cannot vote your shares without your instruction on any of the proposals presented at the special meeting. If you do not provide instructions with your proxy, your broker, bank or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a broker, bank or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the special meeting. Your bank, broker or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.
Q.
How will a broker non-vote impact the results of each proposal?
A.
Broker non-votes will count as a vote “AGAINST” the charter proposal but will not have any effect on the outcome of any other proposals.
Q.
May I change my vote after I have mailed my signed proxy card?
A.
Yes. Stockholders of record may send a later-dated, signed proxy card to Churchill’s transfer agent at the address set forth at the end of this section so that it is received prior to the vote at the special meeting or attend the special meeting and vote. Stockholders also may revoke their proxy by sending a notice of revocation to Churchill’s transfer agent, which must be received prior to the vote at the special meeting.
Q.
What happens if I fail to take any action with respect to the special meeting?
A.
If you fail to take any action with respect to the special meeting and the business combination is
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17

 
approved by stockholders, the business combination will be consummated in accordance with the terms of the Merger Agreement. If you fail to take any action with respect to the special meeting and the business combination is not approved, we will not consummate the business combination.
Q.
What will happen if I sign and return my proxy card without indicating how I wish to vote?
A.
Signed and dated proxies received by us without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal presented to the stockholders. The proxyholders may use their discretion to vote on any other matters which properly come before the special meeting.
Q.
What should I do if I receive more than one set of voting materials?
A.
Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your Churchill shares.
Q.
Who can help answer my questions?
A.
If you have questions about the Transactions or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact:
Churchill Capital Corp IV
640 Fifth Avenue, 12th Floor
New York, NY 10019
Tel: (212) 380-7500
Email: info@churchillcapitalcorp.com
or:
[MISSING IMAGE: lg_mackenziepartners-bw.jpg]
407 Broadway – 27th Floor
New York, New York 10018
Call Toll-Free (800) 322-2885
Email: proxy@mackenziepartners.com
To obtain timely delivery, our stockholders must request any additional materials no later than five business days prior to the special meeting. You may also obtain additional information about Churchill from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your public shares, you will need to deliver your stock (either physically or electronically) to Churchill’s transfer agent at the address below prior to the vote at the special meeting. See the section entitled “Proposal No. 1 — The Business Combination Proposal — Redemption Rights.”
If you have questions regarding the certification of your position or delivery of your stock, please contact:
Continental Stock Transfer & Trust Company
1 State Street 30th Floor
New York, New York 10004
(212) 509-4000
 
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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS
This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the special meeting, including the business combination proposal, you should read this entire document carefully, including the Merger Agreement attached as Annex A to this proxy statement/prospectus. The Merger Agreement is the legal document that governs the Transactions that will be undertaken in connection with the business combination. It is also described in detail in this proxy statement/prospectus in the section entitled “Proposal No. 1 — The Business Combination Proposal — Certain Agreements Related to the Business Combination — Merger Agreement.”
The Parties
Churchill
Churchill Capital Corp IV is a blank check company formed in order to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses or entities. Churchill was incorporated under the laws of Delaware on April 30, 2020.
On August 3, 2020, Churchill closed its initial public offering of 207,000,000 units, including the exercise of the over-allotment option to the extent of 27,000,000 units, with each unit consisting of one share of its Class A common stock and one-fifth of one warrant, each whole warrant to purchase one share of its Class A common stock at a purchase price of $11.50 per share, subject to adjustment as provided in Churchill’s final prospectus filed with the Securities and Exchange Commission on July 30, 2020 (File No. 333-239856). The units from the Churchill IPO were sold at an offering price of $10.00 per unit, generating total gross proceeds of $2,070,000,000.
Simultaneously with the consummation of the Churchill IPO and the exercise of the underwriters’ over-allotment option, Churchill consummated the private sale of 42,850,000 warrants at $1.00 per warrant for an aggregate purchase price of $42,850,000. A total of $2,070,000,000, was deposited into the trust account and the remaining net proceeds became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. The Churchill IPO was conducted pursuant to a registration statement on Form S-1 that became effective on July 29, 2020. As of [•], 2021, the record date for the special meeting, there was approximately $[•] held in the trust account.
Churchill’s units, Class A common stock and warrants are listed on the NYSE under the symbols CCIV.U, CCIV and CCIV WS, respectively. Upon the Closing, we expect that Churchill's Class A common stock and public warrants will begin trading on Nasdaq under the symbols “LCID” and “LCID.WS,” respectively.
The mailing address of Churchill’s principal executive office is 640 Fifth Avenue, 12th Floor, New York, NY 10019. Its telephone number is (212) 380-7500. After the consummation of the business combination, its principal executive office will be that of Lucid.
Merger Sub
Air Merger Sub, Inc. is a wholly owned subsidiary of Churchill formed solely for the purpose of effectuating the Merger described herein. Merger Sub was incorporated under the laws of Delaware as a corporation on February 19, 2021. Merger Sub owns no material assets and does not operate any business.
The mailing address of Merger Sub’s principal executive office is 640 Fifth Avenue, 12th Floor, New York, NY 10019. Its telephone number is (212) 380-7500. After the consummation of the business combination, Merger Sub will cease to exist as a separate legal entity.
Lucid
Lucid is a vertically-integrated technology and automotive company that (i) designs, engineers, and builds electric vehicles, electric vehicle powertrains and battery systems in-house using its own equipment
 
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and factory, (ii) plans to offer a refined customer experience at its own geographically-distributed retail and service locations and through direct-to-consumer and retail sales, and (iii) boasts a strong product roadmap of future vehicle programs and technologies. Lucid’s focus on in-house technological innovation and a “clean-sheet” approach to engineering and design have led to the development of its groundbreaking electric vehicle, the Lucid Air, which Lucid expects to go into production in the second half of 2021.
The Lucid Air is a luxury electric sedan that redefines both the luxury car segment and the electric vehicle space. Lucid’s Space Concept underpins its design, merging a spacious interior with a smaller exterior profile that is reminiscent of a high-performance sports car. This achievement is enabled by Lucid’s miniaturized drive-train components, which also result in increased storage capacity.
The Lucid Air will be manufactured at Lucid’s greenfield electric vehicle manufacturing facility in Casa Grande, Arizona. Lucid plans to sell vehicles directly to consumers through both its retail sales network and through direct online sales. Lucid is also establishing an in-house vehicle service footprint, with brick-and-mortar service centers in various geographies and a planned mobile service fleet.
Lucid expects to launch additional vehicles over the coming decade. Lucid has already commenced engineering and design work for Project Gravity, a luxury sports utility vehicle that is expected to leverage the same platform as the Lucid Air and many of the technological advancements developed for the Lucid Air. Lucid expects to begin production of Project Gravity at the end of 2023. After the Lucid Air and Project Gravity, Lucid plans to leverage its technological and manufacturing advancements to develop and manufacture progressively more affordable vehicles in higher volumes.
Lucid further believes that its battery systems expertise positions it to produce compelling stationary energy storage system products. Beyond the sale of Lucid branded vehicles, Lucid believes that its technological prowess and manufacturing capabilities present a further opportunity to generate revenue and combat climate change through the sale or licensing of electric vehicle powertrain and battery technology.
Emerging Growth Company
Churchill is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, it is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statement/prospectus, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find Churchill’s securities less attractive as a result, there may be a less active trading market for Churchill’s securities and the prices of its securities may be more volatile.
Churchill will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the Churchill IPO, (b) in which Churchill has total annual gross revenue of at least $1.07 billion, or (c) in which Churchill is deemed to be a large accelerated filer, which means the market value of Churchill’s common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which Churchill has issued more than $1.00 billion in non-convertible debt during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
The Business Combination Proposal
Structure of the Transactions
On February 22, 2021, Churchill entered into the Merger Agreement with Merger Sub and Lucid. Pursuant to the Merger Agreement, the parties thereto will enter into a business combination transaction by which Merger Sub will merge with and into Lucid with Lucid surviving such merger as a wholly owned subsidiary of Churchill.
 
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Merger Consideration
Lucid will take all actions necessary or appropriate so that, immediately prior to closing, all of the Lucid Preferred Shares will be converted into Lucid Common Shares in accordance with the terms of Lucid’s memorandum and articles of association (the “Conversion”). All of the Lucid Preferred Shares converted into Lucid Common Shares shall no longer be outstanding, and each holder of Lucid Preferred Shares shall thereafter cease to have any rights with respect to such Lucid Preferred Shares.
Subject to the terms of the Merger Agreement, the aggregate consideration to be paid to Lucid shareholders and holders of vested options to purchase Lucid Common Shares (the “Aggregate Consideration”) will be equal to (a) $11,750,000,000 plus (b) (i) all cash and cash equivalents of Lucid and its subsidiaries less (ii) all indebtedness for borrowed money of Lucid and its subsidiaries, in each case as of two business days prior to the Closing Date. The consideration to Lucid shareholders will be paid entirely in shares of Churchill’s Class A common stock, in an amount equal to $10.00 per share.
Each Lucid Common Share issued and outstanding immediately prior to Closing will be automatically surrendered and exchanged for the right to receive a number of shares of Churchill’s Class A common stock equal to the Exchange Ratio based on the Equity Value. Assuming a Closing Date of July 23, 2021 and that Lucid will have $325.0 million in net cash as of two business days prior to the Closing Date, among other things, we expect that the Exchange Ratio will be approximately 2.595 shares of Churchill’s Class A common stock each issued and outstanding Lucid Common Share. See the section entitled “Proposal No. 1 — The Business Combination Proposal — General — Merger Consideration.”
At the Effective Time, by virtue of the Merger and without any further action on the part of Churchill, Merger Sub, Lucid, any holder of Lucid Shares or the holders of any securities of Churchill, the following will occur:
a)
Each Lucid Common Share issued and outstanding immediately prior to the Effective Time (other than Excluded Shares and Dissenting Shares (each as defined below)) will be automatically surrendered and exchanged for the right to receive the per share Merger Consideration, in each case in accordance with the terms of the Merger Agreement.
b)
Each issued and outstanding share of common stock of Merger Sub will be converted into and become one validly issued, fully paid and nonassessable common shares, par value US $1.00 per share, of Lucid as the surviving entity, which will constitute the only outstanding common shares of Lucid as the surviving entity.
c)
Each Lucid Share held in Lucid’s treasury or owned by Churchill, Merger Sub or Lucid immediately prior to the Effective Time (each, an “Excluded Share”) will automatically be cancelled and surrendered (as applicable) and no consideration will be paid or payable with respect thereto.
For more information regarding the sources and uses of the funds utilized to consummate the Transactions, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Sources and Uses of Funds for the Transactions.”
Exchange and Fractional Shares
Immediately prior to or at the Effective Time, Churchill will deposit, or cause to be deposited, with Continental Stock Transfer & Trust Company (the “Exchange Agent”) evidence in book-entry form of shares of Churchill’s Class A common stock representing the number of shares of Churchill’s Class A common stock sufficient to deliver the Merger Consideration.
At or prior to the Effective Time, Churchill will instruct the Exchange Agent to issue to each shareholder of Lucid the portion of the Merger Consideration to which that shareholder of Lucid is entitled pursuant to the Merger Agreement at or promptly after the Closing.
Notwithstanding anything to the contrary as described in the Merger Agreement, no fraction of a share of Churchill’s Class A common stock will be issued by virtue of the Merger Agreement or the transactions contemplated thereby, and each shareholder of Lucid who would otherwise be entitled to a fraction of a share of Churchill’s Class A common stock (after aggregating all shares of Churchill’s Class A
 
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common stock to which such shareholder of Lucid otherwise would be entitled) will instead have the number of shares of Churchill’s Class A common stock issued to such shareholder of Lucid rounded up or down to the nearest whole share of Churchill’s Class A common stock (with 0.5 of a share or greater rounded up), as applicable.
Treatment of Lucid Equity Awards
Lucid Option Awards
At the Effective Time, each issued and unexercised option to purchase shares Lucid Common Shares (whether or not vested) will be assumed by Churchill and become an option to purchase shares of Churchill’s Class A common stock, on the same terms and conditions as applied to each such option immediately prior to the Effective Time, except that (A) the number of shares of Churchill’s Class A common stock subject to such option will equal the product of (i) the number of Lucid Common Shares that were subject to such option immediately prior to the Effective Time multiplied by (ii) the Exchange Ratio, rounded down to the nearest whole share, and (B) the per-share exercise price will equal the quotient of (1) the exercise price per share of Lucid Common Shares at which such option was exercisable immediately prior to the Effective Time, divided by (2) the Exchange Ratio, rounded up to the nearest whole cent. All incentive stock options (“ISOs”) will be adjusted in accordance with the requirements of Section 424 of the Code and will be adjusted in a manner that complies with Section 409A of the Code.
Lucid Restricted Stock Unit Awards
At the Effective Time, each outstanding Lucid restricted stock unit (“RSU”) will be assumed by Churchill and become an RSU with respect to shares of Churchill’s Class A common stock, on the same terms and conditions as applied to each such RSU immediately prior to the Effective Time, except that (A) the number of shares of Churchill’s Class A common stock subject to such RSU will equal the product of (i) the number of Lucid Common Shares that were subject to such RSU immediately prior to the Effective Time multiplied by (ii) the Exchange Ratio, rounded down to the nearest whole share.
Lucid Warrants
At the Effective Time, each outstanding Lucid warrant will be assumed by Churchill and become a warrant to acquire shares of Churchill’s Class A common stock, on the same terms and conditions as applied to each such warrant immediately prior to the Effective Time, except that (A) the number of shares of Churchill’s Class A common stock subject to such warrant will equal the product of (i) the number of Lucid Common Shares that were subject to such warrant immediately prior to the Effective Time divided by (ii) the Exchange Ratio, rounded up to the nearest whole cent. As of the Effective Time, all Lucid Warrants will no longer be outstanding.
Lucid Shareholder Appraisal/Dissenter’s Rights
Under Cayman law, the Lucid Shares that are issued and outstanding immediately prior to the Effective Time and that are held by shareholders who will have validly exercised and perfected and not effectively withdrawn or lost their rights to dissent from the Merger in accordance with Cayman law (collectively, the “Dissenting Shares”; holders of Dissenting Shares being referred to as “Dissenting Shareholders”) will not be not be entitled to receive the per share Merger Consideration as provided in the Merger Agreement, but instead at the Effective Time the holders of Dissenting Shares will be entitled to receive the fair value of such Dissenting Shares in accordance Cayman law and such Dissenting Shares will no longer be outstanding and will automatically be cancelled and will cease to exist. Notwithstanding the foregoing, if any such holder will fail to perfect or otherwise will waive, withdraw or lose the right to dissent under Cayman law, then the right of such holder to be paid the fair value of such holder’s Lucid Shares under Cayman law will cease and such Lucid Shares will be deemed to have been surrendered and exchanged at the Effective Time for the right to receive the per share Merger Consideration as provided in the Merger Agreement without interest or any other payments. In the event that any written notices of objection to the Merger are served by any holder pursuant to Cayman law, Lucid will serve written notice of the
 
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authorization of the Merger on such holders pursuant to Cayman law within twenty (20) days of the authorization of the Plan of Merger (as defined in the Merger Agreement).
Related Agreements
Merger Agreement
The summary of the material provisions of the Merger Agreement set forth below and elsewhere in this proxy statement/prospectus is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A and which is incorporated by reference in this proxy statement/prospectus. All stockholders are encouraged to read the Merger Agreement in its entirety for a more complete description of the terms and conditions of the business combination.
Closing and Effective Time of the Transactions
The closing of the Transactions will take place promptly following the satisfaction or waiver of the conditions described below under the subsection entitled “Conditions to Closing of the Transactions,” unless Churchill and Lucid agree in writing to another time or unless the Merger Agreement is terminated. The Transactions are expected to be consummated promptly after the approval of Churchill’s stockholders at the special meeting of such stockholders described in this proxy statement/prospectus.
Representations and Warranties
The Merger Agreement contains representations and warranties of Lucid relating, among other things, to:

corporate organization;

subsidiaries;

the authorization, performance and enforceability of the Merger Agreement and the Transaction Agreements (as defined in the Merger Agreement);

no conflict;

consent, approval or authorization of governmental authorities;

current capitalization;

capitalization of subsidiaries;

financial statements;

absence of undisclosed liabilities;

litigation and proceedings;

compliance with laws;

contracts and absence of defaults;

benefit plans;

labor matters;

taxes;

insurance;

permits;

machinery, equipment and other tangible property;

real property;

intellectual property and IT security;
 
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environmental matters;

absence of material adverse effect and certain changes;

brokers’ fees;

related party transactions; and

this proxy statement/prospectus.
The Merger Agreement contains representations and warranties of Churchill and Merger Sub relating, among other things, to:

corporate organization;

the authorization, performance and enforceability of the Merger Agreement and Transaction Agreements;

no conflict;

litigation and proceedings;

consent, approval or authorization of governmental authorities;

financial ability and trust account;

brokers’ fees;

SEC reports, financial statements and Sarbanes-Oxley Act;

absence of undisclosed liabilities;

business activities;

tax matters;

capitalization;

NYSE listing;

the PIPE Investment;

the Sponsor Agreement;

related party transactions;

Investment Company Act of 1940;

no foreign person(s);

this proxy statement/prospectus; and

the fairness opinion of Guggenheim Securities, LLC.
Covenants
The parties have each agreed to use commercially reasonable efforts to obtain certain required consents and approvals so long as any consents required pursuant to any material contract of Lucid or any of its subsidiaries is not otherwise terminable at will, for convenience or upon or after notice of termination is provided by a party thereto. The parties have also agreed to take such other actions as may be reasonably necessary to satisfy the conditions of the other parties as set forth in the Merger Agreement or to otherwise comply with the Merger Agreement and to consummate the Transactions as soon as practicable.
Prior to the closing of the Transactions, Lucid has agreed to, and to cause its subsidiaries to, use commercially reasonable efforts to operate its business in the ordinary course of business consistent with past practices, including recent past practice in light of the current COVID-19 pandemic.
Lucid and Churchill have agreed that, unless otherwise required or permitted under the Merger Agreement, required by law and subject to certain disclosed exceptions, neither Lucid nor its subsidiaries
 
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will take, among others, the following actions during the interim period between signing of the Merger Agreement and closing of the Transactions without the prior written consent of Churchill (which consent will not be unreasonably conditioned, withheld, delayed or denied):

change or amend its memorandum and articles of association or other organizational documents, except as otherwise required by law;

make, declare, set aside, establish a record date for or pay any dividend or distribution, other than any dividends or distributions from any wholly owned subsidiary of Lucid to Lucid or any other wholly owned subsidiaries of Lucid;

enter into, assume, assign, amend or modify any material term of or terminate any collective bargaining or similar agreement of Lucid or any of its subsidiaries (other than entry into such agreements in the ordinary course of business);

issue, deliver, sell, transfer, pledge, dispose of or place any lien (other than a permitted lien) on any shares or any other equity or voting securities of Lucid or any of its subsidiaries or issue or grant any options, warrants or other rights to purchase or obtain any shares or any other equity or voting securities of Lucid, other than (A) issuances of Lucid Options or Lucid RSUs in connection with new hires or to existing employees, in each case pursuant to a Company Share Plan or (B) issuances of Lucid Common Shares upon the exercise of Lucid Options or Lucid Warrants, in each case, that are outstanding as of February 22, 2021;

subject to certain exceptions, sell, assign, transfer, convey, lease, license, abandon, allow to lapse of expire, subject to or grant any lien on or otherwise dispose of any intellectual property or any material assets, rights or properties;

cancel or compromise any claim or indebtedness owed to Lucid or any of its subsidiaries; settle any pending or threatened action or proceeding (a) if such settlement would require payment by Lucid in an amount greater than $2,000,000, (b) to the extent such settlement includes an agreement to accept or concede injunctive relief or (c) to the extent such settlement involves a governmental authority or alleged criminal wrongdoing; or agree to modify in any respect materially adverse to Lucid and its subsidiaries any confidentiality or similar contract to which Lucid or any of its subsidiaries are a party;

acquire (by merger, consolidation, purchase of a substantial portion of stock or assets or otherwise), directly or indirectly, any business or corporation, partnership limited liability company, joint venture, association or other entity or division thereof other than in the ordinary course of business;

make any loans or advance any money or other property to any third party, except for certain advances to employees or officers, prepayments and deposits paid to suppliers of Lucid and its subsidiaries and trade credit extended to customers of Lucid or any of its subsidiaries, in each case, in the ordinary course of business;

enter into, assume, assign, amend or modify any material term or terminate certain types of contracts of Lucid and its subsidiaries or any real property lease, other than in the ordinary course of business;

redeem, purchase or otherwise acquire, any equity interests (convertible or otherwise) of Lucid or any of its subsidiaries;

adjust, split, combine, subdivide, recapitalize, reclassify or otherwise effect any change in respect of any equity interests or securities of Lucid;

make any change in its customary accounting principles or methods of accounting materially affecting the reported consolidated assets, liabilities or results of operations of Lucid and its subsidiaries, other than as may be required by applicable law, GAAP or regulatory guidelines;

adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Lucid or its subsidiaries;

make, change or revoke any material income tax election, adopt or change any material accounting method with respect to taxes, file any amended material tax return, settle or compromise any material tax liability, enter into any material closing agreement with respect to any tax, surrender any right
 
