LCID - NASDAQ

Good day, and welcome to Lucid Group's Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Nick Twork, Vice President of Communications. Please go ahead.

Thank you, and welcome to Lucid Group's Fourth Quarter 2025 Earnings Call. Joining me today are Marc Winterhoff, our Interim CEO; and Taoufiq Boussaid, our CFO. Before handing the call over to Marc, let me remind you that some of the statements on this call include forward-looking statements under federal securities laws. These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, vehicles and products, studios and service networks, financial and operating outlook and guidance, macroeconomic, policy and industry trends, tariffs and trade policy, company initiatives and other future events. These statements are based on various assumptions, whether or not identified in this communication and on the predictions and expectations of our management as of today. Actual events or results are difficult or impossible to predict and may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our most recent filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2025, and the forward-looking statements on Page 2 of our earnings presentation available on the Investor Relations section of our website at ir.lucidmotors.com. We undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this afternoon as well as in the earnings presentation. With that, I'd like to turn the call over to Lucid's Interim CEO, Marc Winterhoff. Marc, please go ahead.

Thank you, Nick. Good afternoon, everyone, and thank you for joining us. 2025 was a defining year for the industry at large. It was a year of extraordinary macro turbulences with the implementation of increased tariffs, the roll-off of federal incentives, shifting EV demand, and multiple supply chain disruptions that no one predicted at the start of the year. I'm glad to be able to say that we navigated those challenges quite well. We nearly doubled production, we significantly grew deliveries, we reduced unit costs, we gained market share, and we continue to strengthen our financial position. Let's start with production and operations. In 2025, we ramped up our first SUV, the award-winning Lucid Gravity. We about doubled annual production, and I will address why I'm using the term about shortly. Total units produced were not far off the expectations we set at the beginning of 2025. Despite unprecedented industry headwinds like tariffs, magnet chip shortages, even fires at 1 of our major suppliers, turning 2025 into one of the most challenging operating environments in recent industry history. I'm very proud of what the Lucid team was able to achieve given the manifold challenges and headwinds. I think we did pretty well in comparison with others in the industry. I'm not going to name names, but I encourage everyone to do your own research. Specifically, I'm proud of us being able to double production from Q3 to Q4, clearly showing that our manufacturing system is capable of scaling when supply chain roles are resolved. During the year, we improved throughput, reduced rework, built repeatable processes and expanded our manufacturing workforce in a disciplined way to scale flexibly. We also overcame quality problems that hindered our Gravity ramp in the beginning, both related to hardware, but even more so related to software. We listen to our customers, acknowledge the problem and focused on solving it. To that end, this month, we rolled out a new software to all Gravities, which helped address a large number of these concerns, and we are grateful that this is recognized both by our customers and media. We also achieved a meaningful reduction of the material cost for the Lucid Air and Gravity, partially offsetting the additional costs introduced by the tariffs. We implemented key organizational changes, streamlined decision-making, improved collaboration to drive efficiency and enable accelerated growth. We landed our second much larger technology partnership this time not only focused on EV components, but a broader partnership with Uber and Nuro, leveraging a whole vehicle, the Lucid Gravity. We see great long-term value there. We also defined and executed on our plan for autonomy. Our approach allows us to provide highly competitive solutions, both for customer vehicles and robotaxis, designed to be executed in their shortest time possible with limited capital expenditure. We view the emerging global robotaxi market as a prime opportunity to utilize our leading technology for potential partners and their customers. This approach delivers a lower and industry-leading total cost of ownership, making new partnerships possible and significantly expanding our total addressable market. Autonomy effectively expands our total addressable market to an estimated $700 billion by 2035. As a first step in July, we announced our agreement with Uber to develop a robotaxi based on the Lucid Gravity, leveraging Nuro's proven Level 4 stack and deploying at a minimum 20,000 autonomous Lucids on Uber's global rideshare platform, which included a significant equity investment by Uber. In Q3, we closed that $300 million investment from Uber and already began delivering the first engineering vehicles for evaluation at the dedicated testing facility. In Q4, on-road testing of the robotaxi began in the San Francisco Bay area, which we also announced as the area of first deployment later this year. And at the CES in January this year, we unveiled the production intent design, the result of tight integration between our engineering team and our partners at Uber and Nuro. But advanced autonomy is not only enabling the new robotaxi market. It is also a key feature for our customer vehicles. Today, many of our customers are using our driver-assist feature, and we expect that in the future, the majority of our customers will want to be able to choose whether they want to drive themselves or being driven autonomously in the moment. To provide enhanced autonomy to our customers, we are partnering to offer highly competitive autonomous functionality as fast as possible in a capital-efficient way. Our road map is clear: point-to-point autonomy rolling out in gravity late this year, L3 targeted for 2028 and L4 targeted for 2029 starting with our midsized vehicles, which not only provides leading autonomy