Lucid this week cut up to $US12,400 ($A18,600) off the sticker price of its Air luxury sedan amid rising competition in the US EV industry and a price war sparked by Tesla.

Tesla is able to cut large swathes out of its retail prices because it has reduced the cost of making its cars so much with innovative new production techniques that are starting to flow through to the bottom line.  

Lucid reduced the price of the Air Pure by $US5000 ($A7600) to $US82,400 ($A125,325) from $US87,400 ($A132,930), and cut prices of the more powerful Touring and Grand Touring versions by $US12,400 to $US95,000 ($A144,500) and $US125,600 ($A191,000).

The company said that the offer would be valid as long as supplies last.

Tesla’s Model S and its performance version Model S Plaid are direct competitors with the Air and carry prices of $US88,490 ($A134,590) and $US108,490 ($A165,000) down from $US104,990 ($A159,700) and $US135,990 ($A206,830) at the beginning of the year.

Reuters reported late last month that the US EV market is growing, but not fast enough during the latest quarter to prevent unsold EVs from stacking up at some dealerships. 

Reuters reported that car-makers in North America “have billions of dollars in EV-related investments riding on how the next several quarters play out.”

“If production of EVs continues to outpace demand, car-makers will have to choose between slashing prices and profit margins, or slowing assembly lines,” Reuters said.

More than 90 new EV models are expected to hit the US market through 2026, according to AutoForecast Solutions.

Many will struggle to reach profitable sales volumes, analysts said.

Lucid, which is majority owned by Saudi Arabia’s Public Investment Fund, and many of its rivals, last year raised prices of its cars as rising raw material prices and supply chain bottlenecks attributed to COVID-19 hit the automotive industry hard.

But rising interest rates to curb inflation and fears of recession have dampened consumer demand, prompting market leader Tesla to slash prices this year.

Now money-hungry startups such as Lucid, which also face competition from traditional car-makers launching EVs, are having difficulty raising funds to increase market share.

Lucid is also not eligible for the US Inflation Reduction Act tax credit of $US7500 ($A11,400) because it only applies to vehicles priced below $US55,000 (sedans) ($A83,650) or $US80,000 (SUVs and utes) ($A121,675).

The California-based Lucid is reported to be expected to show further losses in its second-quarter earnings after reporting a drop in April-June production because of supply-chain problems.

By Neil Dowling