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to claim a material refund of taxes, consent to any extension or waiver of the limitations period applicable to any material tax claim or assessment, or enter into any tax sharing or tax indemnification agreement;

take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act could reasonably be expected to prevent or impede the Merger from qualifying for the intended tax treatment;

directly or indirectly incur or modify in any material respect the terms of, any indebtedness, or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any person for indebtedness (other than indebtedness under capital leases entered into in the ordinary course of business);

voluntarily fail to maintain in full force and effect material insurance policies covering Lucid and its subsidiaries in a form and amount consistent with past practices;

enter into any transaction or materially amend any existing agreement with any person that, to the knowledge of Lucid, is an affiliate of Lucid or its subsidiaries subject to certain exclusions, including ordinary course payments of annual compensation, provision of benefits or reimbursement of expenses in respect of members or stockholders who are officers or directors of Lucid or its subsidiaries;

enter into any contract that materially restricts Lucid or its subsidiaries to engage or compete in any line of business or enter into any new line of business;

make any capital expenditures that exceed $90,000,000 in the aggregate other than as consistent with Lucid’s annual capital expenditures budget for periods following February 22, 2021; or

enter into any agreement, or otherwise become obligated, to do any of the foregoing.
Lucid and Churchill have agreed that, unless otherwise required or permitted under the Merger Agreement, and subject to certain disclosed exceptions, neither Churchill nor its subsidiaries will take the following actions during the interim period between signing of the Merger Agreement and closing of the Transactions, among others, without the prior written consent of Lucid (which consent will not be unreasonably conditioned, withheld, delayed or denied, except in certain cases as described in the Merger Agreement as to which Lucid consent may be granted or withheld in its sole discretion):

change, modify or amend Churchill’s trust agreement or organizational documents or the organizational documents of Merger Sub;

declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, Churchill;

split, combine or reclassify any capital stock of, or other equity interests in, Churchill;

other than in connection with the SPAC Stockholder Redemption (as defined in the Merger Agreement) or as otherwise required by Churchill’s organizational documents in order to consummate the Transactions, repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, Churchill;

make, change or revoke any material income tax election, adopt or change any material accounting method with respect to taxes, file any amended material tax return, settle or compromise any material tax liability, enter into any material closing agreement with respect to any tax, surrender any right to claim a material refund of taxes or consent to any extension or waiver of the limitations period applicable to any material tax claim or assessment or enter into any tax sharing or tax indemnification agreement;

take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act could reasonably be expected to prevent or impede the Merger from qualifying for the intended tax treatment;

enter into, renew or amend in any material respect, any transaction or contract with an affiliate of Churchill (including (i) the sponsors or anyone related by blood, marriage or adoption to any sponsor
 
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and (ii) any person in which any sponsor has a direct or indirect legal, contractual or beneficial ownership interest of 5% or greater);

waive, release, compromise, settle or satisfy any pending or threatened material claim, action or proceeding or compromise or settle any liability;

incur, guarantee or otherwise become liable for any indebtedness;

offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, other equity interests, equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in, Churchill or any of its subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than the (i) issuance of Churchill’s Class A common stock in connection with the exercise of any warrants outstanding on the date of the Merger Agreement, (ii) issuance of Churchill’s Class A common stock at not less than $10.00 per share on the terms set forth in the PIPE Subscription Agreements; or

amend, modify or waive any of the terms or rights set forth in, any warrant or the warrant agreement, including any amendment, modification or reduction of the warrant price set forth therein.
The Merger Agreement also contains additional covenants of the parties, including, among other things, covenants providing for:

the parties to prepare and file this proxy statement/prospectus and to solicit proxies from Churchill stockholders to vote on the proposals that will be presented for consideration at the special meeting;

compliance with the notification and reporting requirements under the HSR Act;

mutual exclusivity during the interim period between signing of the Merger Agreement and closing of the Transactions;

each party to take certain actions to effect the intended tax treatment of the Transactions;

the protection of confidential information of the parties and, subject to the confidentiality requirements, the provision of reasonable access to information;

the parties to take all necessary action to cause the board of directors of the post combination company to consist of nine (9) directors who will be designated as set forth in the Investor Rights Agreement;

Lucid to take all actions reasonably necessary to duly convene an extraordinary general meeting;

Churchill to notify Lucid promptly in the event of any Stockholder Action (as defined in the Merger Agreement), to keep Lucid reasonably apprised, to give Lucid the opportunity to participate in the defense of any such Stockholder Action and to give due consideration to Lucid’s advice with respect to such Stockholder Action and to not settle any such Stockholder Action without the prior written consent of Lucid;

customary indemnification of, and provision of insurance with respect to, former and current officers and directors of Churchill and Lucid and each of their respective subsidiaries;

Churchill to take all actions and do all things necessary, proper or advisable to consummate the transactions contemplated by the PIPE Subscription Agreements on the terms and conditions described therein;

Churchill to take all actions and do all things necessary, proper or advisable to satisfy on a timely basis all conditions and covenants applicable to Churchill in the Sponsor Agreement and to enforce its rights under such agreement;

Churchill to use its reasonable best efforts to ensure Churchill remains listed as a public company on, and for shares of Churchill’s Class A common stock and warrants (but in the case of the warrants, only to the extent issued as of February 22, 2021) to be listed on, the NYSE or other stock exchange mutually agreed upon by Churchill and Lucid;
 
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Churchill to take all steps reasonably necessary or advisable to cause the shares of Churchill’s Class A common stock to trade under the symbol “LCID” upon the Closing, or under such other symbol as Lucid and Churchill may otherwise agree prior to the Closing;

Churchill to take all commercially reasonable steps as may be required to cause any acquisition or disposition of Churchill’s Class A common stock that occurs or is deemed to occur by reason of or pursuant to the Transactions by each individual who is or will be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Churchill to be exempt under Rule 16b-3 promulgated under the Exchange Act;

Churchill to approve and, subject to approval of the stockholders of Churchill, adopt, the Incentive Plan;

Churchill to take all actions necessary to continue to qualify as an “emerging growth company” within the meaning of the JOBS Act and not take any action that would cause Churchill to not qualify as an “emerging growth company” within the meaning of the JOBS Act;

Churchill to (i) amend and restate the current certificate of incorporation to be substantially in the form of the second amended and restated certificate of incorporation, subject to obtaining approval of the stockholders of Churchill and (ii) amend and restate the current bylaws to be substantially in the form of the amended and restated bylaws; and

Churchill to cause Lucid to domesticate as a Delaware corporation in accordance with the DGCL and the CICA, as promptly as practicable following the Closing.
Conditions to Closing of the Transactions
General Conditions
Consummation of the Transactions is conditioned on the approval of the business combination proposal, the charter proposal, the incentive plan proposal and the NYSE proposal, as described in this proxy statement/prospectus.
In addition, the consummation of the Transactions contemplated by the Merger Agreement is conditioned upon, among other things:

the early termination or expiration of the waiting period under the HSR Act (the waiting period expired at 11:59 pm Eastern Time on April 7, 2021);

no order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any governmental authority, and no statute, rule or regulation that is in effect and enjoins or prohibits the consummation of the Transactions;

Churchill having at least $5,000,001 of net tangible assets remaining after redemptions by Churchill stockholders; and

the approval by Lucid’s existing shareholders being obtained;

the shares of common stock have been listed on the NYSE or other stock exchange mutually agreed between Churchill and Lucid and be eligible for continued listing on such stock exchange immediately following the Closing;

the registration statement contemplated under the Merger Agreement has become effective in accordance with the Securities Act, no stop order has been issued by the SEC with respect to the registration statement and no action seeking such order has been threatened or initiated; and

the delivery by each of Lucid and Churchill to the other of a certificate with respect to the truth and accuracy of such party’s representations and warranties as of the Closing, as well as the performance by such party of the covenants and agreements contained in the Merger Agreement required to be complied with by such party prior to the Closing.
Churchill’s Conditions to Closing
The obligations of Churchill and Merger Sub to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:
 
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the accuracy of the representations and warranties of Lucid (subject to customary bring-down standards); and

the covenants of Lucid having been performed in all material respects.
Lucid’s Conditions to Closing
The obligations of Lucid to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:

the accuracy of the representations and warranties of Churchill and Merger Sub (subject to customary bring-down standards);

the covenants of Churchill and Merger Sub having been performed in all material respects;

there being at least $2,800,000,000 of Available Closing SPAC Cash; and

the covenants of the Sponsor and the Insiders under the Sponsor Agreement having been performed in all material respects, and no such Sponsor or Insider having threatened (orally or in writing) (i) that the Sponsor Agreement is not valid, binding and in full force and effect, (ii) that Lucid is in breach of or default under the Sponsor Agreement or (iii) to terminate the Sponsor Agreement.
Waiver
Any party to the Merger Agreement may, at any time prior to the Closing, by action taken by its board of directors or equivalent governing body, or officers thereunto duly authorized, waive in writing any of its rights or conditions in its favor under the Merger Agreement. Notwithstanding the foregoing, pursuant to Churchill’s current certificate of incorporation, Churchill cannot consummate the proposed business combination if it has less than $5,000,001 of net tangible assets remaining after the closing.
The existence of the financial and personal interests of the directors may result in a conflict of interest on the part of one or more of them between what such director may believe is best for Churchill and what such director may believe is best for such director in determining whether or not to grant a waiver in a specific situation.
Termination
The Merger Agreement may be terminated and the Transactions abandoned, but not later than the closing of the Transactions, as follows:

by mutual written consent of Churchill and Lucid;

by Churchill if the Transactions are not consummated on or before October 22, 2021 (the “Termination Date”), which may be automatically extended in the event that any action or legal proceeding for specific performance or other equitable relief by Lucid with respect to the Merger Agreement or any other Transaction Agreement or otherwise with respect to the Transactions is commenced or pending on or before October 22, 2021 until thirty (30) days following the date on which a final, non-appealable order or judgment has been entered with respect to such action or legal proceeding, provided that Churchill’s failure to fulfill any obligation under the Merger Agreement is not the primary cause of, or primarily resulted in, the failure of the closing of the Transactions to occur on or before the termination date;

by Lucid if the Transactions are not consummated on or before October 22, 2021, provided that Lucid’s failure to fulfill any obligation under the Merger Agreement is not the primary cause of, or primarily resulted in, the failure of the closing of the Transactions to occur on or before the Termination Date;

by either Churchill or Lucid if the other party has breached any of its covenants, agreements, representations or warranties which would cause the conditions to closing of the Transactions not to be satisfied and has not cured its breach, if curable, within thirty (30) days of an intent to terminate, provided that the terminating party’s failure to fulfill any obligation under the Merger Agreement is
 
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not the primary cause of, or primarily resulted in, the failure of the closing of the Transactions to occur on or before the Termination Date or, in the case of a termination by Lucid, the extended Termination Date, as applicable;

by either Churchill or Lucid if a final, non-appealable governmental order or a statute, rule or regulation permanently enjoins or prohibits consummation of the Merger;

by either Churchill or Lucid if stockholder approval is not obtained at the stockholders’ meeting (subject to any adjournment or postponement thereof), provided that Churchill is not entitled to terminate on these grounds if, at the time of such termination, Churchill is in breach of certain obligations with respect to this proxy statement/prospectus and the stockholders’ meeting; or

by Churchill if approval by Lucid’s existing shareholders is not obtained at a Lucid’s extraordinary general meeting (subject to any adjournment, postponement or recess of the meeting).
Effect of Termination
In the event of proper termination by either Churchill or Lucid, the Merger Agreement will become void and have no effect (other than with respect to certain surviving obligations specified in the Merger Agreement), without any liability on the part of any party thereto or its respective affiliates, officers, directors, employees or stockholders, other than liability of any party thereto for any intentional and willful breach of the Merger Agreement by such party occurring prior to such termination.
Fees and Expenses
All fees and expenses incurred in connection with the Merger Agreement and the Transactions will be paid by the party incurring such expenses; provided that, if the Closing occurs, Churchill will bear and pay all of its transaction expenses in an amount not to exceed $128,000,000 and all transaction expenses of or payable by Lucid and its subsidiaries. Churchill will cooperate with Lucid and use its best efforts to minimize the amount of its fees and expenses incurred prior to the Closing.
Amendments
The Merger Agreement may be amended by the parties thereto at any time by execution of a duly authorized agreement in writing executed on behalf of each of the parties in the same manner as the Merger Agreement and which makes reference to the Merger Agreement. Churchill would file a Current Report on Form 8-K and issue a press release to disclose any amendment to the Merger Agreement entered into by the parties. If such amendment is material to investors, a proxy statement supplement would also be sent to holders of Churchill’s Class A common stock as promptly as practicable.
Governing Law; Consent to Jurisdiction
The Merger Agreement is governed by the laws of the State of New York. The parties to the Merger Agreement have irrevocably submitted to the exclusive jurisdiction of federal and state courts located in the City of New York, Borough of Manhattan.
Investor Rights Agreement
Concurrently with the execution of the Merger Agreement, Churchill entered into the Investor Rights Agreement with the Sponsor, Ayar and the other parties named therein, pursuant to which the parties thereto will have certain rights and obligations following the closing of the Transactions. The following summary of material provisions of the Investor Rights Agreement is qualified by reference to the complete text of the Investor Rights Agreement, a copy of which is attached as Annex D to this proxy statement/prospectus. All stockholders are encouraged to read the Investor Rights Agreement in its entirety for a more complete description of the terms and conditions of the Investor Rights Agreement.
Board of Directors
Pursuant to the Investor Rights Agreement, effective as of the Closing, the board of Lucid Group will be comprised of nine (9) directors. Ayar has the right to nominate five (5) directors to the board of Lucid
 
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Group and the Sponsor will have the right to nominate one (1) director to the board of Lucid Group. Two (2) directors will be independent directors, nominated by Lucid, and one (1) director will be the chief executive officer of Lucid Group. Churchill will, and the other parties to the Investor Rights Agreement agree with Churchill to, take all necessary actions to cause the board nominees designated pursuant to the Investor Rights Agreement to be elected to the board of Lucid Group. Other than Ayar (as described below), no party has a right to nominate any director to the board of Lucid Group after the Closing.
Ayar’s right to designate directors to the board of Lucid Group after the Closing is subject to its (and its permitted transferees’) continued beneficial ownership of specified amounts of Lucid Group’s common stock as compared to the common stock issued and outstanding as of the record date of each applicable annual or special meeting of stockholders at which directors are to be elected. If Ayar (or its permitted transferees) owns beneficially: (i) fifty percent (50%) or greater of the shares of Lucid Group’s common stock issued and outstanding as of the record date of such annual or special meeting of stockholders, it will have the right to nominate five (5) directors; (ii) less than fifty percent (50%) but greater than or equal to forty percent (40%) of the shares of Lucid Group’s common stock issued and outstanding as of the record date of such annual or special meeting of stockholders, it will have the right to nominate four (4) directors; (iii) less than forty percent (40%) but greater than or equal to thirty percent (30%) of the shares of Lucid Group’s common stock issued and outstanding as of the record date of such annual or special meeting of stockholders, it will have the right to nominate three (3) director; (iv) less than thirty percent (30%) but greater than or equal to twenty percent (20%) of the shares of Lucid Group’s common stock issued and outstanding as of the record date of such annual or special meeting of stockholders, it will have the right to nominate two (2) directors; (v) less than twenty percent (20%) but greater than or equal to ten percent (10%) of the shares of Lucid Group’s common stock issued and outstanding as of the record date of such annual or special meeting of stockholders, it will have the right to nominate one (1) director; (vi) less than ten percent (10%) of the shares of Lucid Group’s common stock issued and outstanding as of the record date of such annual or special meeting of stockholders, it will not have the right to nominate any directors pursuant to the Investor Rights Agreement. If, after the Closing Date the size of the board of Lucid Group is increased or decreased, the number of directors Ayar is entitled to nominate will be increased or decreased in proportion to such increase or decrease in the size of the board of Lucid Group, rounded down to the nearest whole number.
Further, for so long as Ayar beneficially owns twenty percent (20%) or greater of the shares of common stock of Lucid Group issued and outstanding, it will have the right to designate the chairman of the board of Lucid Group. For so long as Ayar beneficially owns common stock representing at least one third (33 1/3%) of the common stock then issued and outstanding, Ayar will have the right to have at least one (1) Ayar director appointed to serve on each committee of the board. Pursuant to the Investor Rights Agreement, any material changes to Lucid Group’s business plan will require the affirmative vote of a majority of the board.
Lock-Up
Pursuant to the Investor Rights Agreement, certain parties agreed with Churchill not to sell, transfer, pledge or otherwise dispose of shares of Churchill’s Class A common stock or certain warrants to purchase shares of Churchill’s Class A common stock they receive in connection with the Transactions or otherwise beneficially own as of the Closing Date for the following time periods after the Closing Date:

in the case of Ayar and certain other existing investors in Lucid, 180 days (the “Lucid Shareholder Lock-Up Period”); and

in the case of the Sponsor, 18 months (the “Sponsor Lock-Up Period”).
Additionally, following certain underwritten offerings of Churchill’s equity securities, such parties will also agree to a customary market stand-off period not to exceed ninety (90) days.
Registration Rights
Pursuant to the Investor Rights Agreement, the Sponsor, Ayar and certain other parties thereto will be entitled to certain registration rights. Lucid Group will be required to register up to approximately 1,143 million shares of Lucid Group Common Stock pursuant to the Investor Rights Agreement (which
 
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amount includes the 13.3 million shares issuable to Ayar pursuant to the PIPE Subscription Agreement between Churchill and Ayar). Lucid Group will also be required to register up to an additional approximately 153 million shares pursuant to the other PIPE Subscription Agreements.
Pursuant to the Investor Rights Agreement, Churchill will file a shelf registration statement within fifteen (15) business days following the Closing Date in respect of the equity securities held by certain parties to the Investor Rights Agreement and will use commercially reasonable efforts to maintain or, in the event it ceases to be effective, replace such shelf registration statement until such parties have sold all eligible equity securities of Churchill beneficially owned by such parties as of the Closing Date. Pursuant to the Investor Rights Agreement, certain parties will be entitled to customary piggyback rights on registered offerings of equity securities of Churchill and certain other registration rights.
Following the Lucid Shareholder Lock-Up Period, Ayar will be entitled to initiate an aggregate of two (2) underwritten shelf take-downs or, if a shelf registration statement is not then effective, demand registrations, subject to participation rights of certain other parties.
Following the Sponsor Lock-Up Period, the Sponsor will be entitled to initiate one (1) underwritten shelf take-down or, if a shelf registration statement is not then effective, demand registrations, subject to participation rights of certain other parties.
Following the applicable lock-up period with respect to each party, each party will be entitled to initiate unlimited non-underwritten shelf take-downs.
Any underwritten offering of Churchill’s equity securities will be subject to customary cut-back provisions. Pursuant to the Investor Rights Agreement, Churchill will agree to cooperate and use commercially reasonable efforts to consummate the applicable registered offerings initiated by the parties and will pay the fees and expenses of such offerings (including fees of one counsel for the parties participating in such offering).
Sponsor Agreement
In connection with the execution of the Merger Agreement, Churchill, the Sponsor and the Insiders entered into the Sponsor Agreement. The following summary of the Sponsor Agreement is qualified by reference to the complete text of the form of Sponsor Agreement, a copy of which is attached as Annex E to this proxy statement/prospectus. All stockholders are encouraged to read the form of Sponsor Agreement in its entirety for a more complete description of the terms and conditions thereof.
Pursuant to the terms of the Sponsor Agreement, the Sponsor and the Insiders agreed (i) to vote any shares of Churchill’s securities held by such party in favor of the business combination proposal and the other proposals described in this proxy statement/prospectus, (ii) not to redeem any shares of Churchill’s Class A common stock or Churchill’s Class B common stock, in connection with the stockholder redemption, (iii) to pay any amounts in excess of the SPAC expense cap of $128,000,000 either in cash or by forfeiting a number of shares of Churchill’s Class B common stock, at a price of $10.00 per share, and/or warrants, at a price of $1.00 per share, with a value equal to such excess (iv) not to transfer any shares of Churchill securities until eighteen (18) months following the Closing and (v) to be bound to certain other obligations as described therein.
The Sponsor has also agreed during the Earnback Period to subject the Sponsor Earnback Shares and the Sponsor Earnback Warrants, which are comprised of three separate tranches of 5,750,000 shares per tranche and 4,761,111 warrants per tranche, respectively, to potential forfeiture to Lucid Group for no consideration until the occurrence of the respective Earnback Triggering Events. If one or more of the Earnback Triggering Events has not occurred by the end of the Earnout Period, the applicable tranche of Sponsor Earnback Shares and Sponsor Earnback Warrants will be forfeited to Lucid Group.
Subscription Agreements
In connection with the execution of the Merger Agreement, Churchill entered into the PIPE Subscription Agreements with the PIPE Investors. The following summary of the PIPE Subscription Agreements is qualified by reference to the complete text of the form of the PIPE Subscription Agreement,
 
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a copy of which is attached as Annex F to this proxy statement/prospectus. All stockholders are encouraged to read the form of the PIPE Subscription Agreement in its entirety for a more complete description of the terms and conditions thereof.
Pursuant to the terms of the PIPE Subscription Agreements, Churchill has agreed to issue and sell to the PIPE Investors and the PIPE Investors have agreed to buy 166,666,667 shares of Churchill’s Class A common stock (collectively, the “Subscribed Shares”) at a purchase price of $15.00 per share for an aggregate commitment of $2,500,000,005.
The closing of the PIPE Investment is conditioned on all conditions set forth in the Merger Agreement having been satisfied or waived and other customary closing conditions, and the Transactions will be consummated immediately following the closing of the PIPE Investment. The PIPE Subscription Agreements will terminate upon the earlier to occur of (i) the termination of the Merger Agreement and (ii) the mutual written agreement of the parties thereto.
From February 22, 2021 until the earlier of (a) the termination of the PIPE Subscription Agreements, and (b) the later of (ii) September 1, 2021, and (ii) the date the registration statement is declared effective (the “Lock-up Period”), none of the PIPE Investors are permitted to transfer their Subscribed Shares. The PIPE Investors further agreed that, subject to limited exceptions, during the Lock-Up Period, none of the PIPE Investors and their affiliates will engage in any short sales with respect to securities of Churchill. The foregoing restriction is expressly agreed to preclude the PIPE Investors from engaging in any hedging or other transactions which is designed to or could reasonably be expected to lead to or result in a sale or disposition of the Subscribed Shares even if such Subscribed Shares would be disposed by someone other than the PIPE Investors. Such prohibited hedging or other transactions include any purchase, sale or grant of any right (including any put or call option) with respect to any of the Subscribed Shares of the PIPE Investors or with respect to any security that includes, relates to, or derives any significant part of its value from such Subscribed Shares.
Voting and Support Agreement
In connection with the Merger Agreement, on February 22, 2021, Churchill entered into a Voting and Support Agreement with Lucid and Ayar. The following summary of the Voting and Support Agreement is qualified by reference to the complete text of the Voting and Support Agreement, a copy of which is attached as Annex G to this proxy statement/prospectus. All stockholders are encouraged to read the Voting and Support Agreement in its entirety for a more complete description of the terms and conditions thereof.
Pursuant to the Voting and Support Agreement, Ayar, owning 204,148,825 Lucid Series D Preferred Shares and 113,877,589 Lucid Series E Preferred Shares (the “Subject Shares”) as of the date of such agreement, agreed to vote all of such shares: (i) in favor of the adoption and approval of the Merger Agreement, the Transaction Agreements (as defined in the Merger Agreement) and the Transactions, (ii) in favor of the other matters set forth in the Merger Agreement, including the conversion of the Lucid Preferred Shares to Lucid Common Shares and (iii) in opposition to: (A) any Acquisition Transaction (as defined in the Merger Agreement) and any and all other proposals (x) that could reasonably be expected to delay or impair the ability of Lucid to consummate the transactions contemplated by the Merger Agreement or any Transaction Agreement, (y) which are in competition with or materially inconsistent with the Merger Agreement or any Transaction Agreement or (z) that would reasonably be expected to result in a breach of any representation, warranty, covenant, obligation or agreement contained in the Merger Agreement or any Transaction Agreement or (B) any other action or proposal involving Lucid or any of its subsidiaries that is intended, or would reasonably be expected, to prevent, impede, interfere with, delay, postpone or adversely affect in any material respect the transactions contemplated by the Merger Agreement or any Transaction Agreement or would reasonably be expected to result in any of the conditions to Lucid’s obligations under the Merger Agreement not being fulfilled.
The affirmative vote of the shares subject to the Voting and Support Agreement is sufficient to obtain the required approval by Lucid’s existing shareholders.
The Voting and Support Agreement generally prohibits Ayar from transferring, or permitting any liens to exist on, any Subject Shares held by Ayar prior to the termination of the Voting and Support Agreement.
 