functionality to our customers, but also enables new software revenue streams. We've proven we can compete and lead in luxury sedans and SUVs. Just as a reminder, the Lucid Air was the #1 selling EV in the U.S. in its segment in 2025. And in third place, in the whole large luxury car segment, including traditional internal combustion engine vehicles. With the midsize platform, we are getting ready to enter much higher volume segments with a price range beginning below $50,000, which is around the average selling price of a new vehicle in the U.S. since recently. The midsize platform expands our TAM from $40 billion currently to $350 billion by 2030. Over time, our involvement in the robotaxi market further increases this time to $700 billion, as mentioned earlier. We recently began production, validation builds for the first model of our midsized platform, and they came together seamlessly. The total cost of the source components to date from its size are below our initial cost estimates. And overall, our midsized BOM costs compare favorable to competitors. The construction of our M2 factory in King Abdullah Economic City, Saudi Arabia remains slightly ahead of schedule with equipment installation having started in Q4 and progressing as planned. Also, the local supplier ecosystem around M2 is developing rapidly with partners like Pirelli, Lear and Benteler and others localizing production. This is just the beginning. Startup production of the first of our midsized platform vehicles remain scheduled for the end of this year. In Q4, we marked our eighth consecutive quarter of record deliveries, and we continue to take share. In our biggest market, the United States, in 2025, the Lucid Air was the #1 selling EV in its segment. And in third place in the whole large luxury car segment, including traditional internal combustion engine vehicles. Q4 deliveries were up 72.5% year-over-year and increased 31.1% from Q3, almost all other manufacturers reported EV sales declines and many of them were drastic. Only Lucid and another manufacturer reported a relevant increase in EV deliveries in the United States in the fourth quarter. Our full year deliveries increased 54.7% versus full year '24. As expected, Lucid Gravity represented the majority of our deliveries in Q4, which was also a key reason for our significant ASP increase for the quarter. I also don't want to miss mentioning that the Lucid Gravity follows Lucid Air's tradition of collecting many awards. It closed 2025 with major accolades, Esquire Car of the Year, Good Housekeeping, Luxury SUV of the Year, and Car and Driver 10Best in its first year of eligibility. Actually, not only was Lucid Gravity named to Car and Driver 10Best for 2026, Lucid Air was also added to the list for the third year in a row, which makes Lucid the only manufacturer with all offered models on the 2026 list -- 10Best list. And we were the only EVs on the list as well. And for 2025, Lucid was named Best Electric Luxury Vehicle Brand by U.S. News & World Report. Also, contradicting a common belief that EVs are not suitable for the winter in Norway's NAF winter test, Lucid Air once again proved its range leadership, driving 520 kilometers on a single charge in temperatures as low as negative 31 degree Celsius, nearly 100 kilometers farther than the next closest competitor. In addition to gaining further accolades, we continued our momentum to build our brand awareness. We launched our global campaign with Timothee Chalamet, and expanded awareness through collaborations with NBA superstars Jalen Brunson and teammate Josh Hart. The Hard Launch campaign featuring those 3 stars was the best-performing campaign so far for Lucid. To service the new customers we are attracting, we expanded our sales studio footprint in the United States, Europe and the Middle East. And I'm pleased to say that we have signed our first European dealer group agent in Germany and are in advanced discussions with more than 10 others as well as importer candidates for other European markets. We also expanded service lift capacity by 40% in the U.S. and Canada to better serve our expanding customer base. And to make the ownership experience even better, we unlocked access to more than 27,500 Tesla Superchargers in North America, where Gravity is able to achieve some of the fastest charging speeds in the industry at more than 400 kilowatts. Altogether, Lucid customers now have access to more than 66,500 fast chargers across the U.S. In December, we opened a new more accessible entry point to the brand by launching Lucid Recharged, our certified pre-owned program. Our operational progress and demand for our award-winning vehicles translated into financial improvements. I will let Taoufiq provide the details in a bit. Before I leave 2025 and talk about 2026, I'd like to explain why I said about doubled our production in 2025 earlier. After we released our Q4 production and delivery numbers, we determined that 538 vehicles that were counted as factory-gated at M2 in Saudi Arabia in the last week of 2025 did not complete certain procedures as required by our standards to be counted as factory-gated. While those vehicles were already built completely in our plant in Arizona, shipped to KSA as kits and reassembled in M2 per our defined standards, we only count factory-gated vehicles as produced. Therefore, you will note that our final production number for Q4 2025 has decreased from what we had announced earlier this year, and those units are now instead expected to be considered factory-gated in 2026. To be clear, this had no impact on any customer deliveries. We are taking a number of additional steps to ensure the accuracy of our production numbers going forward. Moving on to our outlook for 2026. We remain confident in our long-term growth opportunities, and I'd like to repeat what I said several times before. We're just getting started. The ramp-up of Gravity gives us ample opportunity to further grow production and deliveries in 2026. Our midsized vehicles will enable us to compete in a much larger TAM than the Air and the Gravity, and we made clear that we intend to play a major role in the developing robotaxi market. When looking at 2026, the macro environment remains uncertain. Hence, our approach for 2026 is grounded in prudence. Our focus remains on execution. We are