Business

➚ BUY: McDonald’s. Donald Trump, who remains obsessed with Kamala Harris’ burger-flipping college job, is set to work the fry cooker at a Pennsylvania stop as both candidates battle for blue-collar cred.

➘ SELL: McKinsey. The consulting firm will pay at least $500 million to settle federal investigations into its work helping opioid makers increase sales, Bloomberg reports. Demand for consultants continues to weaken.

ECB cuts rates to nobody’s surprise… Uber eyed Expedia takeover… Musk sees bias in CA’s space-flight curbs… John Deere fact-checks Trump’s tariff claim… High cocoa prices = more Halloween gummies… Meta MealGate…

I’ll be interviewing UBS Group CEO Sergio P. Ermotti and other global finance leaders at the Semafor’s World Economy Summit on Oct. 24. We’ll talk about his rescue of Credit Suisse, where central bankers go from here, and how Europe can regain its competitiveness.

Lucid’s boss on sputtering EV market, Elon, and doing business in Saudi Arabia

THE SCENE

The electric-vehicle market is sputtering. Mercedes delayed its goal of being all-electric by five years and reassured investors it will keep classing up its gas-engine cars. Ford scrapped a $1.3 billion plan to convert a Canadian factory into an EV manufacturing hub; it will churn out the company’s flagship gas-powered pickup trucks instead. GM is going back to hybrids.

Peter Rawlinson is betting they’re wrong. The CEO of Lucid Motors is convinced he can sell consumers on all-electric luxury vehicles. its current model, Air, starts at $70,000 and its next one, Gravity, will be even pricier. He’s armed with a seemingly bottomless supply of cash from Saudi Arabia, whose sovereign wealth fund doubled down again this week on its investment in Lucid.

But Lucid is on track to make just 9,000 cars this year, a fraction of the 90,000 it once projected. Its profit margins got worse the more cars it made and are only now stabilizing at levels far below those of rival Rivian. There’s a reason startups build software, not cars.

I spoke to Rawlinson from his office off the floor of Lucid’s giant Arizona factory. Our conversation, edited and condensed, is below.

Liz Hoffman: People say they want these cars but they’re not buying them.

Peter Rawlinson: People don’t realize how good an electric vehicle can be. It’s unimaginably better than a gasoline driving experience, even if you take away the argument for sustainability. People have been ill-served by underwhelming offerings from traditional automakers that haven’t gone all-in on electric, and they’ve not been able to because they’ve not got the technology, and they’ve not got the long-term commitment.

You’re aiming for 9,000 cars this year. There was a time that you thought by 2024, you’d be at 90,000. What happened?

The market is tough. The actual sales numbers of EVs are increasing. It’s just that the rate of increase was not what we anticipated. It’s like saying there’s inflation, but the rate of inflation is less.

Given how important government subsidies are for EV buyers, do you have a point of view on the election?

I am very grateful for the [Inflation Reduction Act]. I don’t want to have this be misinterpreted; thank you very much. But not all EVs are born equal. Just as we’ve got gas-guzzling internal combustion engine cars, we’ve got electron-guzzling EVs. The IRA incentivizes how many batteries you put in an electric car. We should not be incentivizing ‘how big is your gas tank?’ If Lucid made worse cars, I’d get a lot more money from the IRA.

You worked for Elon Musk for three years. Are you surprised by his turn over the past year?

I don’t really want to comment on that. It’s quite a situation.

But a lot of what Elon says today doesn’t seem to align with the politics of traditional EV buyers. Is that an opportunity for you?

I actually had a very nice letter from a long-time Tesla owner, and they said ‘We’ve got a confession to make. What prompted us to switch from Tesla to Lucid wasn’t any knowledge of how good your car was. We just couldn’t drive around in a Tesla anymore. We bought a Lucid out of disdain for Elon, but now we’ve got it, we can’t believe what we’ve got.’

I wonder, though, if the reverse is also true. Can Elon bring over people who never would have bought an EV before because they associate them with liberals?

That would truly be a dark cloud with a slim silver lining.

Investors are flocking to riskier bonds because falling interest rates mean that safer bets soon won’t pay what they used to. Junk-bond funds, which lend to companies with heavy debt loads and scant profits, have raked in $14 billion since July, with inflows accelerating sharply after Fed Chair Jerome Powell’s August speech signaling that rates would start coming down.

Investors are being forced to venture back into riskier territory to get the same returns they once found in cash. “Some of those assets will be redeployed into other sectors, including high-yield [bonds],” Ben Johnson, global head of corporate credit at Goldman Sachs’ money-management arm, which oversees $3 trillion, said in an interview.

Behind the curtain: Blackstone’s private loans continue to outperform its holdings of traded debt, the latest Rorschach test for the private-investing world. Skeptics see firms hiding bad numbers under a veil of secrecy, while champions say they’re simply better than banks and public bondholders at picking winners and losers. Hefty fees charged on private investments eat away at that extra profit, too: Here’s how that chart looks after fees.

• Ahead: Apollo, which is about twice Blackstone’s size in lending, reports earnings Nov. 5.

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• Nigeria’s lithium ambition is getting an unexpected boost.
• Trump’s anti-gang plan involves a law from 1798.