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The Voting and Support Agreement will automatically terminate upon the earliest of (i) the Effective Time , (ii) the date of termination of the Merger Agreement in accordance with its terms prior to the Effective Time, (iii) the mutual written consent of Churchill, Lucid and Ayar and (iv) the time of any modification, amendment or waiver of the Merger Agreement or any other Transaction Agreement without Ayar’s prior written consent.
Incentive Plan
On February 22, the Churchill Board approved a new equity incentive plan, the Lucid Group, Inc. 2021 Stock Incentive Plan (the “Incentive Plan”). The purposes of the Incentive Plan are to enhance our ability to attract, retain, incent, reward, and motivate persons who make (or are expected to make) important contributions to Lucid Group by providing these individuals with equity ownership and other incentive opportunities. The Incentive Plan is intended as the successor to and continuation of the 2021 Plan. The Incentive Plan includes an Employee Stock Purchase Plan as an addendum (the “ESPP Addendum”). Stockholders are being asked to consider and approve the Incentive Plan, which will reserve approximately 30.5 million shares of our common stock for issuance pursuant to future grants made under the Incentive Plan. Please see the section entitled “Proposal No. 4 — The Incentive Plan Proposal — Description of the Material Features of the Incentive Plan.”
Impact of the Business Combination on Lucid Group’s Public Float
As of the date of this proxy statement/prospectus, there are (i) 258,750,000 shares of common stock issued and outstanding, which includes the 51,750,000 founder shares held by the Sponsor and the 207,000,000 public shares, (ii) 84,250,000 warrants issued and outstanding, which includes the 42,850,000 private placement warrants held by the Sponsor and the 41,400,000 public warrants, and (iii) up to 1,500,000 additional warrants that may be issued pursuant to the Sponsor’s option to convert any unpaid balance of the issued and outstanding Note into Working Capital Warrants at a price of $1.00 per warrant. Each whole warrant entitles the holder thereof to purchase one share of Churchill’s Class A common stock and, following the Transactions, will entitle the holder thereof to purchase one share of Lucid Group Common Stock. Therefore, as of the date of this proxy statement/prospectus (without giving effect to the Transactions) the Churchill fully diluted share capital would be 344,500,000 common stock equivalents.
Upon completion of the Transactions, we anticipate that: (1) Lucid shareholders (without taking into account shares of Lucid Group Common Stock issuable to holders of Lucid Group Awards) are expected to hold an ownership interest of 73.4% of the issued and outstanding Lucid Group Common Stock, (2) the Sponsor is expected to hold an ownership interest of 3.2% of the issued and outstanding Lucid Group Common Stock, (3) Churchill’s public stockholders (other than the PIPE Investors) will retain an ownership interest of 13.0% of the issued and outstanding Lucid Group Common Stock and (4) the PIPE Investors are expected to hold an ownership interest of 10.4% of the issued and outstanding Lucid Group Common Stock. These levels of ownership interest assume (i) that no public stockholders exercise their redemption rights in connection with the Transactions, (ii) no exercises of warrants to purchase Lucid Group Common Stock, (iii) no forfeitures of any shares or warrants of Lucid Group Common Stock in connection with the Sponsor Earnback Shares and Sponsor Earnback Warrants, and (iv) that Lucid Group reserves 108,703,877 shares of Lucid Group Common Stock for potential future issuance upon the exercise of Lucid Group Options or settlement of Lucid Group RSUs, (v) Lucid Group sells and issues 166,666,667 shares of Lucid Group Common Stock to the PIPE Investors pursuant to the PIPE Investment and (vi) Lucid will have $325.0 million in net cash as of two business days prior to the Closing Date. If the actual facts are different from these assumptions, the percentage ownership retained by the current Churchill stockholders in Lucid Group will be different.
 
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The following table illustrates varying ownership levels in Lucid Group immediately following the consummation of the Transactions based on the assumptions above:
Pro Forma Combined
(Assuming No Redemptions)
Pro Forma Combined
(Assuming Maximum
Redemptions)(5)
Number of
Shares
% Ownership
Number of
Shares
% Ownership
Lucid shareholders(1)
1,170,324,70473.4%1,170,324,70482.6%
Churchill Sponsor(2)
51,750,0003.2%51,750,0003.6%
Churchill public stockholders207,000,00013.0%29,973,2712.1%
PIPE Investors(3)
166,666,667 10.4%166,666,66711.7%
Total(4)1,595,741,371100.0%1,418,714,642100.0%
(1)
Excludes an estimated 108,703,877 shares of Lucid Group Common Stock to be reserved for potential future issuance upon the exercise of Lucid Group Options or settlement of Lucid Group RSUs.
(2)
The 51,750,000 shares beneficially owned by the Sponsor includes the 17,250,000 Sponsor Earnback Shares, which will be restricted from transfer, subject to the occurrence of the Earnback Triggering Events during the Earnback Period. Any such shares not released from these transfer restrictions during the Earnback Period will be forfeited back to Lucid Group for no consideration.
(3)
Reflects the sale and issuance of 166,666,667 shares of Lucid Group Common Stock to the PIPE Investors at $15.00 per share, of which Ayar has agreed to purchase 13,333,333 of such shares.
(4)
Excludes the 84,250,000 warrants issued and outstanding, which includes the 42,850,000 private placement warrants held by the Sponsor and the 41,400,000 public warrants, and up to 1,500,000 additional warrants that may be issued pursuant to the Sponsor’s option to convert any unpaid balance of the issued and outstanding Note into Working Capital Warrants at a price of $1.00 per warrant. The 42,850,000 private warrants beneficially owned by the Sponsor includes the 14,283,333 Sponsor Earnback Warrants, which will be restricted from transfer, subject to the occurrence of the Earnback Triggering Events during the Earnback Period. Any such warrants not released from these transfer restrictions during the Earnback Period will be forfeited back to Lucid Group for no consideration.
(5)
Assumes maximum redemptions of 177,026,729 public shares of Churchill’s Class A common stock in connection with the Transactions at approximately $10.00 per share based on trust account figures as of March 31, 2021.
See the subsection entitled “Proposal No. 1 — The Business Combination Proposal — Impact of the Business Combination on Lucid Group’s Public Float” and section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.
Matters Being Voted On
The stockholders of Churchill will be asked to consider and vote on the following proposals at the special meeting:
1.
a proposal to approve the business combination described in this proxy statement/prospectus, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in this proxy statement/prospectus. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal”;
2.
a proposal to approve and adopt the second amended and restated certificate of incorporation of Churchill in the form attached hereto as Annex B. Please see the section entitled “Proposal No. 2 — The Charter Proposal”;
3.
a proposal to vote upon, on a non-binding advisory basis, certain governance provisions in the second amended and restated certificate of incorporation, presented separately in accordance with the requirements of the SEC. Please see the section entitled “Proposal No. 3 — The Governance Proposal”;
 
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4.
a proposal to approve and adopt the Lucid Group, Inc. 2021 Stock Incentive Plan, including the Lucid Group, Inc. 2021 Employee Stock Purchase Plan attached thereto (the “Incentive Plan”), and the material terms thereof, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 4 — The Incentive Plan Proposal”;
5.
a proposal to elect nine directors to serve on the Churchill Board for a term ending on the date of the next annual stockholder meeting, or until their respective successors are duly elected and qualified. Please see the section entitled “Proposal No. 5 — The Director Election Proposal”;
6.
a proposal to approve, for purposes of complying with the applicable provisions of Section 312.03 of the NYSE’s Listed Company Manual, (a) the issuance of more than 20% of Churchill’s issued and outstanding shares of common stock in connection with the Transactions, including, without limitation, the PIPE Investment (as described below) and the issuance of more than 20% of Churchill’s issued and outstanding shares to a single holder (which may constitute a change of control under the NYSE’s Listed Company Manual) and (b) the issuance of shares of Churchill’s Class A common stock to a Related Party (as defined in Section 312.03 of the NYSE’s Listed Company Manual) in connection with the Transactions. Please see the section entitled “Proposal No. 6 — The NYSE Proposal”; and
7.
a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal or the NYSE proposal. Please see the section entitled “Proposal No. 7 — The Adjournment Proposal.
Date, Time and Place of Special Meeting of Churchill’s Stockholders
The special meeting of stockholders of Churchill will be held via live webcast at [•] a.m. Eastern Time, on [•], 2021. The special meeting can be accessed by visiting [•], where you will be able to listen to the meeting live and vote during the meeting. Please note that you will only be able to access the special meeting by means of remote communication.
At the special meeting, stockholders will be asked to consider and vote upon the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal, the NYSE proposal and if necessary, the adjournment proposal to permit further solicitation and vote of proxies if Churchill is not able to consummate the Transactions.
Voting Power; Record Date
Stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned shares of Churchill common stock at the close of business on [•], 2021, which is the record date for the special meeting. Stockholders will have one vote for each share of Churchill common stock owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. Churchill warrants do not have voting rights. On the record date, there were [•] shares of Churchill common stock outstanding, of which [•] were public shares with the rest being held by the Sponsor.
Quorum and Vote of Churchill Stockholders
A quorum of Churchill stockholders is necessary to hold a valid meeting. A quorum will be present at the Churchill special meeting if a majority of the outstanding shares entitled to vote at the meeting are represented in person or by proxy. Proxies that are marked “abstain” will be treated as shares present for purposes of determining the presence of a quorum on all matters. Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the special meeting.
The Sponsor owns of record and is entitled to vote 20% of the outstanding shares of Churchill common stock as of the record date. Such shares, as well as any shares of common stock acquired in the aftermarket by the Sponsor, will be voted in favor of the proposals presented at the special meeting.
 
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The proposals presented at the special meeting will require the following votes:

the approval of each of the business combination proposal, the governance proposal (which is a non-binding advisory vote), the incentive plan proposal, the NYSE proposal and the adjournment proposal require the affirmative vote of a majority of the votes cast by holders of Churchill’s outstanding shares of common stock represented at the special meeting by attendance via the virtual meeting website or by proxy and entitled to vote thereon at the special meeting. Accordingly, if a valid quorum is established, a Churchill stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the business combination proposal, the governance proposal, the incentive plan proposal, the NYSE proposal and the adjournment proposal will have no effect on such proposals;

the approval of the charter proposal requires the affirmative vote of holders of a majority of Churchill’s outstanding shares of common stock entitled to vote thereon at the special meeting. Accordingly, if a valid quorum is established, a Churchill stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the charter proposal will have the same effect as a vote “against” such proposal; and

directors are elected by a plurality of all of the votes cast by holders of shares of Churchill’s common stock represented at the special meeting by attendance via the virtual meeting website or by proxy and entitled to vote thereon at the special meeting. This means that the nine director nominees who receive the most affirmative votes will be elected. Churchill stockholders may not cumulate their votes with respect to the election of directors. Accordingly, if a valid quorum is established, a Churchill stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the director election proposal will have no effect on such proposal.
Abstentions will have the same effect as a vote “against” the charter proposal, but will have no effect on the other proposals. Please note that holders of the public shares cannot seek redemption of their shares for cash unless they affirmatively vote “for” or “against” the business combination proposal.
Consummation of the Transactions is conditioned on the approval of each of the business combination proposal, the charter proposal, the incentive plan proposal, and the NYSE proposal. If any of those proposals are not approved, we will not consummate the Transactions.
Redemption Rights
Pursuant to Churchill’s current certificate of incorporation, a holder of public shares may demand that Churchill redeem such shares for cash if the business combination is consummated. Holders of public shares will be entitled to receive cash for these shares only if they demand that Churchill redeem their shares for cash no later than the second business day prior to the vote on the business combination proposal by delivering their stock to Churchill’s transfer agent prior to the vote at the meeting. If the business combination is not completed, these shares will not be redeemed. If a holder of public shares properly demands redemption, Churchill will redeem each public share for a full pro rata portion of the trust account, calculated as of two business days prior to the consummation of the business combination. As of [•], 2021, the record date for the special meeting, this would amount to approximately $[•] per share. If a holder of public shares exercises its redemption rights, then it will be exchanging its shares of Churchill common stock for cash and will no longer own the shares. Please see the section entitled “Special Meeting of Churchill Stockholders — Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your shares for cash.
Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” ​(as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to more than 15% of the public shares.
Accordingly, all public shares in excess of 15% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or was a “group,” will not be redeemed for cash.
The business combination will not be consummated if Churchill has net tangible assets of less than $5,000,001 after taking into account holders of public shares that have properly demanded redemption of their shares for cash.
 
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Holders of Churchill warrants will not have redemption rights with respect to such securities.
Appraisal Rights
Churchill stockholders, Churchill unitholders and Churchill warrant holders do not have appraisal rights in connection with the Transactions under the DGCL.
Proxy Solicitation
Proxies may be solicited by mail, telephone or in person. Churchill has engaged Mackenzie Partners, Inc. (“Mackenzie”) to assist in the solicitation of proxies. If a stockholder grants a proxy, it may still vote its shares during the meeting if it revokes its proxy before the special meeting. A stockholder may also change its vote by submitting a later-dated proxy as described in the section entitled “Special Meeting of Churchill Stockholders — Revoking Your Proxy.”
Interests of Certain Persons in the Business Combination
In considering the recommendation of the Churchill Board to vote in favor of approval of the business combination proposal and the other proposals, stockholders should keep in mind that the Sponsor and the Insiders have interests in such proposals that are different from, or in addition to, those of Churchill stockholders generally. In particular:

If the Transactions or another business combination are not consummated by August 3, 2022 (or November 3, 2022 if Churchill has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination by August 3, 2022), Churchill will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and the Churchill Board, dissolving and liquidating. In such event, the 51,750,000 initial shares held by the Sponsor would be worthless because the holders thereof are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of approximately $[•] based upon the closing price of $[•] per share on the NYSE on [•], 2021, the record date for the special meeting. Such founder shares are subject to certain time- and performance-based vesting provisions as described under “Proposal No. 1 — The Business Combination Proposal — Sponsor Agreement.

The Sponsor purchased an aggregate of 42,850,000 private placement warrants from Churchill for an aggregate purchase price of $ 42,850,000 (or $1.00 per warrant). These purchases took place on a private placement basis simultaneously with the consummation of the Churchill IPO. A portion of the proceeds Churchill received from these purchases were placed in the trust account. Such warrants had an aggregate market value of approximately $[•] based upon the closing price of $[•] per warrant on the NYSE on [•], 2021, the record date for the special meeting. The private placement warrants will become worthless if Churchill does not consummate a business combination by August 3, 2022 (or November 3, 2022 if Churchill has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination by August 3, 2022). Such private placement warrants are subject to certain time- and performance-based vesting provisions as described under “Proposal No. 1 — The Business Combination Proposal — Sponsor Agreement.”

Glenn R. August will become a director of the post-combination company after the closing of the Transactions. As such, in the future Mr. August will receive any cash fees, stock options or stock awards that the post-combination board of directors determines to pay to its executive and non-executive directors.

If Churchill is unable to complete a business combination within the completion window, its executive officers will be personally liable under certain circumstances to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Churchill for services rendered or contracted for or products sold to Churchill. If Churchill consummates a business combination, on the other hand, Churchill will be liable for all such claims.

Churchill’s officers and directors, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Churchill’s behalf, such as identifying
 
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and investigating possible business targets and business combinations and with respect to the PIPE Investment. As of the date of this proxy statement/prospectus, such reimbursement is estimated to be approximately $375,000 in the aggregate. However, if Churchill fails to consummate a business combination within the completion window, they will not have any claim against the trust account for reimbursement. Accordingly, Churchill may not be able to reimburse these expenses if the Transactions or another business combination, are not completed within the completion window.

The continued indemnification of current directors and officers and the continuation of directors’ and officers’ liability insurance.

On February 22, 2021, Churchill issued the Note in the principal amount of $1,500,000 to the Sponsor. The Note bears no interest and is repayable in full upon the closing of the Merger. The Sponsor has the option to convert any unpaid balance of the Note into Working Capital Warrants to purchase one share of Churchill’s Class A common stock equal to the principal amount of the Note so converted divided by $1.00. The terms of any such Working Capital Warrants are identical to the terms of Churchill’s existing private placement warrants held by the Sponsor. The proceeds of the Note will be used to fund expenses related to Churchill’s normal operating expenses and other transactional related expenses.

Andrew Liveris is the Chairman of Lucid’s board of directors and an operating partner of the Sponsor. Mr. Liveris also has an economic interest in shares of Churchill’s common stock and warrants to purchase shares of Churchill’s common stock through his ownership of membership interests in the Sponsor. For more information, see the section entitled “Beneficial Ownership of Securities.”

Nancy Gioia will become a director of the post-combination company after the closing of the Transactions. As such, in the future Ms. Gioia will receive any cash fees, stock options or stock awards that the post-combination board of directors determines to pay to its executive and non-executive directors. As a result of Ms. Gioia becoming a director of Lucid Group, Ms. Gioia will forfeit certain pension benefits from a prior employer in the amount of approximately $3.3 million. As compensation for such forfeiture, and conditioned upon Ms. Gioia becoming a director of Lucid Group after the closing of the Transactions, (i) Churchill has agreed to pay $2.0 million in cash to Ms. Gioia and (ii) an affiliate of the Sponsor has agreed to issue Ms. Gioia indirect membership interests in the Sponsor, which represent 100,000 shares of Churchill's common stock. Such cash payment is payable by Churchill and is subject to the SPAC expense cap of $128,000,000 included in the Merger Agreement. Ms. Gioia serves as an operating partner of the Sponsor and was a consultant to Churchill in evaluating the Transactions. In connection with her service as an operating partner of the Sponsor, an affiliate of the Sponsor granted Ms. Gioia indirect membership interests in the Sponsor, which represent 25,000 shares of Churchill's common stock. In connection with her consulting services, Churchill paid Ms. Gioia a fee of $100,000. For more information, see the section entitled “Beneficial Ownership of Securities.”
In addition, the PIPE Investors have agreed to buy shares of Churchill's Class A common stock at a purchase price of $15.00 per share. The closing price of Churchill's Class A common stock on the NYSE was $[•] per share on [•], 2021, the record date for the special meeting. Certain PIPE Investors have an economic interest in shares of Churchill's common stock and warrants to purchase shares of Churchill's common stock through ownership of membership interests in the Sponsor.
Board of Directors following the Business Combination
Upon consummation of the Transactions, nine directors will be elected to serve on the Churchill Board for a term ending on the date of the next annual stockholder meeting, or in each case until their respective successors are duly elected and qualified, or until their earlier resignation, removal or death.
Please see the sections entitled “Proposal No. 5 — The Director Election Proposal” and “Management After the Business Combination” for additional information.
Opinion of Churchill’s Financial Advisor
Churchill retained Guggenheim Securities, LLC (which we refer to as “Guggenheim Securities”) as its financial advisor in connection a potential business combination involving Churchill and Lucid. In
 
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connection with the Merger, Guggenheim Securities rendered an opinion to the Churchill Board to the effect that, as of February 22, 2021, and based on and subject to the matters considered, the procedures followed, the assumptions made and various limitations of and qualifications to the review undertaken, the Merger Consideration in connection with the Merger was fair, from a financial point of view, to Churchill. The full text of Guggenheim Securities’ written opinion, which is attached as Annex I to this proxy statement/prospectus and which you should read carefully and in its entirety, is subject to the assumptions, limitations, qualifications and other conditions contained in such opinion and is necessarily based on economic, business, capital markets and other conditions, and the information made available to Guggenheim Securities, as of the date of such opinion.
Guggenheim Securities’ opinion was provided to the Churchill Board (in its capacity as such) for its information and assistance in connection with its evaluation of the Merger Consideration. Guggenheim Securities’ opinion and any materials provided in connection therewith did not constitute a recommendation to the Churchill Board with respect to the Merger, nor does Guggenheim Securities’ opinion or the summary of its underlying financial analyses elsewhere in this proxy statement/prospectus constitute advice or a recommendation to any holder of Churchill’s common stock as to how to vote or act in connection with the Merger or otherwise (including whether or not holders of Churchill’s Class A common stock should redeem their shares). Guggenheim Securities’ opinion addresses only the fairness, from a financial point of view and as of the date of such opinion, of the Merger Consideration to the extent expressly specified in such opinion and does not address any other term, aspect or implication of the Merger (including, without limitation, the form or structure of the Merger), the Merger Agreement, the PIPE Investment, the Sponsor Agreement, the Investor Rights Agreement, the Company Voting and Support Agreement, or any other agreement, transaction document or instrument contemplated by the Merger Agreement or to be entered into or amended in connection with the Merger or any financing or other transactions related thereto.
For a description of the opinion that the Churchill Board received from Guggenheim Securities, see “Proposal No. 1 — The Business Combination Proposal — Opinion of Churchill’s Financial Advisor.”
Recommendation to Stockholders
The Churchill Board believes that the business combination proposal and the other proposals to be presented at the special meeting are fair to and in the best interest of Churchill’s stockholders and unanimously recommends that its stockholders vote “FOR” the business combination proposal, “FOR” the charter proposal, “FOR” the governance proposal, “FOR” the incentive plan proposal, “FOR” the director election proposal, “FOR” the NYSE proposal and “FOR” the adjournment proposal, if presented.
When you consider the Churchill Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Transactions that are different from, or in addition to, the interests of Churchill stockholders generally. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information. The Churchill Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the Churchill stockholders that they vote “FOR” the proposals presented at the special meeting.
Conditions to the Closing of the Business Combination
General Conditions
Consummation of the Transactions is conditioned on the approval of the business combination proposal, the charter proposal, the incentive plan proposal and the NYSE proposal, as described in this proxy statement/prospectus.
In addition, the consummation of the Transactions contemplated by the Merger Agreement is conditioned upon, among other things:

the early termination or expiration of the waiting period under the HSR Act (the waiting period expired at 11:59 pm Eastern Time on April 7, 2021);
 
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no order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any governmental authority, and no statute, rule or regulation that is in effect and enjoins or prohibits the consummation of the Transactions;

Churchill having at least $5,000,001 of net tangible assets remaining after redemptions by Churchill stockholders;

the approval by Lucid’s existing shareholders being obtained;

the shares of common stock have been listed on the NYSE or other stock exchange mutually agreed between Churchill and Lucid and be eligible for continued listing on such stock exchange immediately following the Closing;

the registration statement contemplated under the Merger Agreement has become effective in accordance with the Securities Act, no stop order has been issued by the SEC with respect to the registration statement and no action seeking such order has been threatened or initiated;

the delivery by each of Lucid and Churchill to the other of a certificate with respect to the truth and accuracy of such party’s representations and warranties as of the Closing, as well as the performance by such party of the covenants and agreements contained in the Merger Agreement required to be complied with by such party prior to the Closing.
Churchill’s Conditions to Closing
The obligations of Churchill and Merger Sub to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:

the accuracy of the representations and warranties of Lucid (subject to customary bring-down standards); and

the covenants of Lucid having been performed in all material respects.
Lucid’s Conditions to Closing
The obligations of Lucid to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:

the accuracy of the representations and warranties of Churchill and Merger Sub (subject to customary bring-down standards);

the covenants of Churchill and Merger Sub having been performed in all material respects;

there being at least $2,800,000,000 of Available Closing SPAC Cash (as defined in the Merger Agreement); and

the covenants of the Sponsor and the Insiders under the Sponsor Agreement having been performed in all material respects, and no such Sponsor or Insider having threatened (orally or in writing) (i) that the Sponsor Agreement is not valid, binding and in full force and effect, (ii) that Lucid is in breach of or default under the Sponsor Agreement or (iii) to terminate the Sponsor Agreement.
Emerging Growth Company
Churchill is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, it is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statement/prospectus, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find Churchill’s securities less attractive as a result, there may be a less active trading market for Churchill’s securities and the prices of its securities may be more volatile.
 
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Churchill will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the Churchill IPO, (b) in which Churchill has total annual gross revenue of at least $1.07 billion, or (c) in which Churchill is deemed to be a large accelerated filer, which means the market value of Churchill’s common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which Churchill has issued more than $1.00 billion in non-convertible debt during the prior three-year period.
Controlled Company Exemption
Upon the completion of the Transactions, Lucid’s majority shareholder, Ayar, will hold 62.5% of Lucid Group Common Stock, assuming that no public stockholders exercise their redemption rights in connection with the Transactions and subject to certain other assumptions as set forth under “Beneficial Ownership of Securities.” As a result, Lucid Group will be a “controlled company” within the meaning of Nasdaq rules and, as a result, will qualify for exemptions from certain corporate governance requirements. The stockholders of Lucid Group will not have the same protections afforded to stockholders of companies that are subject to such requirements. Please see the section entitled “Management After the Business Combination — Controlled Company Exemption.” Ayar will also have the ability to nominate five of the nine directors to the Lucid Group board of directors.
Tax Consequences of the Business Combination
For a description of certain U.S. federal income tax consequences of the Transactions and the exercise of redemption rights, please see the information set forth in “Proposal No. 1 — The Business Combination Proposal — Material U.S. Federal Income Tax Consequences of the Redemption to Churchill Stockholders.”
Expected Accounting Treatment of the Transactions
We expect the Transactions to be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Churchill is expected to be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Lucid Group will represent a continuation of the financial statements of Lucid with the Transactions treated as the equivalent of Lucid issuing shares for the net assets of Churchill, accompanied by a recapitalization. The net assets of Churchill will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Transactions will be those of Lucid in future reports of Lucid Group. See the subsection entitled “Proposal No. 1 — The Business Combination Proposal — Expected Accounting Treatment of the Transactions.”
Regulatory Matters
Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the “FTC”), certain transactions may not be consummated unless information has been furnished to the Antitrust Division of the Department of Justice (the “Antitrust Division”) and the FTC and certain waiting period requirements have been satisfied. The Transactions are subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the filing of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted. If the FTC or the Antitrust Division issues a Second Request within the initial 30-day waiting period, the waiting period with respect to the Transactions will be extended for an additional period of 30 calendar days, which will begin on the date on which the filing parties each certify compliance with the Second Request. Complying with a Second Request can take a significant period of time.
On March 8, 2021, Churchill and Lucid filed the required forms under the HSR Act with the Antitrust Division and the FTC and requested early termination. The waiting period under the HSR Act expired at 11:59 pm (Eastern Time) on April 7, 2021.
At any time before or after consummation of the Transactions, notwithstanding termination of the waiting period under the HSR Act, the applicable competition authorities could take such action under applicable antitrust laws as each deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Transactions. Private parties may also seek to take legal action under the
 
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antitrust laws under certain circumstances. There is no assurance that the Antitrust Division, the FTC, any state attorney general, or any other government authority will not attempt to challenge the Transactions on antitrust grounds, and, if such a challenge is made, we cannot assure you as to its result.
Neither Churchill nor Lucid is aware of any material regulatory approvals or actions that are required for completion of the Transactions other than the expiration or early termination of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.
Litigation Matters
On March 3, 2021, Richard Hofman, a purported stockholder of Churchill, filed a complaint, individually and on behalf of other Churchill stockholders, in the Superior Court of the State of California against Churchill, Lucid, and other unnamed defendants. The complaint alleged claims for fraud, negligent misrepresentation, and false advertising and unfair business practices in connection with allegedly false and misleading statements and omissions in Churchill’s public filings, concerning the proposed merger between Churchill and Lucid. The complaint sought injunctive relief, as well as compensatory and punitive damages. On March 8, 2021, plaintiff filed an ex parte application for a temporary restraining order and preliminary injunction, which Churchill opposed and the court denied on March 10, 2021. Plaintiff filed an amended complaint on March 22, 2021, solely in a personal capacity and not on behalf of any other Churchill stockholders. The amended complaint alleges claims for fraud against defendants Lucid and Peter Rawlinson, and negligent misrepresentation against Churchill, Lucid, and Mr. Rawlinson. The amended complaint seeks compensatory and punitive damages. On June 7, 2021, the plaintiff filed a notice voluntarily dismissing the action without prejudice.
Since April 18, 2021, four actions asserting claims under the federal securities laws have been filed in federal courts in Alabama, California, New Jersey, and Indiana, including two putative class actions: Randy Phillips v. Churchill Capital Corporation IV, et al., 1:21-cv-00539-ACA (N.D. Ala., filed Apr. 18, 2021); Arec D. Simeri v. Churchill Capital Corporation IV, et al., 2:21-cv-04295 (C.D. Cal., filed May 24, 2021); Chris Arico v. Churchill Capital Corporation IV, et al., 1:21-cv-12355 (D.N.J., filed June 9, 2021); and Gregory Slabaugh v. Churchill Capital Corporation IV, et al., 1:21-cv-01652 (S.D. Ind., filed June 11, 2021). The complaints name Churchill, Atieva, Inc. (doing business as Lucid), Michael Klein, Jay Taragin, and Peter Rawlinson as defendants and generally allege violations of Sections 10(b) and 20(a) of the Exchange Act in connection with alleged false and misleading statements concerning Lucid’s business plans and prospects, as well as the proposed merger between Churchill and Lucid. The complaints generally seek compensatory and/or punitive damages. Defendants believe the claims are without merit and intend to defend themselves vigorously.
Risk Factors
In evaluating the proposals to be presented at the special meeting, you should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors.” These risks include, but are not limited to the following:

The ongoing COVID-19 pandemic has adversely affected Lucid’s business, results of operations and financial condition.

Lucid’s limited operating history makes evaluating its business and future prospects difficult and may increase the risk of your investment.

Lucid has incurred net losses each year since its inception and expects to incur increasing expenses and substantial losses for the foreseeable future.

Lucid may be unable to adequately control the substantial costs associated with its operations.

Lucid has received only a limited number of reservations for the Lucid Air, all of which may be cancelled.
 
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Lucid’s operating and financial results forecasts rely in large part upon assumptions and analyses developed by it and Lucid’s actual results of operations may be materially different from its forecasted results.

The automotive industry has significant barriers to entry that Lucid must overcome in order to manufacture and sell electric vehicles at scale.

The automotive market is highly competitive, and Lucid may not be successful in competing in this industry.

Lucid will initially depend on revenue generated from a single model and in the foreseeable future will be significantly dependent on a limited number of models.

Lucid will not have a third-party retail product distribution network.

Lucid has experienced and may in the future experience significant delays in the design, manufacture, launch and financing of the Lucid Air, which could harm its business and prospects.

If Lucid’s vehicles fail to perform as expected, its ability to develop, market and sell or lease its products could be harmed.

Lucid faces challenges providing charging solutions for its vehicles.

Lucid has no experience servicing its vehicles and their integrated software. If Lucid or its partners are unable to adequately service its vehicles, Lucid’s business, prospects, financial condition and results of operations may be materially and adversely affected.

Insufficient reserves to cover future warranty or part replacement needs or other vehicle repair requirements, including any potential software upgrades, could materially adversely affect Lucid’s business, prospects, financial condition and results of operations.

Lucid has no experience to date in high volume manufacture of its vehicles.

If Lucid fails to successfully tool its manufacturing facilities or if its manufacturing facilities become inoperable, it will be unable to produce its vehicles and its business will be harmed.

Lucid’s ability to start production and its future growth depend upon its ability to maintain relationships with its existing suppliers and source suppliers for its critical components, and to complete building out its supply chain, while effectively managing the risks due to such relationships.

Lucid is dependent on its suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of Lucid’s products according to its schedule and at prices, quality levels and volumes acceptable to Lucid, or Lucid’s inability to efficiently manage these components, could have a material adverse effect on Lucid’s results of operations and financial condition.

Lucid may not be able to accurately estimate the supply and demand for its vehicles, which could result in a variety of inefficiencies in its business and hinder its ability to generate revenue. If Lucid fails to accurately predict its manufacturing requirements, it could incur additional costs or experience delays.

Increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion cells or semiconductors, could harm Lucid’s business.

Any unauthorized control, manipulation, interruption or compromise of or access to Lucid’s products or information technology systems could result in loss of confidence in Lucid and its products, harm Lucid’s business and materially adversely affect its financial performance, results of operations or prospects.

The loss of key personnel or an inability to attract, retain and motivate qualified personnel may impair Lucid’s ability to expand its business.

Lucid is highly dependent on the services of Peter Rawlinson, its Chief Executive Officer and Chief Technology Officer.

Lucid is subject to substantial laws and regulations that could impose substantial costs, legal prohibitions or unfavorable changes upon its operations or products, and any failure to comply with
 
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these laws and regulations, including as they evolve, could substantially harm its business and results of operations.

Lucid may face regulatory limitations on its ability to sell vehicles directly, which could materially and adversely affect its ability to sell its vehicles.

Lucid may fail to adequately obtain, maintain, enforce and protect its intellectual property and may not be able to prevent third parties from unauthorized use of its intellectual property and proprietary technology. If Lucid is unsuccessful in any of the foregoing, its competitive position could be harmed and it could be required to incur significant expenses to enforce its rights.

Lucid will require additional capital to support business growth, and this capital might not be available on commercially reasonable terms, or at all.

Lucid has identified material weaknesses in its internal control over financial reporting. If Lucid is unable to remediate these material weaknesses, or if it identifies additional material weaknesses in the future or otherwise fails to maintain an effective system of internal control over financial reporting, Lucid may not be able to accurately or timely report its financial condition or results of operations, which may adversely affect investor confidence in Lucid Group and the value of Lucid Group’s common stock.

Following the business combination, Lucid Group will be a “controlled company” within the meaning of the applicable rules of Nasdaq and, as a result, may qualify for exemptions from certain corporate governance requirements. Lucid Group’s stockholders will not have the same protections afforded to stockholders of companies that are not controlled companies.

The Sponsor, certain members of the Churchill Board and certain Churchill officers have interests in the business combination that are different from or are in addition to other stockholders in recommending that stockholders vote in favor of approval of the business combination proposal and approval of the other proposals described in this proxy statement/prospectus.

Nasdaq may not continue to list our securities, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

The Sponsor is liable to ensure that proceeds of the trust are not reduced by vendor claims in the event a business combination is not consummated. It has also agreed to pay for any liquidation expenses if a business combination is not consummated. Such liability may have influenced the Sponsor’s decision to approve the Transactions.

If Churchill is unable to complete the Transactions or another initial business combination by August 3, 2022 (or November 3, 2022, if Churchill has an executed letter of intent, agreement in principle or definitive agreement for a business combination by August 3, 2022) Churchill will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and the Churchill Board, dissolving and liquidating. In such event, third parties may bring claims against Churchill and, as a result, the proceeds held in the trust account could be reduced and the per-share liquidation price received by stockholders could be less than $10.00 per share.

Churchill’s stockholders will experience dilution as a consequence of, among other transactions, the issuance of Churchill’s Class A common stock as consideration in the business combination and the PIPE Investment. Having a minority share position may reduce the influence that Churchill’s current stockholders have on the management of Churchill.

The Sponsor, Ayar and the PIPE Investors will beneficially own a significant equity interest in Churchill and may take actions that conflict with your interests.

Churchill and Lucid have incurred and expect to incur significant costs associated with the business combination. Whether or not the business combination is completed, the incurrence of these costs will reduce the amount of cash available to be used for other corporate purposes by Churchill if the business combination is not completed.
 
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Even if Churchill consummates the business combination, there is no guarantee that the public warrants will ever be in the money, and they may expire worthless and the terms of Churchill’s warrants may be amended.

Churchill and Lucid will be subject to business uncertainties and contractual restrictions while the business combination is pending.

If Churchill’s due diligence investigation of the Lucid business was inadequate, then stockholders of Churchill following the business combination could lose some or all of their investment.

A market for Lucid Group’s securities may not continue, which would adversely affect the liquidity and price of Lucid Group’s securities.

Legal proceedings in connection with the business combination, the outcomes of which are uncertain, could delay or prevent the completion of the business combination.
Sources and Uses of Funds for the Transactions
The following table summarizes the sources and uses for funding the Transactions. These figures assume (i) that no public stockholders exercise their redemption rights in connection with the Transactions and (ii) that Lucid Group issues 1,170,324,704 shares of Lucid Group Common Stock to the Lucid shareholders and reserves 108,703,877 shares of Lucid Group Common Stock for potential future issuance upon the exercise of Lucid Group Options or settlement of Lucid Group RSUs as part of the Merger Consideration pursuant to the Merger Agreement. If the actual facts are different from these assumptions, then the amounts and shares outstanding after the Closing will be different and those changes could be material.
SourcesUses
($ in millions)
Cash and investments held in trust account(1)
2,070.3
Cash to balance sheet(4)
4,402.3
PIPE Investment(2)
2,500.0
Transaction expenses(5)
168.0
Lucid Shareholders(3)
12,075.0
Lucid Shareholders(3)
12,075.0
Total sources16,645.3Total uses16,645.3
(1)
Calculated as of March 31, 2021.
(2)
Reflects the proceeds of $2,500.0 million from the sale and issuance of 166,666,667 shares of Lucid Group Common Stock, of which Ayar has agreed to purchase 13,333,333 of such shares, at a purchase price of $15.00 per share pursuant to the PIPE Subscription Agreements in connection with the PIPE Investment.
(3)
Based on the fixed equity value of $11,750.0 million plus the assumed $325.0 million in net cash held by Lucid as of two business days prior to the Closing Date.
(4)
If we assume redemptions of 177,026,729 public shares of Churchill’s Class A common stock in connection with the Transactions at an assumed redemption price of approximately $10.00 per share based on trust account figures as of March 31, 2021, which is the maximum redemptions scenario described under the section entitled “Unaudited Pro Forma Condensed Combined Financial Information — Basis of Pro Forma Presentation”, we expect to still satisfy the Available Closing SPAC Cash condition required to consummate the Transactions of at least $2,800.0 million, after giving effect to the proceeds from the PIPE Investment and before giving effect to the payment of deferred underwriting commission and estimated transaction expenses.
(5)
Reflects the cash disbursement for the preliminary estimated direct and incremental transaction costs of $168.0 million incurred by Churchill and Lucid prior to, or concurrent with, the Closing, including the deferred underwriting fees related to the Churchill IPO.
 
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SELECTED HISTORICAL FINANCIAL INFORMATION OF CHURCHILL
The selected historical statement of operations data of Churchill for the period from April 30, 2020 (date of inception) to December 31, 2020 and the balance sheet data as of December 31, 2020 are derived from Churchill’s audited annual financial statements (as restated) included elsewhere in this proxy statement/prospectus. The selected historical condensed consolidated statement of operations data of Churchill for the three months ended March 31, 2021 and the selected historical condensed consolidated balance sheet data as of March 31, 2021 are derived from Churchill’s unaudited interim condensed consolidated financial statements included elsewhere in this proxy statement/prospectus. The unaudited interim condensed consolidated financial data set forth below have been prepared on the same basis as our audited annual consolidated financial statements (as restated) and, in the opinion of Churchill’s management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for the fair statement of such data.
Churchill’s historical results are not necessarily indicative of the results that may be expected for any other period in the future and Churchill’s results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021 or any other period. You should read the selected historical financial data set forth below together with Churchill’s financial statements and the accompanying notes included elsewhere in this proxy statement/prospectus, the information in the section entitled “Churchill’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information included elsewhere in this prospectus.
Churchill is providing the following selected historical consolidated financial information to assist you in your analysis of the financial aspects of the Transactions.
Statement of Operations Data
(in thousands, except share and per share data)
For the Three
Months Ended
March 31,
2021
For the Period from
April 30, 2020 (Inception)
to December 31, 2020
(As Restated)
Operating costs$3,090$2,976
Loss from operations(3,090)(2,976)
Change in fair value of derivative liabilities(812,374)(58,779)
Transaction costs(2,168)
Interest expense – excess fair value of conversion liability(56,192)
Interest expense – amortization of debt discount(300)
Interest earned on marketable securities held in trust account177531
Unrealized gain on marketable securities held in trust account45
Other expense, net(868,685)(60,411)
Loss before provision for income taxes(871,775)(60,387)
Provision for income taxes(24)(81)
Net loss(871,799)(63,468)
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible
redemption
196,306,266188,268,610
Basic and diluted net income per share, Class A common stock subject to possible redemption$0.00$0.00
Basic and diluted weighted average shares outstanding, non-redeemable common stock65,318,73462,139,948
Basic and diluted net loss non-redeemable per common share$(13.35)$(1.02)
 
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Balance Sheet Data
(in thousands)
As of March 31,
2021
As of December 31,
2020
Marketable securities held in Trust Account$2,070,267$2,070,086
Total assets2,073,1812,074,617
Total liabilities1,086,542216,179
Class A common stock subject to possible redemption2,070,0001,853,438
Total stockholders' equity(1)
$(1,083,361)$5,000
(1)
Excludes an aggregate of 207,000,000 and 185,343,777 shares subject to possible redemption as of March 31, 2021 and December 31, 2020, respectively.
 
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SELECTED HISTORICAL FINANCIAL INFORMATION OF LUCID
The selected historical consolidated statements of operations data of Lucid for the years ended December 31, 2020 and 2019 and the selected historical consolidated balance sheets data as of December 31, 2020 and 2019 are derived from Lucid’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus. The selected historical condensed consolidated statements of operations data of Lucid for the three months ended March 31, 2021 and 2020 and the selected historical condensed consolidated balance sheet data as of March 31, 2021 are derived from Lucid’s unaudited interim condensed consolidated financial statements included elsewhere in this proxy statement/prospectus. The unaudited interim condensed consolidated financial data set forth below have been prepared on the same basis as our audited annual consolidated financial statements and, in the opinion of Lucid’s management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for the fair statement of such data.
Lucid’s historical results are not necessarily indicative of the results that may be expected for any other period in the future and Lucid’s results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021 or any other period. You should read the selected historical consolidated financial data set forth below together with Lucid’s consolidated financial statements and the accompanying notes included elsewhere in this proxy statement/prospectus, the information in the section entitled “Lucid’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information included elsewhere in this prospectus.
Lucid is providing the following selected historical consolidated financial information to assist you in your analysis of the financial aspects of the Transactions.
 
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Statement of Operations Data
(in thousands, except share and per share data)
Three Months
Ended March 31,
Year Ended December 31,
2021202020202019
Revenue$313$8$3,976$4,590
Cost of revenue853,0703,926
Gross profit2288906664
Operating expenses:
Research and development167,369109,759511,110220,223
Sales, general and administrative131,65214,24589,02338,375
Total operating expenses299,021124,004600,133258,598
Loss from operations(298,793)(123,996)(599,227)(257,934)
Other income (expense), net
Change in fair value of forward contract(442,164)(5,516)(118,382)(15,053)
Change in fair value of convertible preferred share
warrant liability
(6,977)(57)(1,205)(406)
Interest expense(5)(9)(64)(8,547)
Other income (expense)(9)(77)(690)4,606
Total other income (expense), net(449,155)(5,659)(120,341)(19,400)
Loss before provision for income taxes(747,948)(129,655)(719,568)(277,334)
Provision (benefit) for income taxes4(72)(188)23
Net loss and comprehensive loss(747,952)(129,583)(719,380)(277,357)
Deemed contribution related to repurchase of Series B convertible preferred shares1,000
Deemed contribution related to repurchase of Series C convertible preferred shares12,7847,935
Deemed dividend related to the issuance of Series E convertible preferred shares(2,167,332)
Net loss attributable to common
shareholders.
$(2,915,284)$(129,583)$(705,596)$(269,422)
Net loss per share attributable to common shareholders – basic and diluted$(236.07)$(16.07)$(75.15)$(34.59)
Weighted-average shares used in computing loss per share attributable to common shareholders – basic and diluted12,349,0458,063,6789,389,5407,789,421
Balance Sheet Data
(in thousands)
As of
March 31,
2021
As of December 31,
20202019
Total assets$1,799,786$1,402,681$579,602
Total liabilities1,572,838227,382126,672
Total convertible preferred shares4,454,8112,494,0761,074,010
Total shareholders' deficit$(4,227,863)$(1,318,777)$(621,080)
 
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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The selected unaudited pro forma condensed combined financial information (the “Selected Pro Forma Information”) gives effect to the Transactions and the other events described in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The Transactions are expected to be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Churchill is expected to be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Lucid Group will represent a continuation of the financial statements of Lucid with the Transactions treated as the equivalent of Lucid issuing shares for the net assets of Churchill, accompanied by a recapitalization. The net assets of Churchill will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Transactions will be those of Lucid in future reports of Lucid Group.
The selected unaudited pro forma condensed combined balance sheet data as of March 31, 2021 gives pro forma effect to the Transactions and the other events as if consummated on March 31, 2021. The selected unaudited pro forma condensed combined statements of operations data for the three months ended March 31, 2021 and for the year ended December 31, 2020 give effect to the Transactions and the other events as if consummated on January 1, 2020, the beginning of the earliest period presented.
The Selected Pro Forma Information has been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information prepared in accordance with Article 11 of Regulation S-X of Lucid Group appearing elsewhere in this proxy statement/prospectus and the accompanying notes in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The unaudited pro forma condensed combined financial information is derived from, and should be read in conjunction with, the historical financial statements and accompanying notes of Churchill and Lucid for the applicable periods included elsewhere in this proxy statement/prospectus. The Selected Pro Forma Information has been presented for informational purposes only and is not necessarily indicative of what Lucid Group’s financial position or results of operations actually would have been had the Transactions and the other events been completed as of the dates indicated. The Selected Pro Forma Information does not purport to project the financial position or operating results of Lucid Group that may be expected for any other period in the future.
The unaudited pro forma condensed combined financial information has been prepared using the assumptions below with respect to the potential redemption by Churchill’s public stockholders of shares of Churchill’s Class A common stock for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the Closing) in the trust account:

Assuming No Redemptions — this scenario assumes that no public stockholders of Churchill exercise their redemption rights with respect to their public shares of Churchill’s Class A common stock for a pro rata share of the funds in the trust account.

Assuming Maximum Redemptions — this scenario assumes that 177,026,729 public shares of Churchill’s Class A common stock are redeemed for an aggregate payment of $1,770.3 million, which is derived from the number of shares that could be redeemed in connection with the Transactions at an assumed redemption price of approximately $10.00 per share based on funds held in the trust account as of March 31, 2021 and still satisfy the Available Closing SPAC Cash condition required to consummate the Transactions of at least $2,800.0 million, after giving effect to the proceeds from the PIPE Investment and before giving effect to the payment of the estimated transaction costs incurred in connection with the Transactions of $168.0 million, including deferred underwriting commissions from the Churchill IPO.
 
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The following summarizes the pro forma Lucid Group Common Stock issued and outstanding immediately after the Transactions, presented under the two assumed redemption scenarios:
Pro Forma Combined
(Assuming No Redemptions)
Pro Forma Combined
(Assuming Maximum Redemptions)(5)
Number of
Shares
% Ownership
Number of
Shares
% Ownership
Lucid shareholders(1)
1,170,324,70473.4%1,170,324,70482.6%
Churchill Sponsor(2)
51,750,0003.2%51,750,0003.6%
Churchill public stockholders207,000,00013.0%29,973,2712.1%
PIPE Investors(3)
166,666,66710.4%166,666,66711.7%
Total(4)1,595,741,371100.0%1,418,714,642100.0%
(1)
Excludes an estimated 108,703,877 shares of Lucid Group Common Stock to be reserved for potential future issuance upon the exercise of Lucid Group Options or settlement of Lucid Group RSUs.
(2)
The 51,750,000 shares beneficially owned by the Sponsor includes the 17,250,000 Sponsor Earnback Shares, which will be restricted from transfer, subject to the occurrence of the Earnback Triggering Events during the Earnback Period. Any such shares not released from these transfer restrictions during the Earnback Period will be forfeited back to Lucid Group for no consideration.
(3)
Reflects the sale and issuance of 166,666,667 shares of Lucid Group Common Stock to the PIPE Investors at $15.00 per share, of which Ayar has agreed to purchase 13,333,333 of such shares.
(4)
Excludes the 84,250,000 warrants issued and outstanding, which includes the 42,850,000 private placement warrants held by the Sponsor and the 41,400,000 public warrants, and up to 1,500,000 additional warrants that may be issued pursuant to the Sponsor’s option to convert any unpaid balance of the issued and outstanding Note into Working Capital Warrants at a price of $1.00 per warrant. The 42,850,000 private warrants beneficially owned by the Sponsor includes the 14,283,333 Sponsor Earnback Warrants, which will be restricted from transfer, subject to the occurrence of the Earnback Triggering Events during the Earnback Period. Any such warrants not released from these transfer restrictions during the Earnback Period will be forfeited back to Lucid Group for no consideration.
(5)
Assumes maximum redemptions of 177,026,729 public shares of Churchill’s Class A common stock in connection with the Transactions at approximately $10.00 per share based on trust account figures as of March 31, 2021.
See the subsection entitled “Summary of the Proxy Statement/Prospectus —  Impact of the Business Combination on Lucid Group’s Public Float” and the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.
If the actual facts are different than these assumptions, then the amounts and shares outstanding in the unaudited pro forma condensed combined financial information will be different and those changes could be material.
Selected Unaudited Pro Forma Condensed Combined
Balance Sheet Data as of March 31, 2021
(in thousands)
Pro Forma
Combined
(Assuming No
Redemptions)
Pro Forma
Combined
(Assuming
Maximum
Redemptions)
Cash$5,305,283$3,535,016
Total assets$6,295,937$4,525,670
Total liabilities$854,830$854,830
Total stockholders’ equity$    5,441,107$    3,670,840
Selected Unaudited Pro Forma Condensed Combined
Statement of Operations Data for the Three Months Ended March 31, 2021
(in thousands, except share and per share data)
Revenue$313$313
Net loss attributable to common stockholders$(3,449,652)$(3,449,652)
Net loss per share attributable to common stockholders – basic and diluted$(2.30)$(2.60)
 
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Selected Unaudited Pro Forma Condensed Combined
Statement of Operations Data for the Three Months Ended March 31, 2021
(in thousands, except share and per share data)
Weighted-average shares outstanding – basic and diluted1,501,419,1151,324,392,386
Selected Unaudited Pro Forma Condensed Combined
Statement of Operations Data for the Year Ended December 31, 2020
(in thousands, except share and per share data)
Revenue$3,976$3,976
Net loss attributable to common stockholders$(1,281,551)$(1,281,551)
Net loss per share attributable to common stockholders – basic and diluted$(1.13)$(1.35)
Weighted-average shares outstanding – basic and diluted1,129,469,954952,443,226
 
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COMPARATIVE PER SHARE INFORMATION
The comparative per share information sets forth summary historical per share information for Churchill and Lucid and unaudited pro forma condensed combined per share information after giving effect to the Transactions, presented under the two assumed redemption scenarios as follows:

Assuming No Redemptions — this scenario assumes that no public stockholders of Churchill exercise their redemption rights with respect to their public shares of Churchill’s Class A common stock for a pro rata share of the funds in the trust account.

Assuming Maximum Redemptions — this scenario assumes that 177,026,729 public shares of Churchill’s Class A common stock are redeemed for an aggregate payment of $1,770.3 million, which is derived from the number of shares that could be redeemed in connection with the Transactions at an assumed redemption price of approximately $10.00 per share based on funds held in the trust account as of March 31, 2021 and still satisfy the Available Closing SPAC Cash condition required to consummate the Transactions of at least $2,800.0 million, after giving effect to the proceeds from the PIPE Investment and before giving effect to the payment of the estimated transaction costs incurred in connection with the Transactions of $168.0 million, including deferred underwriting commissions from the Churchill IPO.
The selected unaudited pro forma condensed combined book value information as of March 31, 2021 gives pro forma effect to the Transactions and the other events as if consummated on March 31, 2021. The selected unaudited pro forma condensed combined net loss per share and weighted average shares outstanding information for the three months ended March 31, 2021 and for the year ended December 31, 2020 gives pro forma effect to the Transactions and the other events as if consummated on January 1, 2020, the beginning of the earliest period presented.
This information is only a summary and should be read in conjunction with the historical financial statements and accompanying notes of Churchill (as restated) and Lucid included elsewhere in this proxy statement/prospectus. The unaudited pro forma condensed combined per share information of Churchill and Lucid is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information and accompanying notes included elsewhere in this proxy statement/prospectus in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”
The unaudited pro forma condensed combined loss per share information below does not purport to represent the loss per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma condensed combined book value per share information below does not purport to represent what the value of Churchill and Lucid would have been had the companies been combined during the periods presented.
 
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Churchill is providing the following comparative per share information to assist you in your analysis of the financial aspects of the Transactions.
Pro Forma Combined
Lucid Equivalent
Pro Forma Per Share(3)
As of and for the three months ended
March 31, 2021(1)
Churchill
(Historical)
Lucid
(Historical)
(Assuming No
Redemptions)
(Assuming
Maximum
Redemptions)
(Assuming No
Redemptions)
(Assuming
Maximum
Redemptions)
Book value per share(2)
$(20.93)$(313.22)$3.41$2.59$8.85$    6.71
Net loss per share – basic and diluted$(13.35)$(236.07)$(2.30)$(2.60)$    (5.96)$(6.76)
Weighted average shares outstanding – basic and diluted65,318,73412,349,0451,501,419,1151,324,392,386
Net income per share, Class A common stock subject to possible redemption – basic and diluted$0.00
Weighted average shares outstanding, Class A common stock subject to possible redemption – basic and
diluted
196,306,266
Net loss per share, non-redeemable common stock – basic and diluted$(13.35)
Weighted average shares outstnading, non-redeemable common stock – basic and diluted65,318,734
For the year ended December 31, 2020
Net loss per share – basic and diluted$(1.02)$(75.15)$(1.13)$(1.35)$(2.94)$(3.49)
Weighted average shares outstanding – basic and diluted62,139,9489,389,5401,129,469,954952,443,226
Net income per share, Class A common stock subject to possible redemption –  basic and diluted$0.00
Weighted average shares outstanding, Class
A common stock subject to possible
redemption – basic and diluted
188,268,610
Net loss per share, non-redeemable common stock – basic and diluted$(1.02)
Weighted average shares outstanding, non-redeemable common stock – basic and diluted62,139,948
(1)
There were no cash dividends declared in the period presented.
(2)
Book value per share is calculated as (a) total shareholders’ equity (deficit) classified in permanent equity divided by (b) the total number of shares of common stock outstanding classified in permanent equity. Churchill’s historical book value per share calculation is based on all shares issued and outstanding related to Churchill’s Class A and Class B common stock classified in permanent equity and excludes Churchill’s Class A common stock subject to possible redemption not classified in permanent equity. Lucid’s historical book value per share calculation is based on all shares issued and outstanding related to Lucid Common Shares classified in permanent equity and excludes all Lucid Preferred Shares, which are all subject to possible redemption and not classified in permanent equity. Lucid Group’s pro forma combined book value per share is based on all shares of Lucid Group Common Stock to be issued and outstanding on a pro forma combined basis immediately after the Transactions under the no redemptions and maximum redemptions scenarios, respectively.
(3)
The equivalent pro forma basic and diluted per share data for Lucid is calculated by multiplying the pro forma combined per share data by the Exchange Ratio of 2.595, which has been determined in accordance with the Merger Agreement and assumes Lucid will have $325.0 million in net cash as of two business days prior to the Closing Date.
 
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus includes statements that express Churchill’s and Lucid’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this proxy statement/prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things, the Transactions, the benefits of the Transactions, results of operations, financial condition, liquidity, prospects, growth, strategies and the markets in which Lucid operates, including estimates and forecasts of financial and operational metrics, projections of market opportunity, market share and product sales, expectations and timing related to commercial product launches, including the start of production and launch of the Lucid Air and any future products, the performance, range, autonomous driving and other features of the Lucid Air, future market opportunities, including with respect to energy storage systems and automotive partnerships, future manufacturing capabilities and facilities, future sales channels and strategies, future market launches and expansion and the potential success of Lucid’s go-to-market strategy. Such forward-looking statements are based on available current market material and Churchill’s and Lucid’s current expectations, beliefs and forecasts concerning future developments and their potential effects on the Transactions, Lucid and Churchill. Factors that may impact such forward-looking statements include:

changes in domestic and foreign business, market, financial, political and legal conditions;

the inability of the parties to successfully or timely consummate the proposed transactions, including the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect Lucid Group or the expected benefits of the proposed transactions or that the approval of the shareholders of Churchill or Lucid is not obtained;

the outcome of any legal proceedings that may be instituted against Lucid or Churchill following announcement of the proposed transactions;

failure to realize the anticipated benefits of the proposed transactions;

risks relating to the uncertainty of the projected financial information with respect to Lucid, including conversion of reservations into binding orders;

risks related to the timing of expected business milestones and commercial launch, including Lucid’s ability to mass produce the Lucid Air and complete the tooling of its manufacturing facility;

risks related to the expansion of Lucid’s manufacturing facility and the increase of Lucid’s production capacity;

risks related to future market adoption of Lucid’s offerings;

the effects of competition and the pace and depth of electric vehicle adoption generally on Lucid’s future business;

changes in regulatory requirements, governmental incentives and fuel and energy prices;

Lucid’s ability to rapidly innovate;

Lucid’s ability to deliver Environmental Protection Agency (“EPA”) estimated driving ranges that match or exceed its pre-production projected driving ranges;

future changes to vehicle specifications which may impact performance, pricing, and other expectations;

Lucid’s ability to enter into or maintain partnerships with original equipment manufacturers, vendors and technology providers;

Lucid’s ability to effectively manage its growth and recruit and retain key employees, including its chief executive officer and executive team;
 
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Lucid’s ability to establish its brand and capture additional market share, and the risks associated with negative press or reputational harm;

Lucid’s ability to manage expenses;

Lucid’s ability to effectively utilize zero emission vehicle credits and obtain and utilize certain tax and other incentives;

the amount of redemption requests made by Churchill’s public stockholders;

the ability of Churchill or Lucid Group to issue equity or equity-linked securities in connection with the proposed transactions or in the future;

the outcome of any potential litigation, government and regulatory proceedings, investigations and inquiries;

the impact of the global COVID-19 pandemic on Lucid, Churchill, Lucid Group’s projected results of operations, financial performance or other financial metrics, or on any of the foregoing risks;

other factors disclosed in this proxy statement/prospectus; and

those factors discussed in Churchill’s Annual Report on Form 10-K/A under the heading “Risk Factors,” and other documents of Churchill filed, or to be filed, with the SEC.
There can be no assurance that future developments affecting Churchill and/or Lucid will be those that Churchill or Lucid has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond either Churchill’s or Lucid’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Churchill and Lucid will not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Before a stockholder grants its proxy or instructs how its vote should be cast or votes on the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal, the NYSE proposal or the adjournment proposal, it should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect Churchill and Lucid.
 
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RISK FACTORS
Stockholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement/prospectus. The following risk factors apply to the business and operations of Lucid and will also apply to the business and operations of Lucid Group following the completion of the business combination. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the business combination, and may have an adverse effect on the business, cash flows, financial condition and results of operations of Lucid Group. You should also carefully consider the following risk factors in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” Churchill or Lucid may face additional risks and uncertainties that are not presently known to us or Lucid, or that we or Lucid currently deem immaterial, which may also impair our or Lucid’s business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.
Risks Related to Lucid’s Business and Operations Following the Business Combination
Risks Related to Lucid’s Business and Industry
The ongoing COVID-19 pandemic has adversely affected Lucid’s business, results of operations and financial condition.
The ongoing COVID-19 pandemic poses risks to Lucid’s business, including through its impact on general economic conditions; manufacturing and supply chain operations; stay-at-home orders; and global financial markets. The pandemic’s impact on economic conditions has led to a global decrease in vehicle sales in markets around the world. Its continued impact on the economy, even after the pandemic has subsided, could lead consumers to further reduce spending, delay purchases of Lucid’s vehicles, or cancel their refundable deposits for Lucid’s vehicles. Because of Lucid’s premium brand positioning and pricing, an economic downturn is likely to have a heightened adverse effect on it, compared to many of its electric vehicle and traditional automotive industry competitors, to the extent that consumer demand for luxury goods is reduced in favor of lower-priced alternatives. Any economic recession or other downturn could also cause logistical challenges and other operational risks if any of Lucid’s suppliers, sub-suppliers or partners become insolvent or are otherwise unable to continue their operations. Further, the immediate or prolonged effects of the COVID-19 pandemic could significantly affect government finances and, accordingly, the continued availability of incentives related to electric vehicle purchases and other governmental support programs.
The spread of COVID-19 has also periodically disrupted the manufacturing operations of other vehicle manufacturers and their suppliers. Any such disruptions to Lucid or to its suppliers could result in delays to Lucid’s plans to begin commercial production of its first vehicle, the Lucid Air sedan, in the second half of 2021, and could negatively affect its production volume. Lucid’s manufacturing operations at a limited number of facilities in Casa Grande, Arizona concentrate these risks.
The pandemic has resulted in the imposition of travel bans and restrictions, quarantines, shelter-in-place and stay-at-home orders and business shutdowns, which have contributed to delays in the anticipated production schedule of the Lucid Air. These measures pose numerous operational risks and logistical challenges to Lucid’s business. For example, Lucid may be required to limit the number of employees and contractors at its manufacturing facilities in Casa Grande, Arizona, which could cause further delays in tooling efforts or in the production schedule of the Lucid Air. In addition, regional, national and international travel restrictions have resulted in adverse impacts to Lucid’s supply chain. For example, in certain instances, international travel restrictions have prevented Lucid supply quality engineers from conducting in-person visits and parts production quality engineering with international suppliers, which has lengthened the time required to finalize and secure certain components of the Lucid Air. Further, Lucid’s sales and marketing activities have been, and may in the future be, adversely affected due to the cancellation or reduction of in-person sales activities, meetings, events and conferences, and Lucid’s planned construction and opening of its Lucid Studio sales and service facilities in key markets has been delayed. The transition of some of
 
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Lucid’s personnel to a mostly remote workforce has also increased demand on its information technology resources and systems and increased data privacy and cybersecurity risks. These restrictive measures could be in place for a significant period of time and may be reinstituted or replaced with more burdensome restrictions if conditions deteriorate, which could adversely affect Lucid’s start-up, manufacturing and sales and distribution plans and timelines.
In addition, the COVID-19 pandemic has resulted in extreme volatility in the global financial markets, which could increase Lucid’s cost of capital or limit its ability to access financing when it needs it.
The severity, magnitude and duration of the COVID-19 pandemic and its economic and regulatory consequences are rapidly changing and uncertain. Accordingly, Lucid cannot predict the ultimate impact of the COVID-19 pandemic on its business, financial condition and results of operations.
Lucid’s limited operating history makes evaluating its business and future prospects difficult and may increase the risk of your investment.
Lucid is an early-stage company with a limited operating history, operating in a rapidly evolving and highly regulated market. Furthermore, Lucid has not yet released a commercially available vehicle, and it has no experience manufacturing or selling a commercial product at scale. Because Lucid has yet to generate revenue from the sale of electric vehicles, and as a result of the capital-intensive nature of its business, Lucid expects to continue to incur substantial operating losses for the foreseeable future.
Lucid has encountered and expects to continue to encounter risks and uncertainties frequently experienced by early-stage companies in rapidly changing markets, including risks relating to its ability to, among other things:

successfully launch commercial production and sales of the Lucid Air on the timing and with the specifications Lucid had planned;

hire, integrate and retain professional and technical talent, including key members of management;

continue to make significant investments in research, development, manufacturing, marketing and sales;

successfully obtain, maintain, protect and enforce its intellectual property and defend against claims of intellectual property infringement, misappropriation or other violation;

build a well-recognized and respected brand;

establish and refine its commercial manufacturing capabilities and distribution infrastructure;

establish and maintain satisfactory arrangements with third-party suppliers;

establish and expand a customer base;

navigate an evolving and complex regulatory environment;

anticipate and adapt to changing market conditions, including consumer demand for certain vehicle types, models or trim levels, technological developments and changes in competitive landscape; and

successfully design, build, manufacture and market new models of electric vehicles to follow the Lucid Air.
Lucid has incurred net losses each year since its inception and expects to incur increasing expenses and substantial losses for the foreseeable future.
Lucid has incurred net losses each year since its inception, including net loss attributable to common shareholders of approximately $2,915.3 million for the three months ended March 31, 2021 and $705.6 million for the year ended December  31, 2020. As of March 31, 2021, Lucid’s accumulated deficit was approximately $4,234.1 million. Lucid expects to continue to incur substantial losses and increasing expenses in the foreseeable future as it:

continues to design and develop and begins to manufacture its vehicles;
 
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equips and expands its manufacturing facilities to produce its vehicles in Arizona, and potentially in international locations;

builds up inventories of parts and components for its vehicles;

manufactures an available inventory of its vehicles;

develops and deploys vehicle charging partnerships;

expands its design, research, development, maintenance and repair capabilities;

increases its sales and marketing activities and develops its distribution infrastructure; and

expands its general and administrative functions to support its growing operations and status as a public company.
If Lucid’s product development or commercialization is delayed, Lucid’s costs and expenses may be significantly higher than it currently expects. Because Lucid will incur the costs and expenses from these efforts before it receives any incremental revenues with respect thereto, Lucid expects its losses in future periods will be significant. Lucid’s ability to generate product revenues will depend on its ability to finalize and begin commercial production of the Lucid Air, which it does not expect will occur until the second half of 2021, and Lucid may never achieve profitability.
Lucid may be unable to adequately control the substantial costs associated with its operations.
Lucid will require significant capital to develop and grow its business. Lucid has incurred and expects to continue to incur significant expenses, including leases, sales and distribution expenses as its builds its brand and markets its vehicles; expenses relating to developing and manufacturing its vehicles, tooling and expanding its manufacturing facilities; research and development expenses (including expenses related to the development of the Lucid Air, the Project Gravity SUV and other future products), raw material procurement costs; and general and administrative expenses as it scales its operations and incurs the costs of being a public company. In addition, Lucid expects to incur significant costs servicing and maintaining customers’ vehicles, including establishing its service operations and facilities. As a company, Lucid does not have experience forecasting and budgeting for any of these expenses, and these expenses could be significantly higher than Lucid currently anticipates. In addition, any delays in the start of production, obtaining necessary equipment or supplies, expansion of Lucid’s manufacturing facilities, or the procurement of permits and licenses relating to Lucid’s expected manufacturing, sales and distribution model could significantly increase Lucid’s expenses. In such event, Lucid could be required to seek additional financing earlier than it expects, and such financing may not be available on commercially reasonable terms, or at all.
In the longer term, Lucid’s ability to become profitable in the future will depend on its ability not only to control costs, but also to sell in quantities and at prices sufficient to achieve its expected margins. If Lucid is unable to cost-efficiently design, manufacture, market, sell, distribute and service its vehicles, its margins, profitability and prospects would be materially and adversely affected.
Lucid has received only a limited number of reservations for the Lucid Air, all of which may be cancelled.
As of May 31, 2021, Lucid had reservations for more than 9,500 units of its first vehicle, the Lucid Air, with fully refundable deposits. Lucid’s customers may cancel their reservations without penalty and for any reason until they place an order for their vehicle. In addition, any further delays in the expected start of production of the Lucid Air could result in significant customer cancellations. No assurance can be given that reservations will not be cancelled and will ultimately result in the final purchase, delivery and sale or lease of vehicles. Accordingly, the number of reservations has significant limitations as a measure of demand for Lucid’s vehicles, including demand for particular body styles, models or trim levels, or for future vehicle sales. If Lucid encounters delays in the start of production of the Lucid Air that further lengthen wait times, a significant number of reservations may be cancelled.
Lucid’s operating and financial results forecasts rely in large part upon assumptions and analyses developed by it and Lucid’s actual results of operations may be materially different from its forecasted results.
The forecasts dated February 2021 appearing elsewhere in this proxy statement/prospectus reflect Lucid’s estimates of future performance as of February 2021, incorporated certain financial and operational
 
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assumptions based on information available at the time the forecasts were made and should not be regarded as an indication that Lucid or any other recipient of this information considered, or now considers, it to be predictive of actual future results. For example, since February 2021, Lucid has received higher cost estimates from certain third party vendors that may cause Lucid's future operating expenses to exceed those included in the forecasts delivered to Churchill and included in this proxy statement/prospectus. In addition, such projections incorporate assumptions relating to sales volumes and revenue, which could be significantly impacted by economic events and consumer demand for Lucid vehicles; Lucid’s expectation to sell vehicles internationally, which could be impacted by trade policies, regulatory constraints and other factors; projected growth in the luxury vehicle market; Lucid’s ability to develop a sales/distribution network; and Lucid’s ability to start and scale production of its electric vehicles, and introduce new models, on the timeline and at the quantities planned. In addition, the projected financial and operating information incorporates assumptions about Lucid’s ability to maintain an effective cost structure, which could be impacted by the prices of commodities and other inputs, wage inflation, logistics costs, infrastructure and utilities costs, the costs of specialized equipment and tooling, research and development costs, facilities costs and numerous other factors, as well as Lucid’s ability to access or develop localized supply chains in regions where it establishes manufacturing operations and manage international supply chain and logistics costs. These assumptions were preliminary and there can be no assurance that the actual results upon which Lucid’s assumptions were based will be in line with its expectations at the time the forecasts were made. As an early-stage company in a rapidly evolving industry, Lucid has limited data on which to base its projections of its future performance, and Lucid has limited experience forecasting its future results. The forecasts dated February 2021 also reflect assumptions as to certain business strategies or plans that are subject to change. In addition, Lucid’s forecasts dated February 2021 assumed that Lucid would be able to complete its planned phased manufacturing build-out and that there would be no significant issues or defects related to the construction of its facilities through each phase of its planned phased manufacturing build-out that would require major repair or remediation. Any such repair or remediation could materially limit Lucid’s ability to achieve its production and sales projections reflected in the forecasts dated February 2021. For example, if repair or remediation efforts require Lucid to take vehicle production offline, delay implementation of its planned phased manufacturing build-out, or construct alternate manufacturing facilities, such idling, delay or construction could adversely affect Lucid’s manufacturing capacity, its ability to start production of the Project Gravity SUV or other future vehicles, and its ability to timely sell and deliver such vehicles to customers. In addition, any repair or remediation efforts may impose substantial costs that differ materially from Lucid’s cost projections reflected in the forecasts dated February 2021. As a result, the inclusion of such forecasts in this proxy statement/prospectus should not be relied on as “guidance” or otherwise predictive of actual future events, and actual results may differ materially from the forecasts dated February 2021. Whether actual operating and financial results and business developments will be consistent with the expectations and assumptions reflected in Lucid’s forecast dated February 2021 depends on a number of factors, many of which are outside of Lucid’s control, including, but not limited to, the risks and uncertainties described elsewhere in this section. If Lucid fails to meet its own financial or operating forecasts or those of securities analysts, the value of Lucid’s common stock could be significantly and adversely affected.
The automotive industry has significant barriers to entry that Lucid must overcome in order to manufacture and sell electric vehicles at scale.
The automobile industry is characterized by significant barriers to entry, including large capital requirements, investment costs of designing, manufacturing, and distributing vehicles, long lead times to bring vehicles to market from the concept and design stage, the need for specialized design and development expertise, regulatory requirements, establishing a brand name and image, and the need to establish sales and service locations. Since Lucid is focused on the design of electric vehicles, it faces a variety of added challenges to entry that a traditional automobile manufacturer would not encounter, including additional costs of developing and producing an electric powertrain that has comparable performance to a traditional gasoline engine in terms of range and power, inexperience with servicing electric vehicles, regulations associated with the transport of batteries, the need to establish or provide access to sufficient charging locations and unproven high-volume customer demand for fully electric vehicles. While Lucid has developed prototypes of its electric sedan and has completed the first phase of construction of its commercial manufacturing facility in Casa Grande, Arizona, it has not finished tooling all production lines at its Casa Grande facilities, finalized the design and specifications of the Lucid Air or begun commercial manufacturing
 
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processes for the Lucid Air. If Lucid is not able to overcome these barriers, its business, prospects, results of operations and financial condition will be negatively impacted, and its ability to grow its business will be harmed.
The automotive market is highly competitive, and Lucid may not be successful in competing in this industry.
The global automotive market, particularly for electric and alternative fuel vehicles, is highly competitive, and Lucid expects it will become even more so in the future. In recent years, the electric vehicle industry has grown, with several companies that focus completely or partially on the electric vehicle market. Lucid expects additional companies to enter this market within the next several years. Electric vehicle manufacturers with which Lucid competes include Tesla as well as an increasing number of U.S.-based and international entrants, many of which have announced plans to begin selling their own electric vehicles in 2021 or 2022. Lucid also competes with established automobile manufacturers in the luxury vehicle segment, many of which have entered or have announced plans to enter the alternative fuel and electric vehicle market with either fully electric or plug-in hybrid versions of their vehicles. Lucid also expects to compete for sales with luxury vehicles with internal combustion engines from established manufacturers. Many of Lucid’s current and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than Lucid does and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale, servicing, and support of their products. In addition, many of these companies have longer operating histories, greater name recognition, larger and more established sales forces, broader customer and industry relationships and other resources than Lucid does. Lucid’s competitors may be in a stronger position to respond quickly to new technologies and may be able to design, develop, market and sell their products more effectively than it does. Lucid expects competition in its industry to significantly intensify in the future in light of increased demand for alternative fuel vehicles, continuing globalization, favorable governmental policies, and consolidation in the worldwide automotive industry. Lucid’s ability to successfully compete in its industry will be fundamental to its future success in existing and new markets. There can be no assurance that Lucid will be able to compete successfully in its markets.
Lucid will initially depend on revenue generated from a single model and in the foreseeable future will be significantly dependent on a limited number of models.
Lucid will initially depend on revenue generated from a single vehicle model, the Lucid Air, and in the foreseeable future will be significantly dependent on a single or limited number of models. Although Lucid has other vehicle models on its product roadmap, it currently does not expect to introduce another vehicle model for sale until the end of 2023. Lucid expects to rely on sales from the Lucid Air, among other sources of financing, for the capital that will be required to develop and commercialize those subsequent models. To the extent that production of the Lucid Air is delayed or reduced, or if the Lucid Air is not well-received by the market for any reason, Lucid’s revenue and cash flow would be adversely affected, it may need to seek additional financing earlier than it expects, and such financing may not be available to it on commercially reasonable terms, or at all.
Lucid will not have a third-party retail product distribution network.
Third-party dealer networks are the traditional method of vehicle sales distribution. Because Lucid plans to sell directly to consumers, it will not have a traditional dealer product distribution network. Lucid does not have experience distributing directly to consumers, and it expects that the building of an in-house sales and marketing function, including a physical sales and marketing footprint via its Lucid Studios, will be expensive and time consuming. If Lucid’s lack of a traditional dealer distribution network results in lost opportunities to generate sales, it could limit its ability to grow. Moreover, Lucid’s plans to sell directly to consumers may be limited by regulatory constraints. To the extent Lucid is unable to successfully execute on such plans, it may be required to develop a third-party dealer distribution network, which may prove costly, time-consuming or ineffective. If Lucid’s use of an in-house sales and marketing team is not effective, its results of operations and financial conditions could be adversely affected.
 
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Lucid’s sales will depend in part on its ability to establish and maintain confidence in its long-term business prospects among consumers, analysts and others within its industry.
Consumers may be less likely to purchase Lucid’s products if they do not believe that its business will succeed or that its operations, including service and customer support operations, will continue for many years. Similarly, suppliers and other third parties will be less likely to invest time and resources in developing business relationships with Lucid if they are not convinced that its business will succeed. Accordingly, to build, maintain and grow its business, Lucid must establish and maintain confidence among customers, suppliers, analysts and other parties with respect to its liquidity and long-term business prospects. Maintaining such confidence may be particularly difficult as a result of many factors, including Lucid’s limited operating history, others’ unfamiliarity with its products, uncertainty regarding the future of electric vehicles, any delays in scaling production, delivery and service operations to meet demand, competition and Lucid’s production and sales performance compared with market expectations. Many of these factors are largely outside of Lucid’s control, and any negative perceptions about Lucid’s long-term business prospects, even if exaggerated or unfounded, would likely harm its business and make it more difficult to raise additional capital in the future. In addition, as discussed above, a significant number of new electric vehicle companies have recently entered the automotive industry, which is an industry that has historically been associated with significant barriers to entry and a high rate of failure. If these new entrants or other manufacturers of electric vehicles go out of business, produce vehicles that do not perform as expected or otherwise fail to meet expectations, such failures may have the effect of increasing scrutiny of others in the industry, including Lucid, and further challenging customer, supplier and analyst confidence in Lucid’s long-term prospects.
Lucid’s ability to generate meaningful product revenue will depend on consumer adoption of electric vehicles.
Lucid is only developing electric vehicles and, accordingly, its ability to generate meaningful product revenue will highly depend on sustained consumer demand for alternative fuel vehicles in general and electric vehicles in particular. If the market for electric vehicles does not develop as Lucid expects or develops more slowly than it expects, or if there is a decrease in consumer demand for electric vehicles, Lucid’s business, prospects, financial condition and results of operations will be harmed. The market for electric and other alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation (including government incentives and subsidies) and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors. Any number of changes in the industry could negatively affect consumer demand for electric vehicles in general and Lucid’s electric vehicles in particular.
In addition, demand for electric vehicles may be affected by factors directly impacting automobile prices or the cost of purchasing and operating automobiles such as sales and financing incentives such as tax credits, prices of raw materials and parts and components, cost of fuel, availability of consumer credit, and governmental regulations, including tariffs, import regulation and other taxes. Volatility in demand may lead to lower vehicle unit sales, which may result in downward price pressure and adversely affect Lucid’s business, prospects, financial condition and results of operations. Further, sales of vehicles in the automotive industry tend to be cyclical in many markets, which may expose Lucid to increased volatility, especially as it expands and adjusts its operations and retail strategies. Specifically, it is uncertain how such macroeconomic factors will impact Lucid as a new entrant in an industry that has globally been experiencing a recent decline in sales.
Other factors that may influence the adoption of electric vehicles include:

perceptions about electric vehicle quality, safety, design, performance and cost;

perceptions about the limited range over which electric vehicles may be driven on a single battery charge;

perceptions about the total cost of ownership of electric vehicles, including the initial purchase price and operating and maintenance costs, both including and excluding the effect of government and other subsidies and incentives designed to promote the purchase of electric vehicles;

concerns about electric grid capacity and reliability;
 
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perceptions about the sustainability and environmental impact of electric vehicles, including with respect to both the sourcing and disposal of materials for electric vehicle batteries and the generation of electricity provided in the electric grid;

the availability of other alternative fuel vehicles, including plug-in hybrid electric vehicles;

improvements in the fuel economy of the internal combustion engine;

the quality and availability of service for electric vehicles, especially in international markets;

volatility in the cost of oil and gasoline;

government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;

access to charging stations and cost to charge an electric vehicle, especially in international markets, and related infrastructure costs and standardization;

the availability of tax and other governmental incentives to purchase and operate electric vehicles or future regulation requiring increased use of nonpolluting vehicles; and

macroeconomic factors.
The influence of any of the factors described above or any other factors may cause a general reduction in consumer demand for electric vehicles or Lucid’s electric vehicles in particular, either of which would materially and adversely affect its business, results of operations, financial condition and prospects.
Developments in electric vehicle or alternative fuel technology or improvements in the internal combustion engine may adversely affect the demand for Lucid’s vehicles.
Lucid may be unable to keep up with changes in electric vehicle technology or alternatives to electricity as a fuel source and, as a result, its competitiveness may suffer. Significant developments in alternative technologies, such as alternative battery cell technologies, hydrogen fuel cell technology, advanced gasoline, ethanol or natural gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect Lucid’s business and prospects in ways it does not currently anticipate. Existing and other battery cell technologies, fuels or sources of energy may emerge as customers’ preferred alternative to the technologies in Lucid’s electric vehicles. Any failure by Lucid to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay its development and introduction of new and enhanced electric vehicles, which could result in the loss of competitiveness of its vehicles, decreased revenue and a loss of market share to competitors. In addition, Lucid expects to compete in part on the basis of its vehicles’ range, efficiency, charging speeds and performance, and improvements in the technology offered by competitors could reduce demand for the Lucid Air or other future vehicles. As technologies change, Lucid plans to upgrade or adapt its vehicles and introduce new models that reflect such technological developments, but its vehicles may become obsolete, and its research and development efforts may not be sufficient to adapt to changes in alternative fuel and electric vehicle technology. Additionally, as new companies and larger, existing vehicle manufacturers continue to enter the electric vehicle space, Lucid may lose any technological advantage it may have and suffer a decline in its competitive position. Any failure by Lucid to successfully react to changes in existing technologies or the development of new technologies could materially harm its competitive position and growth prospects.
Extended periods of low gasoline or other petroleum-based fuel prices could adversely affect demand for Lucid’s vehicles, which would adversely affect its business, prospects, results of operations and financial condition.
A portion of the current and expected demand for electric vehicles results from concerns about volatility in the cost of gasoline and other petroleum-based fuel, the dependency of the United States on oil from unstable or hostile countries, government regulations and economic incentives promoting fuel efficiency and alternative forms of energy, as well as concerns about climate change resulting in part from the burning of fossil fuels. If the cost of gasoline and other petroleum-based fuel decreases significantly, the outlook for the long-term supply of oil to the United States improves, the government eliminates or modifies its regulations or economic incentives related to fuel efficiency and alternative forms of energy or
 
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there is a change in the perception that the burning of fossil fuels negatively impacts the environment, the demand for electric vehicles, including Lucid’s vehicles, could be reduced, and Lucid’s business and revenue may be harmed.
Gasoline and other petroleum-based fuel prices have historically been extremely volatile, particularly during the ongoing COVID-19 pandemic, and it is difficult to ascertain whether such volatility will continue to persist. Lower gasoline or other petroleum-based fuel prices over extended periods of time may lower the perception in government and the private sector that cheaper, more readily available energy alternatives should be developed and produced. If gasoline or other petroleum-based fuel prices remain at deflated levels for extended periods of time, the demand for electric vehicles, including Lucid’s vehicles, may decrease, which would have an adverse effect on its business, prospects, financial condition and results of operations.
The unavailability, reduction or elimination of certain government and economic programs could have a material adverse effect on Lucid’s business, prospects, financial condition and results of operations.
Lucid expects to benefit from government and economic programs that encourage the development, manufacture or purchase of electric vehicles, such as zero emission vehicle credits, greenhouse gas credits and similar regulatory credits, the loss of which could harm Lucid’s ability to generate revenue from the sale of such credits to other manufacturers; tax credits and other incentives to consumers, without which the net cost to consumers of Lucid’s vehicles would increase, potentially reducing demand for Lucid’s products; and investment tax credits for equipment, tooling and other capital needs, without which Lucid may be unable to procure the necessary infrastructure for production to support its business and timeline; and certain other benefits, including a California sales and use tax exclusion and certain other hiring and job training credits in California and Arizona. Lucid may also benefit from government loan programs, such as loans under the Advanced Technology Vehicles Manufacturing Loan Program administered by the U.S. Department of Energy. Any reduction, elimination or selective application of tax and other governmental programs and incentives because of policy changes, the reduced need for such programs due to the perceived success of the electric vehicle, fiscal tightening or other reasons may result in the diminished competitiveness of the electric vehicle industry generally or Lucid’s electric vehicles in particular, which would adversely affect Lucid’s business, prospects, financial condition and results of operations. Further, Lucid cannot assure you that the current governmental incentives and subsidies available for purchasers of electric vehicles will remain available.
While certain U.S. federal and state tax credits and other incentives for alternative energy production and alternative fuel and electric vehicles have been available in the past, there is no guarantee these programs will be available in the future. If current tax incentives are not available in the future, Lucid’s financial position could be harmed.
Lucid may not be able to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which it may apply. As a result, Lucid’s business and prospects may be adversely affected.
Lucid may apply for federal and state grants, loans and tax incentives under government programs designed to stimulate the economy and support the production of alternative fuel and electric vehicles and related technologies. Lucid anticipates that in the future there will be new opportunities for it to apply for grants, loans and other incentives from the United States federal and state governments, as well as foreign governments. Lucid’s ability to obtain funds or incentives from government sources is subject to the availability of funds under applicable government programs and approval of Lucid’s applications to participate in such programs. The application process for these funds and other incentives will likely be highly competitive. Lucid cannot assure you that it will be successful in obtaining any of these additional grants, loans and other incentives. If Lucid is not successful in obtaining any of these additional incentives and it is unable to find alternative sources of funding to meet its planned capital needs, Lucid’s business and prospects could be materially adversely affected.
If Lucid fails to manage its future growth effectively, it may not be able to develop, manufacture, distribute, market and sell its vehicles successfully.
Any failure to manage Lucid’s growth effectively could materially and adversely affect its business, prospects, results of operations and financial condition. Lucid intends to expand its operations significantly. Lucid expects its future expansion will include:
 
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expanding its management team;

hiring and training new personnel;

establishing or expanding design, manufacturing, sales and service facilities;

implementing and enhancing administrative infrastructure, systems and processes, including in connection with its transition to a public company; and

expanding into new markets and establishing sales, service and manufacturing operations in such markets.
Lucid intends to continue to hire a significant number of additional personnel, including design and manufacturing personnel and service technicians for its vehicles. Because Lucid’s vehicles are based on a different technology platform than traditional internal combustion engines, individuals with sufficient training in electric vehicles may not be available to hire, and as a result, Lucid will need to expend significant time and expense training the employees it does hire. Competition for individuals with experience designing, manufacturing and servicing electric vehicles is intense, and Lucid may not be able to attract, integrate, train, motivate or retain additional highly qualified personnel in the future. The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm Lucid’s business and prospects. In addition, Lucid has no experience to date in high volume manufacturing of its vehicles. Lucid cannot assure you that it will be able to develop efficient, automated, low-cost manufacturing capabilities and processes, and reliable sources of component supply that will enable it to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully market its vehicles. Any failure to develop such manufacturing processes and capabilities within Lucid’s projected costs and timelines could stunt its future growth and impair its ability to produce, market, service and sell or lease its vehicles successfully. In addition, if Lucid’s manufacturing facilities are not constructed in conformity with its requirements, repair or remediation could be required to support Lucid’s planned phased manufacturing build-out and could require Lucid to take vehicle production offline, delay implementation of its planned phased manufacturing build-out, or construct alternate facilities, which could materially limit Lucid’s manufacturing capacity, delay planned increases in manufacturing volumes, delay the start of production of the Project Gravity SUV or other future vehicles, adversely affect Lucid’s ability to timely sell and deliver its electric vehicles to customers, or impose substantial additional costs, any of which consequences could have a material adverse effect on Lucid’s business, prospects, results of operations and financial condition. In addition, Lucid’s success is substantially dependent upon the continued service and performance of its senior management team and key technical and vehicle management personnel. If any key personnel were to terminate their employment with Lucid, such termination would likely increase the difficulty of managing Lucid’s future growth and heighten the foregoing risks. If Lucid fails to manage its growth effectively, such failure could result in negative publicity and damage to its brand and have a material adverse effect on its business, prospects, financial condition and results of operations.
Lucid may be unable to offer attractive leasing and financing options for the Lucid Air and future vehicles, which would adversely affect consumer demand for the Lucid Air and future Lucid vehicles. In addition, offering leasing and financing options to customers could expose Lucid to credit risk.
While Lucid currently intends to offer leasing and financing of its vehicles to potential customers through a third-party financing partner or partners, Lucid currently has no agreements in place with any potential financing partners. Lucid can provide no assurance that such third-party financing partners would be able or willing to provide such services on terms acceptable to Lucid or its customers, or to provide such services at all. Furthermore, because Lucid has not yet sold any vehicles and no secondary market for its vehicles exists, the future resale value of Lucid’s vehicles is difficult to predict, and the possibility that resale values could be lower than Lucid expects increases the difficulty of providing leasing terms that appeal to potential customers through such third-party financing partners. Lucid believes that the ability to offer attractive leasing and financing options is particularly relevant to customers in the luxury vehicle segments in which it competes, and if Lucid is unable to offer its customers an attractive option to finance the purchase of or lease the Lucid Air or planned future vehicles, such failure could substantially reduce the population of potential customers and decrease demand for Lucid’s vehicles.
 
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Furthermore, offering leasing and financing alternatives to customers could expose Lucid to risks commonly associated with the extension of consumer credit. Competitive pressure and challenging markets could increase credit risk through leases and loans to financially weak customers, extended payment terms, and leases and loans into new and immature markets, and any such credit risk could be further heightened in light of the economic uncertainty and any economic recession or other downturn caused by the ongoing COVID-19 pandemic. If Lucid is unable to provide leasing and financing arrangements that appeal to potential customers, or if the provision of such arrangements exposes it to excessive consumer credit risk, Lucid’s business, competitive position, results of operations and financial condition could be adversely affected.
Lucid is subject to risks associated with autonomous driving and advanced driver assistance system technology, and it cannot guarantee that its vehicles will achieve its targeted assisted or autonomous driving functionality within its projected timeframe, if ever.
Lucid’s vehicles are being designed with autonomous driving (“AD”) and advanced driver assistance system (“ADAS”) hardware, and Lucid expects to launch the Lucid Air and Project Gravity with Level 2 (partial automation) ADAS functionality, which it plans to upgrade with additional capabilities over time. AD/ADAS technologies are emerging and subject to known and unknown risks, and there have been accidents and fatalities associated with such technologies. The safety of such technologies depends in part on user interaction, and users, as well as other drivers on the roadways, may not be accustomed to using or adapting to such technologies. In addition, self-driving technologies are the subject of intense public scrutiny and interest, and previous accidents involving autonomous driving features in other vehicles, including alleged failures or misuse of such features, have generated significant negative media attention and government investigations. To the extent accidents associated with Lucid’s AD/ADAS technologies occur, Lucid could be subject to significant liability, negative publicity, government scrutiny and further regulation. Any of the foregoing could materially and adversely affect Lucid’s results of operations, financial condition and growth prospects.
In addition, Lucid faces substantial competition in the development and deployment of AD/ADAS technologies. Many of its competitors, including Tesla, established automakers such as Mercedes-Benz, Audi and General Motors (including via its investments in Cruise Automation), and technology companies including Waymo (owned by Alphabet), Zoox.ai (owned by Amazon), Aurora (which recently announced a business combination with Uber’s subsidiary focused on self-driving technologies), Argo AI (jointly owned by Ford and Volkswagen), Mobileye (a subsidiary of Intel), Aptiv, Nuro and Ghost.ai, have devoted significant time and resources to developing self-driving technologies. If Lucid is unable to develop competitive Level 2 or more advanced AD/ADAS technologies in-house or acquire access to such technologies via partnerships or investments in other companies or assets, it may be unable to equip its vehicles with competitive AD/ADAS features, which could damage its brand, reduce consumer demand for its vehicles or trigger cancellations of reservations and could have a material adverse effect on its business, results of operations, prospects and financial condition.
AD/ADAS technology is also subject to considerable regulatory uncertainty, which exposes Lucid to additional risks. See “— Risks Related to Litigation and Regulation — AD/ADAS technology is subject to uncertain and evolving regulations.”
Lucid’s business and prospects depend significantly on the Lucid brand.
Lucid’s business and prospects will heavily depend on its ability to develop, maintain and strengthen the “Lucid” brand associated with luxury and technological excellence. Promoting and positioning its brand will likely depend significantly on Lucid’s ability to provide a consistently high-quality customer experience, an area in which it has limited experience. To promote its brand, Lucid may be required to change its customer development and branding practices, which could result in substantially increased expenses, including the need to use traditional media such as television, radio and print advertising. In particular, any negative publicity, whether or not true, can quickly proliferate on social media and harm consumer perception and confidence in Lucid’s brand. Lucid’s ability to successfully position its brand could also be adversely affected by perceptions about the quality of its competitors’ vehicles or its competitors’ success. For example, certain of Lucid’s competitors have been subject to significant scrutiny for incidents involving their self-driving technology and battery fires, which could result in similar scrutiny of Lucid.
 
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In addition, from time to time, Lucid’s vehicles may be evaluated and reviewed by third parties. Any negative reviews or reviews which compare Lucid unfavorably to competitors could adversely affect consumer perception about its vehicles and reduce demand for its vehicles, which could have a material adverse effect on Lucid’s business, results of operations, prospects and financial condition.
Lucid faces risks associated with international operations, including unfavorable regulatory, political, tax and labor conditions, which could harm its business.
Lucid anticipates having operations and subsidiaries in Europe, the Middle East and China that are subject to the legal, political, regulatory and social requirements and economic conditions in these jurisdictions. Additionally, as part of its growth strategy, Lucid intends to expand its sales, maintenance and repair services outside of the United States and may also expand its manufacturing activities outside the United States. However, Lucid has no experience to date manufacturing, selling or servicing its vehicles outside of the United States, and such expansion would require it to make significant expenditures, including the hiring of local employees and establishing facilities, in advance of generating any revenue. Lucid is subject to a number of risks associated with international business activities that may increase its costs, impact its ability to sell, service and manufacture its vehicles, and require significant management attention. These risks include:

conforming Lucid’s vehicles to various international regulatory requirements where its vehicles are sold, or homologation;

establishing localized supply chains and managing international supply chain and logistics costs;

establishing sufficient charging points for Lucid’s customers in those jurisdictions, via partnerships or, if necessary, via development of its own charging networks;

difficulty in staffing and managing foreign operations;

difficulties attracting customers in new jurisdictions;

difficulties establishing international manufacturing operations, including difficulties establishing relationships with or establishing localized supplier bases and developing cost-effective and reliable supply chains for such manufacturing operations;

foreign government taxes, regulations and permit requirements, including foreign taxes that Lucid may not be able to offset against taxes imposed upon it in the United States, and foreign tax and other laws limiting its ability to repatriate funds to the United States;

fluctuations in foreign currency exchange rates and interest rates, including risks related to any forward currency contracts, interest rate swaps or other hedging activities Lucid undertakes;

United States and foreign government trade restrictions, tariffs and price or exchange controls;

foreign labor laws, regulations and restrictions;

changes in diplomatic and trade relationships, including political risk and customer perceptions based on such changes and risks;

political instability, natural disasters, pandemics (including the ongoing COVID-19 pandemic), war or events of terrorism; and

the strength of international economies.
If Lucid fails to successfully address these risks, its business, prospects, results of operations and financial condition could be materially harmed.
Uninsured losses could result in payment of substantial damages, which would decrease Lucid’s cash reserves and could harm its cash flow and financial condition.
In the ordinary course of business, Lucid may be subject to losses resulting from product liability, accidents, acts of God and other claims against it, for which it may have no insurance coverage. While Lucid currently carries commercial general liability, commercial automobile liability, excess liability, product
 
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liability, cybersecurity, crime, special crime, drone, cargo stock throughput, builder’s risk, owner controlled insurance program, property, owners protective, workers’ compensation, employment practices, employed lawyers, production, fiduciary liability and directors’ and officers’ insurance policies, it may not maintain as much insurance coverage as other original equipment manufacturers do, and in some cases, it may not maintain any at all. Additionally, the policies that Lucid does have may include significant deductibles, and Lucid cannot be certain that its insurance coverage will be sufficient to cover all or any future claims against it. A loss that is uninsured or exceeds policy limits may require Lucid to pay substantial amounts, which could adversely affect its financial condition and results of operations. Further, insurance coverage may not continue to be available to Lucid or, if available, may be at a significantly higher cost, especially if insurance providers perceive any increase in Lucid’s risk profile in the future.
Risks Related to Manufacturing and Supply Chain
Lucid has experienced and may in the future experience significant delays in the design, manufacture, launch and financing of the Lucid Air, which could harm its business and prospects.
Lucid’s vehicles are still in the development and testing phase, and production of the Lucid Air sedan and the Project Gravity SUV is not expected to begin until the second half of 2021 and the end of 2023, respectively, and may occur later or not at all. Any delay in the financing, design, manufacture and launch of the Lucid Air, including planned future variants, and any future electric vehicles could materially damage Lucid’s business, prospects, financial condition and results of operations. Automobile manufacturers often experience delays in the design, manufacture and commercial release of new vehicle models, and Lucid has experienced in the past, and may experience in the future, such delays with regard to the Lucid Air. For example, Lucid has experienced delays in the engineering of certain of its vehicle systems. Lucid’s plan to commercially manufacture and sell the Lucid Air is dependent upon the timely availability of funds, upon Lucid’s finalizing of the related design, engineering, component procurement, testing, build-out and manufacturing plans in a timely manner and also upon Lucid’s ability to execute these plans within the planned timeline. Prior to mass production of its electric vehicles, Lucid will also need the vehicles to be fully approved for sale according to differing requirements, including but not limited to regulatory requirements, in the different geographies where Lucid intends to launch its vehicles. To the extent Lucid further delays the launch of the Lucid Air, its growth prospects could be adversely affected as Lucid may fail to grow its market share.
Furthermore, Lucid relies on third party suppliers for the provision and development of many of the key components and materials used in its vehicles. To the extent Lucid’s suppliers experience any delays in providing Lucid with or developing necessary components, Lucid could experience delays in delivering on its timelines. For example, in certain instances, international travel restrictions have prevented Lucid supply quality engineers from conducting in-person visits and quality engineering for parts production with international suppliers, which has contributed to delays in Lucid’s supply chain. Likewise, Lucid may encounter delays with the design, construction and regulatory or other approvals necessary to bring online its Casa Grande, Arizona manufacturing facilities, future expansions of the Casa Grande manufacturing facilities, or other future manufacturing facilities. Any significant delay or other complication in the production ramp of the Lucid Air or the development, manufacture, launch and production ramp of Lucid’s future products, features and services, including complications associated with expanding its production capacity and supply chain or obtaining or maintaining related regulatory approvals, or inability to manage such ramps cost-effectively, could materially damage Lucid’s brand, business, prospects, financial condition and results of operations.
The continued development of and the ability to start manufacturing Lucid’s vehicles, including the Lucid Air and Project Gravity, are and will be subject to risks, including with respect to:

the ability to ensure readiness of firmware features and functions to be integrated into the Lucid Air as planned and on the desired timeline;

the ability to finalize release candidate specifications as planned and on the desired timeline;

delays by Lucid in delivering final component designs to its suppliers;
 
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Lucid’s or its suppliers’ ability to successfully tool their manufacturing facilities as planned and on the desired timeline;

the ability to ensure working supply chain and desired supplier part quality as planned and on the desired timeline;

the ability to accurately manufacture vehicles within specified design tolerances;

the occurrence of product defects that cannot be remedied without adversely affecting the expected start of production;

the ability to secure necessary funding;

the ability to negotiate and execute definitive agreements with various suppliers for hardware, software, or services necessary to engineer or manufacture Lucid’s vehicles;

the ability to obtain required regulatory approvals and certifications;

the ability to comply with environmental, safety, and similar regulations and in a timely manner;

the ability to secure necessary components, services, or licenses on acceptable terms and in a timely manner;

the ability to attract, recruit, hire, retain and train skilled employees;

the ability to implement effective and efficient quality controls;

delays or disruptions in Lucid’s supply chain including raw material supplies;

the ability to maintain arrangements on commercially reasonable terms with its suppliers, delivery and other partners, after sales service providers, and other operationally significant third parties;

other delays, backlog in manufacturing and research and development of new models, and cost overruns;

the ongoing COVID-19 pandemic, including related business interruptions and other effects; and

any other risks identified herein.
Although Lucid expects the net proceeds from the business combination and the PIPE Investment to be sufficient to finance the initial commercial production of the Lucid Air, Lucid expects that it will require additional financing to fund its planned operations and expansion plans. If Lucid is unable to arrange for required funds under the terms and on the timeline that it anticipates, Lucid’s plans for tooling and building out its manufacturing facilities and for commercial production of its electric vehicles could be significantly delayed, which would materially adversely affect its business, prospects, financial condition and results of operations.
If Lucid’s vehicles fail to perform as expected, its ability to develop, market and sell or lease its products could be harmed.
Once production commences, Lucid’s vehicles may contain defects in design and manufacture that may cause them not to perform as expected or that may require repairs, recalls, and design changes, any of which would require significant financial and other resources to successfully navigate and resolve. Lucid’s vehicles will use a substantial amount of software code to operate, and software products are inherently complex and may contain defects and errors when first introduced. If Lucid’s vehicles contain defects in design and manufacture that cause them not to perform as expected or that require repair, or certain features of Lucid’s vehicles such as bi-directional charging or AD/ADAS features take longer than expected to become available, are legally restricted or become subject to additional regulation, Lucid’s ability to develop, market and sell its products and services could be harmed. Although Lucid will attempt to remedy any issues it observes in its products as effectively and rapidly as possible, such efforts could significantly distract management’s attention from other important business objectives, may not be timely, may hamper production or may not be to the satisfaction of its customers. Further, Lucid’s limited operating history and limited field data reduce its ability to evaluate and predict the long-term quality, reliability, durability and performance characteristics of its battery packs, powertrains and vehicles. There can be no assurance that Lucid will be able to detect and fix any defects in its products prior to their sale or lease to customers.
 
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Any defects, delays or legal restrictions on vehicle features, or other failure of Lucid’s vehicles to perform as expected, could harm Lucid’s reputation and result in delivery delays, product recalls, product liability claims, breach of warranty claims and significant warranty and other expenses, and could have a material adverse impact on Lucid’s business, results of operations, prospects and financial condition. As a new entrant to the industry attempting to build customer relationships and earn trust, these effects could be significantly detrimental to Lucid. Additionally, problems and defects experienced by other electric consumer vehicles could by association have a negative impact on perception and customer demand for Lucid’s vehicles.
In addition, even if its vehicles function as designed, Lucid expects that the battery efficiency, and hence the range, of its electric vehicles, like other electric vehicles that use current battery technology, will decline over time. Other factors, such as usage, time and stress patterns, may also impact the battery’s ability to hold a charge, or could require Lucid to limit vehicles’ battery charging capacity, including via over-the-air or other software updates, for safety reasons or to protect battery capacity, which could further decrease Lucid’s vehicles’ range between charges. Such decreases in or limitations of battery capacity and therefore range, whether imposed by deterioration, software limitations or otherwise, could also lead to consumer complaints or warranty claims, including claims that prior knowledge of such decreases or limitations would have affected consumers’ purchasing decisions. Further, there can be no assurance that Lucid will be able to improve the performance of its battery packs, or increase its vehicles’ range, in the future. Any such battery deterioration or capacity limitations and related decreases in range may negatively influence potential customers’ willingness to purchase Lucid’s vehicles and negatively impact its brand and reputation, which could adversely affect Lucid’s business, prospects, results of operations and financial condition.
Lucid faces challenges providing charging solutions for its vehicles.
Demand for Lucid’s vehicles will depend in part on the availability of charging infrastructure. While the prevalence of charging stations has been increasing, charging station locations are significantly less widespread than gas stations. Although Lucid has partnered with Electrify America and may partner with other third-party electric vehicle charging providers to offer charging stations to its customers, the charging infrastructure available to its customers may be insufficient to meet their needs or expectations, especially in certain international markets. Some potential customers may choose not to purchase Lucid’s vehicles because of the lack of a more widespread charging infrastructure, and some potential customers may be conditioned to favor or expect proprietary charging solutions, such as Tesla’s Supercharger network. In addition, although the current U.S. presidential administration has proposed a plan to deploy 500,000 additional public charging stations across the United States by 2030, appropriations for such a deployment may not occur at proposed levels or at all, which could serve to limit the development of public charging infrastructure and increase the relative attractiveness to potential customers of a proprietary charging solution.
If Lucid were to pursue development of a proprietary charging solution, it would face significant challenges and barriers, including successfully navigating the complex logistics of rolling out a network and teams in appropriate areas, resolving issues related to inadequate capacity or overcapacity in certain areas, addressing security risks and risks of damage to vehicles, securing agreements with third-party providers to roll out and support a network of charging solutions in appropriate areas, obtaining any required permits and land use rights and filings, and providing sufficient financial resources to successfully roll out the proprietary charging solution, which could require diverting such resources from Lucid’s other important business initiatives. In addition, Lucid’s limited experience in providing charging solutions could contribute to additional unanticipated challenges that would hinder its ability to provide such solutions or make the provision of such solutions costlier than anticipated. To the extent Lucid is unable to meet user expectations or experiences difficulties in providing charging solutions, demand for its vehicles may suffer, and Lucid’s reputation and business may be materially and adversely affected.
Lucid has no experience servicing its vehicles and their integrated software. If Lucid or its partners are unable to adequately service its vehicles, Lucid’s business, prospects, financial condition and results of operations may be materially and adversely affected.
Because Lucid does not plan to begin commercial production of the Lucid Air until the second half of 2021 at the earliest, Lucid has no experience servicing or repairing its vehicles. Servicing electric vehicles is
 
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different than servicing vehicles with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques. In addition, Lucid plans to partner with certain third parties to perform some of the service on Lucid’s vehicles, and there can be no assurance that Lucid will be able to enter into acceptable arrangements with any such third-party providers. Further, although such servicing partners may have experience in servicing other electric vehicles, they will initially have no experience in servicing Lucid’s vehicles. There can be no assurance that Lucid’s service arrangements will adequately address the service requirements of its customers to their satisfaction, or that Lucid and its servicing partners will have sufficient resources, experience or inventory to meet these service requirements in a timely manner as the volume of vehicles Lucid delivers increases. This risk is enhanced by Lucid’s limited operating history and its limited data regarding its vehicles’ real-world reliability and service requirements. In addition, if Lucid is unable to roll out and establish a widespread service network that provides satisfactory customer service, its customer loyalty, brand and reputation could be adversely affected, which in turn could materially and adversely affect its sales, results of operations, prospects and financial condition.
In addition, the motor vehicle industry laws in many states require that service facilities be available to service vehicles physically sold from locations in the state. While Lucid anticipates developing a service program that would satisfy regulatory requirements in these circumstances, the specifics of its service program are still in development, and at some point may need to be restructured to comply with state law, which may impact Lucid’s business, financial condition, results of operations and prospects.
Lucid’s customers will also depend on Lucid’s customer support team to resolve technical and operational issues relating to the integrated software underlying its vehicles, a large portion of which Lucid has developed in-house. As Lucid grows, additional pressure may be placed on its customer support team or partners, and Lucid may be unable to respond quickly enough to accommodate short-term increases in customer demand for technical support. Lucid also may be unable to modify the future scope and delivery of its technical support to compete with changes in the technical support provided by its competitors. Increased customer demand for support, without corresponding revenue, could increase costs and negatively affect Lucid’s results of operations. If Lucid is unable to successfully address the service requirements of its customers, or if it establishes a market perception that it does not maintain high-quality support, its brand and reputation could be adversely affected, and it may be subject to claims from its customers, which could result in loss of revenue or damages, and its business, results of operations, prospects and financial condition could be materially and adversely affected.
Insufficient reserves to cover future warranty or part replacement needs or other vehicle repair requirements, including any potential software upgrades, could materially adversely affect Lucid’s business, prospects, financial condition and results of operations.
Lucid will provide a manufacturer’s warranty on all vehicles and powertrain components and systems it sells. Once its vehicles are in commercial production, Lucid will need to maintain reserves to cover part replacement and other vehicle repair needs, including any potential software upgrades or warranty claims. In addition, Lucid expects to provide a manufacturer’s warranty on any future energy storage systems it sells and may provide additional warranties on installation workmanship or performance guarantees. Warranty reserves will include the Lucid management team’s best estimate of the projected costs to repair or to replace items under warranty. Such estimates are inherently uncertain, particularly in light of Lucid’s limited operating history and the limited field data available to it, and changes to such estimates based on real-world observations may cause material changes to Lucid’s warranty reserves in the future. If Lucid’s reserves are inadequate to cover future maintenance requirements on its vehicles, its business, prospects, financial condition and results of operations could be materially and adversely affected. Lucid may become subject to significant and unexpected expenses as well as claims from Lucid’s customers, including loss of revenue or damages. There can be no assurances that then-existing reserves will be sufficient to cover all claims. In addition, if future laws or regulations impose additional warranty obligations on Lucid that go beyond Lucid’s manufacturer’s warranty, Lucid may be exposed to materially higher warranty, parts replacement and repair expenses than it expects, and its reserves may be insufficient to cover such expenses.
Lucid has no experience to date in high volume manufacture of its vehicles.
Lucid cannot provide any assurance as to whether it will be able to develop efficient, automated, low-cost production capabilities and processes and reliable sources of component supply that will enable it to
 
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meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully mass market its vehicles. Even if Lucid is successful in developing its high volume production capability and processes and reliably source its component supply, no assurance can be given as to whether it will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond its control such as problems with suppliers and vendors, or force majeure events, or in time to meet its commercialization schedules or to satisfy the requirements of customers and potential customers. Any failure to develop such production processes and capabilities within Lucid’s projected costs and timelines could have a material adverse effect on its business, results of operations, prospects and financial condition. Bottlenecks and other unexpected challenges may also arise as Lucid ramps production of the Lucid Air, and it will be important that Lucid address them promptly while continuing to control its manufacturing costs. If Lucid is not successful in doing so, or if it experiences issues with its manufacturing process improvements, it could face delays in establishing and/or sustaining Lucid’s production ramps or be unable to meet its related cost and profitability targets.
If Lucid fails to successfully tool its manufacturing facilities or if its manufacturing facilities become inoperable, it will be unable to produce its vehicles and its business will be harmed.
While Lucid has completed the initial phase of construction at its manufacturing facilities in Casa Grande, Arizona, tooling its facilities for production of its vehicles and its future expansion plans are complicated and present significant challenges. For example, Lucid’s manufacturing plans contemplate a compressed time period between finalization of the Lucid Air’s specifications for commercial production and the start of commercial production, which would require finalization of tooling in a short time period. In addition, certain of Lucid’s suppliers may be unable to complete tooling with respect to finalized components of the Lucid Air in the planned timeframe after Lucid delivers final component specifications, which could adversely affect Lucid’s ability to begin commercial production of the Lucid Air on the expected timing and at the quality levels it requires. As with any large-scale capital project, these efforts could be subject to delays, cost overruns or other complications. These risks could be exacerbated because Lucid is building its facilities from the ground up to support its electric vehicle production processes, which differ substantially from traditional automobile production processes for which expertise is more readily available. In order to commence commercial production at its Casa Grande facilities, Lucid will also need to hire and train a significant number of employees and integrate a yet-to-be-fully-developed supply chain. A failure to commence commercial production on schedule would lead to additional costs and would delay Lucid’s ability to generate meaningful revenues. In addition, it could prevent Lucid from gaining the confidence of potential customers, spur cancellations of reservations for the Lucid Air and open the door to increased competition. All of the foregoing could hinder Lucid’s ability to successfully launch and grow its business and achieve a competitive position in the market.
In addition, if any of Lucid’s manufacturing facilities are not constructed in conformity with its requirements, repair or remediation may be required to support Lucid’s planned phased manufacturing build-out and could require Lucid to take vehicle production offline, delay implementation of its planned phased manufacturing build-out, or construct alternate facilities, which could materially limit Lucid’s manufacturing capacity, delay planned increases in manufacturing volumes, delay the start of production of the Project Gravity SUV or other future vehicles, or adversely affect Lucid’s ability to timely sell and deliver its electric vehicles to customers. Any repair or remediation efforts could also require Lucid to bear substantial additional costs, including both the direct costs of such activities and potentially costly litigation or other legal proceedings related to any identified defect, and there can be no assurance that Lucid’s insurance policies or other recoveries would be sufficient to cover all or any of such costs. Any of the foregoing consequences could have a material adverse effect on Lucid’s business, prospects, results of operations and financial condition and could cause Lucid’s results of operations to differ materially from its projections.
In addition, Lucid expects to utilize a number of new manufacturing technologies, techniques and processes for its vehicles, such as motor winding equipment, and Lucid may utilize additional new technologies, techniques and processes in the future. Certain design features in Lucid’s vehicles present additional manufacturing challenges, such as large display screens and AD/ADAS hardware. There is no guarantee that Lucid will be able to successfully and timely introduce and scale any such new processes or features.
 
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Furthermore, Lucid’s Casa Grande facilities and the equipment Lucid uses to manufacture its vehicles will be costly to repair or replace and could require substantial lead time to repair or replace and qualify for use. Lucid will rely heavily on complex machinery for its operations, and its production will involve a significant degree of uncertainty and risk in terms of operational performance and costs. Lucid’s manufacturing plant will employ large-scale, complex machinery combining many components, which once deployed may suffer unexpected malfunctions from time to time and will depend on repairs and spare parts that may not be available when needed. Unexpected malfunctions of the manufacturing plant components may significantly decrease Lucid’s operational efficiency, including by forcing manufacturing shutdowns in order to conduct repairs or troubleshoot manufacturing problems. Lucid’s facilities may also be harmed or rendered inoperable by natural or man-made disasters, including but not limited to earthquakes, tornadoes, flooding, fire, power outages, environmental hazards and remediation, costs associated with decommissioning of equipment, labor disputes and strikes, difficulty or delays in obtaining governmental permits and licenses, damages or defects in electronic systems, industrial accidents or health epidemics, such as the recent COVID-19 pandemic, which may render it difficult or impossible for Lucid to manufacture Lucid’s vehicles for some period of time. The inability to produce Lucid’s vehicles or the backlog that could develop if Lucid’s manufacturing plant is inoperable for even a short period of time may result in the loss of customers or harm its reputation. Although Lucid maintains insurance for damage to its property and the disruption of its business, this insurance may not be sufficient to cover all of Lucid’s potential losses and may not continue to be available to it on acceptable terms, if at all. Should operational risks materialize, they may result in the personal injury to or death of Lucid’s workers, the loss of production equipment, damage to manufacturing facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on Lucid’s business, results of operations, cash flows, financial condition or prospects.
Lucid’s ability to start production and its future growth depend upon its ability to maintain relationships with its existing suppliers and source suppliers for its critical components, and to complete building out its supply chain, while effectively managing the risks due to such relationships.
Lucid’s success, including its ability to start production of the Lucid Air, will be dependent upon its ability to enter into supplier agreements and maintain its relationships with suppliers who are critical and necessary to the output and production of its vehicles. Lucid also relies on suppliers to provide it with the components for its vehicles. The supplier agreements Lucid has or may enter into with key suppliers in the future may have provisions where such agreements can be terminated in various circumstances, including potentially without cause. If these suppliers become unable to provide, or experience delays in providing, components, or if the supplier agreements Lucid has in place are terminated, it may be difficult to find replacement components. Changes in business conditions, pandemics, governmental changes and other factors beyond Lucid’s control or that Lucid does not presently anticipate could affect its ability to receive components from its suppliers.
Further, Lucid has not secured supply agreements for all of its components. Lucid may be at a disadvantage in negotiating supply agreements for the production of its vehicles due to its limited operating history and the limited time period before the planned start of production of the Lucid Air. In addition, there is the possibility that finalizing the supply agreements for the parts and components of its vehicles will cause significant disruption to Lucid’s operations, or such supply agreements could be at costs that make it difficult for Lucid to operate profitably.
If Lucid does not enter into long-term supplier agreements with guaranteed pricing for its parts or components, it may be exposed to fluctuations in prices of components, materials and equipment. Agreements for the purchase of battery cells and other components contain or are likely to contain pricing provisions that are subject to adjustment based on changes in market prices of key commodities. Substantial increases in the prices for such components, materials and equipment would increase Lucid’s operating costs and could reduce its margins if it cannot recoup the increased costs. Any attempts to increase the announced or expected prices of Lucid’s vehicles in response to increased costs could be viewed negatively by its potential customers and could adversely affect Lucid’s business, prospects, financial condition or results of operations.
 
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Lucid is dependent on its suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of Lucid’s products according to its schedule and at prices, quality levels and volumes acceptable to Lucid, or Lucid’s inability to efficiently manage these components, could have a material adverse effect on Lucid’s results of operations and financial condition.
Lucid relies on hundreds of third-party suppliers for the provision and development of many of the key components and materials used in its vehicles. While Lucid plans to obtain components from multiple sources whenever possible, many of the components used in Lucid’s vehicles will be purchased by Lucid from a single source, and Lucid’s limited, and in many cases single-source, supply chain exposes it to multiple potential sources of delivery failure or component shortages for its production. Lucid’s third-party suppliers may not be able to meet Lucid’s required product specifications and performance characteristics, which would impact Lucid’s ability to achieve its product specifications and performance characteristics as well. This risk is heightened by the compressed period Lucid anticipates between finalization of the Lucid Air and the start of commercial production, which may not provide all suppliers with sufficient time to begin production of finalized components of the Lucid Air in the planned timeframe or at the quality levels Lucid demands and could cause delays in the planned start of production of the Lucid Air or issues with initial quality levels of the Lucid Air. Additionally, Lucid’s third-party suppliers may be unable to obtain required certifications or provide necessary warranties for their products that are necessary for use in Lucid’s vehicles. Lucid may also be impacted by changes in its supply chain or production needs, including cost increases from its suppliers, in order to meet its quality targets and development timelines as well as due to design changes. Likewise, any significant increases in its production may in the future require Lucid to procure additional components in a short amount of time. Lucid’s suppliers may not ultimately be able to sustainably and timely meet Lucid’s cost, quality and volume needs, requiring Lucid to replace them with other sources. If Lucid is unable to obtain suitable components and materials used in its vehicles from its suppliers or if its suppliers decide to create or supply a competing product, its business could be adversely affected. Further, if Lucid is unsuccessful in its efforts to control and reduce supplier costs, its results of operations will suffer.
In addition, Lucid could experience delays if its suppliers do not meet agreed upon timelines or experience capacity constraints. Any disruption in the supply of components, whether or not from a single source supplier, could temporarily disrupt production of its vehicles until an alternative supplier is able to supply the required material. Even in cases where Lucid may be able to establish alternate supply relationships and obtain or engineer replacement components for its single source components, it may be unable to do so quickly, or at all, at prices or quality levels that are acceptable to it. This risk is heightened by the fact that Lucid has less negotiating leverage with suppliers than larger and more established automobile manufacturers, which could adversely affect its ability to obtain necessary components and materials on favorable pricing and other terms, or at all. Any of the foregoing could materially and adversely affect Lucid’s results of operations, financial condition and prospects.
Furthermore, as the scale of its vehicle production increases, Lucid will need to accurately forecast, purchase, warehouse and transport components to its manufacturing facilities and servicing locations internationally and at much higher volumes. If Lucid is unable to accurately match the timing and quantities of component purchases to its actual needs or successfully implement automation, inventory management and other systems to accommodate the increased complexity in its supply chain, Lucid may incur unexpected production disruption, storage, transportation and write-off costs, which could have a material adverse effect on its results of operations and financial condition.
In addition, as Lucid develops an international manufacturing footprint, it will face additional challenges with respect to international supply chain management and logistics costs. If Lucid is unable to access or develop localized supply chains in the regions where it develops manufacturing facilities with the quality, costs and capabilities required, Lucid could be required to source components from distant suppliers, which would increase its logistics and manufacturing costs, increase the risk and complexity of Lucid’s supply chain and significantly impair Lucid’s ability to develop cost-effective manufacturing operations, which could have a material adverse effect on Lucid’s business, results of operations and financial condition.
Furthermore, unexpected changes in business conditions, materials pricing, labor issues, wars, governmental changes, tariffs, natural disasters, health epidemics such as the ongoing COVID-19 pandemic,
 
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and other factors beyond Lucid’s and its suppliers’ control could also affect these suppliers’ ability to deliver components to Lucid on a timely basis. Lucid has also identified certain of its suppliers, including certain suppliers it deems critical, as having poor financial health or being at risk of bankruptcy. Although Lucid routinely reviews its suppliers’ financial health and attempts to identify alternate suppliers where possible, the loss of any supplier, particularly a single- or limited-source supplier, or the disruption in the supply of components from its suppliers, could lead to vehicle design changes, production delays, idle manufacturing facilities and potential loss of access to important technology and parts for producing, servicing and supporting Lucid’s vehicles, any of which could result in negative publicity, damage to its brand and a material and adverse effect on its business, prospects, results of operations and financial condition. In addition, if Lucid’s suppliers experience substantial financial difficulties, cease operations or otherwise face business disruptions, including as a result of the effects of the COVID-19 pandemic, Lucid may be required to provide substantial financial support to ensure supply continuity, which could have an additional adverse effect on Lucid’s liquidity and financial condition.
Lucid may not be able to accurately estimate the supply and demand for its vehicles, which could result in a variety of inefficiencies in its business and hinder its ability to generate revenue. If Lucid fails to accurately predict its manufacturing requirements, it could incur additional costs or experience delays.
It is difficult to predict Lucid’s future revenues and appropriately budget for its expenses, and Lucid has limited insight into trends that may emerge and affect its business. Lucid will be required to provide forecasts of its demand to its suppliers several months prior to the scheduled delivery of vehicles to Lucid’s prospective customers. Currently, there is no historical basis for making judgments about the demand for Lucid’s vehicles or Lucid’s ability to develop, manufacture, and deliver vehicles, or Lucid’s profitability in the future. If Lucid overestimates its requirements, its suppliers may have excess inventory, which indirectly would increase its costs. If Lucid underestimates its requirements, its suppliers may have inadequate inventory, which could interrupt manufacturing of its products and result in delays in shipments and revenues. In addition, lead times for materials and components that Lucid’s suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. If Lucid fails to order sufficient quantities of product components in a timely manner, the delivery of vehicles to its customers could be delayed, which would harm Lucid’s business, financial condition and results of operations.
Increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion cells or semiconductors, could harm Lucid’s business.
Once Lucid begins commercial production of its vehicles or any future energy storage systems, Lucid may experience increases in the cost of or a sustained interruption in the supply or shortage of materials. Any such increase, supply interruption or shortage could materially and adversely impact Lucid’s business, results of operations, prospects and financial condition. Lucid uses various materials in its business, including aluminum, steel, lithium, nickel, copper, cobalt, neodymium, terbium, praseodymium and manganese, as well as lithium-ion cells and semiconductors from suppliers. The prices for these materials fluctuate, and their available supply may be unstable, depending on market conditions and global demand for these materials, including as a result of increased production of electric vehicles and energy storage products by Lucid’s competitors, and could adversely affect Lucid’s business and results of operations. For instance, Lucid is exposed to multiple risks relating to lithium-ion cells. These risks include:

the inability or unwillingness of current battery manufacturers to build or operate battery cell manufacturing plants to supply the numbers of lithium-ion cells required to support the growth of the electric vehicle industry as demand for such cells increases;

an increase in the cost, or decrease in the available supply, of materials, such as cobalt, used in lithium-ion cells;

disruption in the supply of cells due to quality issues or recalls by battery cell manufacturers; and

fluctuations in the value of any foreign currencies, and the Korean Won in particular, in which battery cell and related raw material purchases are or may be denominated against the U.S. dollar.
 
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Lucid’s ability to manufacture its vehicles or any future energy storage systems will depend on the continued supply of battery cells for the battery packs used in its products. Lucid has limited flexibility in changing battery cell suppliers, and any disruption in the supply of battery cells from such suppliers could disrupt production of Lucid’s vehicles until a different supplier is fully qualified. Furthermore, Lucid’s ability to manufacture its vehicles depends on continuing access to semiconductors and components that incorporate semiconductors. A global semiconductor supply shortage is having wide-ranging effects across multiple industries and the automotive industry in particular, and it has impacted many automotive suppliers and manufacturers, including Lucid, that incorporate semiconductors into the parts they supply or manufacture. Lucid has experienced and may continue to experience an impact on its operations as a result of the semiconductor supply shortage, and such shortage could in the future have a material impact on Lucid or its suppliers, which could delay the start of production of the Lucid Air or planned future vehicles, impair Lucid’s ability to continue production once started or force Lucid or its suppliers to pay exorbitant rates for continued access to semiconductors, and of which could have a material adverse effect on Lucid’s business, prospects and results of operations. In addition, prices and transportation expenses for these materials fluctuate depending on many factors beyond Lucid’s control, including fluctuations in supply and demand, currency fluctuations, tariffs and taxes, fluctuations and shortages in petroleum supply, freight charges and other economic and political factors. Substantial increases in the prices for Lucid’s materials or prices charged to Lucid, such as those charged by battery cell or semiconductor suppliers, would increase Lucid’s operating costs, and could reduce Lucid’s margins if it cannot recoup the increased costs through increased prices. Any attempts to increase product prices in response to increased material costs could result in cancellations of orders and reservations and materially and adversely affect Lucid’s brand, image, business, results of operations, prospects and financial condition.
Lucid must develop complex software and technology systems, including in coordination with vendors and suppliers, in order to produce its electric vehicles, and there can be no assurance such systems will be successfully developed.
Lucid’s vehicles, including the Lucid Air, will use a substantial amount of third-party and in-house software and complex technological hardware to operate, some of which is still subject to further development and testing. The development and implementation of such advanced technologies is inherently complex, and Lucid will need to coordinate with its vendors and suppliers in order to integrate such technology into its electric vehicles and ensure it interoperates with other complex technology as designed and as expected. Lucid may fail to detect defects and errors that are subsequently revealed, and its control over the performance of third-party services and systems may be limited. Any defects or errors in, or which are attributed to, Lucid’s technology, could result in, among other things:

delayed start of production and delivery of Lucid’s vehicles, including the Lucid Air;

delayed market acceptance of Lucid’s vehicles;

loss of customers or inability to attract new customers;

diversion of engineering or other resources for remedying the defect or error;

damage to Lucid’s brand or reputation;

increased service and warranty costs;

legal action by customers or third parties, including product liability claims; and

penalties imposed by regulatory authorities.
In addition, if Lucid is unable to develop the software and technology systems necessary to operate Lucid’s vehicles, Lucid’s competitive position will be harmed. Lucid relies on third-party suppliers to develop a number of technologies for use in its products, including Continental, Bosch, Valeo, Cogent, Quanta, Robosense, Via, Primax, Eletrobit, Here, Ublox, Renesas, Blackberry, Qt and DSP Concepts. There can be no assurances that Lucid’s suppliers will be able to meet the technological requirements, production timing and volume requirements to support Lucid’s business plan. In addition, such technology may not satisfy the cost, performance useful life and warranty characteristics Lucid anticipates in its business plan, which could materially adversely affect Lucid’s business, prospects and results of operations.
 
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Lucid’s facilities or operations could be adversely affected by events outside of its control, such as natural disasters, wars, health epidemics or pandemics, or security incidents.
Lucid may be impacted by natural disasters, wars, health epidemics or pandemics or other events outside of its control. For example, Lucid’s corporate headquarters are located in seismically active regions in Northern California, and Lucid’s manufacturing facilities in Arizona are located in a sandstorm-, flood- and tornado-prone area. If major disasters such as earthquakes, wildfires, floods, tornadoes or other events occur, or Lucid’s information system or communications network breaks down or operates improperly, its headquarters and manufacturing facilities may be seriously damaged, or Lucid may have to stop or delay production and shipment of its products. In addition, the ongoing COVID-19 pandemic has impacted economic markets, manufacturing operations, supply chains, employment and consumer behavior in nearly every geographic region and industry across the world, and Lucid has been, and may in the future be, adversely affected as a result. Furthermore, Lucid could be impacted by physical security incidents at its facilities, which could result in significant damage to such facilities that could require Lucid to delay or discontinue production of its vehicles. In addition, Lucid has established a foreign trade zone with respect to certain of its facilities in Casa Grande, Arizona. To the extent any such physical security incidents are determined to result from insufficient security measures, Lucid could face the risk of loss of its foreign trade zone approval, as well as financial penalties or fines, which could increase the cost of Lucid’s duties and tariffs. See “— Risks Related to Litigation and Regulation — A failure to properly comply with foreign trade zone laws and regulations could increase the cost of Lucid’s duties and tariffs.” Lucid may incur significant expenses or delays relating to such events outside of its control, which could have a material adverse impact on its business, results of operations and financial condition.
If Lucid updates or discontinues the use of its manufacturing equipment more quickly than expected, it may have to shorten the useful lives of any equipment to be retired as a result of any such update, and the resulting acceleration in Lucid’s depreciation could negatively affect its financial results.
Lucid has invested and expects to continue to invest significantly in what it believes is state of the art tooling, machinery and other manufacturing equipment, and Lucid depreciates the cost of such equipment over their expected useful lives. However, manufacturing technology may evolve rapidly, and Lucid may decide to update its manufacturing processes more quickly than expected. Moreover, as Lucid initiates and ramps the commercial production of its vehicles, Lucid’s experience may cause it to discontinue the use of already installed equipment in favor of different or additional equipment. The useful life of any equipment that would be retired early as a result would be shortened, causing the depreciation on such equipment to be accelerated, and Lucid’s results of operations could be negatively impacted.
Lucid’s vehicles will make use of lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame.
The battery packs within Lucid’s vehicles and any future energy storage systems will make use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. While Lucid has designed its battery packs to passively contain a single cell’s release of energy without spreading to neighboring cells, once Lucid’s vehicles are commercially available, a field or testing failure of its vehicles or other battery packs that it produces could occur. In addition, although Lucid intends to equip its vehicles with systems designed to detect and warn vehicle occupants of such thermal events, there can be no assurance that such systems will function as designed or will provide vehicle occupants with sufficient or any warning. Any such events or failures of Lucid’s vehicles, battery packs or warning systems could subject Lucid to lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive. Also, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications or any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident does not involve Lucid’s vehicles, could seriously harm Lucid’s business and reputation.
In addition, once Lucid begins manufacturing its vehicles and any future energy storage products, Lucid will need to store a significant number of lithium-ion cells at its Casa Grande, Arizona manufacturing facilities. Any mishandling of battery cells or safety issue or fire related to the cells could disrupt its operations. Such damage or injury could also lead to adverse publicity and potentially a safety recall. In
 
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addition, the transportation and effective storage of lithium-ion batteries is also tightly regulated by the U.S. Department of Transportation and other regulatory bodies, and any failure to comply with such regulation could result in fines, loss of permits and licenses or other regulatory consequences, which could limit Lucid’s ability to manufacture and deliver its vehicles and negatively affect Lucid’s results of operations and financial condition. Moreover, any failure of a competitor’s electric vehicle or energy storage product may cause indirect adverse publicity for Lucid and its products. Such adverse publicity could negatively affect Lucid’s brand and harm Lucid’s business, prospects, results of operations and financial condition.
Risks Related to Cybersecurity and Data Privacy
Any unauthorized control, manipulation, interruption or compromise of or access to Lucid’s products or information technology systems could result in loss of confidence in Lucid and its products, harm Lucid’s business and materially adversely affect its financial performance, results of operations or prospects.
Lucid’s products contain complex information technology systems. For example, Lucid’s vehicles are designed with built-in data connectivity to accept and install periodic remote updates to improve their functionality. In addition, Lucid expects to collect, store, transmit and otherwise process data from vehicles, customers, employees and other third parties as part of its business operations, which may include personal data or confidential or proprietary information. Lucid also works with third-party service providers and vendors that collect, store and process such data on its behalf. Lucid has designed, implemented and tested information security policies and deployed systems and measures to implement such policies, including encryption technologies, to prevent unauthorized access and plan to continue to deploy additional measures as it grows. Lucid’s third-party service providers and vendors also take steps to protect the security and integrity of Lucid’s and their information technology systems and Lucid’s and their customers’ information. However, there can be no assurance that such systems and measures will not be compromised as a result of intentional misconduct, including by employees, contractors, or vendors, as well as by software bugs, human error, or technical malfunctions.
Furthermore, hackers may in the future attempt to gain unauthorized access to, modify, alter and use Lucid’s vehicles, products and systems to (i) gain control of, (ii) change the functionality, user interface and performance characteristics of or (iii) gain access to data stored in or generated by, Lucid’s vehicles, products and systems. Advances in technology, an increased level of sophistication and diversity of Lucid’s products and services, an increased level of expertise of hackers and new discoveries in the field of cryptography could lead to a compromise or breach of the measures that Lucid or its third-party service providers use. Lucid and its third-party service providers’ systems have in the past and may in the future be affected by security incidents. Lucid’s systems are also vulnerable to damage or interruption from, among other things, physical theft, fire, terrorist attacks, natural disasters, power loss, war, telecommunications failures, computer viruses, computer denial or degradation of service attacks, ransomware, social engineering schemes, domain name spoofing, insider theft or misuse or other attempts to harm Lucid’s products and systems. Lucid’s and its third-party service providers’ or vendors’ data centers could be subject to break-ins, sabotage and intentional acts of vandalism causing potential disruptions. Some of Lucid’s systems will not be fully redundant, and Lucid’s disaster recovery planning cannot account for all eventualities. Any problems at Lucid’s or its third-party service providers’ or vendors’ data centers could result in lengthy interruptions in Lucid’s service. There can be no assurance that any security or other operational measures that Lucid or its third-party service providers or vendors have implemented will be effective against any of the foregoing threats or issues.
If Lucid is unable to protect its products and systems (and the information stored in its systems) from unauthorized access, use, disclosure, disruption, modification, destruction or other breach, such problems or security breaches could have negative consequences for Lucid’s business and future prospects, including causing monetary losses, giving rise to liabilities under Lucid’s contracts or to the owners of the applicable information, subjecting Lucid to substantial fines, penalties, damages and other liabilities under applicable laws and regulations, incurring substantial costs to respond to, investigate and remedy such incidents, reducing customer demand for Lucid’s products, harming its reputation and brand and compromising or leading to a loss of protection of its intellectual property or trade secrets. In addition, regardless of their veracity, reports of unauthorized access to Lucid’s vehicles, systems or data, as well as other factors that may result in the perception that its vehicles, systems or data are capable of being “hacked,” could negatively affect Lucid’s
 
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brand. In addition, some members of t