streamlining operations, managing costs and protecting the balance sheet while positioning the company for profitable growth. This includes the step we took last week to implement 12% reduction of our U.S. workforce, excluding hourly production employees in manufacturing, logistics and quality. We expect this measure to yield up to $500 million in cost savings over the next 3 years. This difficult but necessary decision was made to improve operational effectiveness and optimize our resources as we continue on our path towards profitability. There has been a lot of EV winter narrative following the phaseout of federal incentives. We view much of that as an overreaction. Yes, there was demand pull forward in Q3. Yes, buying an EV has somehow become more than a technology decision. Yes, building awesome EV is hard. But instead of flip-flopping, our industry must do a better job to educate the customer that EVs are actually the superior technology and obviously build cars that live up to that claim and not rely on EVs as a sustainable choice, which are only price competitive through incentives. I want to be clear, we are convinced that EVs are the future, and we are staying the course, but we don't see ourselves just as an EV company. Our customers choose Lucid because our cars are thrilled to drive because they outperform -- and because they generally believe they are the best vehicles on the planet, not simply because they're electric. And with our midsized vehicles, we will make that unique Lucid experience accessible to a much broader audience. For 2026, we have 5 clear priorities: one, further grow production and deliveries by leveraging the full potential for Air and Gravity, expanding our footprint into new markets. In the U.S. and in our international markets, we plan to open 42 new locations in 2026. Second, continue to enhance our vehicles through over-the-air updates. Given our recent software improvements, driving the Gravity is now even more a true pleasure, which has been mentioned by recent third-party reviews and our customers. Additional features will soon follow. Third, start of production of the first model from our midsized platform by the end of this year. Midsize represents a radical shift in our variable and fixed cost structure, and we will share more details at our Investor Day on March 12. Fourth, delivery of our first production vehicles to Uber to support commercial operations for our robotaxi partnership. We are currently delivering our final alpha test vehicles and remain on track for commercial deployment in San Francisco Bay area later this year. Fifth, continue with prudent cost and cash management, but I will leave this to Taoufiq to share more. In closing, 2025 was a year of progress against extraordinary macro challenges, and we met those challenges. We exited the year stronger operationally, financially and strategically. With that, let me hand over the call to Taoufiq to walk you through our financial performance and outlook.

Good afternoon, everyone. The fourth quarter was about execution, improving operational stability, improving unit economics and improving liquidity to extend our own way. We scaled production, delivered strong top line growth, reduced cost per unit and maintain solid liquidity even in a volatile environment. After working through operational complexity earlier in the year, Q4 marked a clear step change in throughput consistency, cost trajectory and financial visibility. And importantly, the progress we made is structural, driven by better quality, higher yield, tighter cost control and disciplined capital management. Let me walk through the key operating and financial results. Production in Q4 was 7,874 vehicles, up 133% year-over-year. Full year production reached 7,840 vehicles, up 98% year-over-year. Operationally, we addressed key throughput constraints in final assembly, increased system commonality and tightened configuration discipline. First time through improved, rework and scrap declined sequentially and software and process improvements reduced variability. And in Q4, we did not experience the same degree of supply chain disruptions as we did earlier in the year, demonstrating the adaptability of our supply chain team. We exited the quarter with an underlying run rate that supports up to 7,500 vehicles per quarter, supported by higher yield and improved stability. This is not the result of temporary measures, it reflects a more repeatable operating cadence heading into 2026. Q4 deliveries were 5,345 vehicles, up 72% year-over-year, our eighth consecutive record quarter. Full year deliveries were 15,841 vehicles, up 55% year-over-year. Gravity represented the majority of deliveries in each month in Q4. Operationally, we shifted to a more targeted build-to-stock approach to meet customer expectations for faster delivery of specific trends and configurations. Days on hand in December were 108, well within the industry range, and we expect this to trend down in Q1 2026. On pricing, we remain disciplined. We will not chase volume at the expense of margin. As Gravity mix builds, particularly higher priced trims, and as conversion improves with expanded configurations, we expect mix and pricing to remain positive factors. Q4 revenue was $522.7 million, up 55% sequentially and 123% year-over-year. Full year revenue reached $1.35 billion, up 68% year-over-year. We exceeded consensus expectations in both Q4 and the full year. Growth was driven by higher deliveries and higher ASPs, reflecting a richer mix and demand for higher value configurations. Gross margin improved approximately 18 points sequentially in Q4. Full year gross margin improved meaningfully as well, though it remains below our long-term targets. The improvement was driven by higher production volume and improved fixed cost absorption, richer Gravity mix, yield gains, lower scrap and logistics and material cost optimization. Those improvements were partially offset by incremental tariffs, transitory ramping efficiencies and inventory impairments, factors we believe are unlikely to repeat or to repeat at the same magnitude. As throughput stabilizes and Gravity mix increases, fixed cost absorption improves and process efficiencies compound. We expect continued sequential gross margin improvement and OpEx will continue to grow at a slower pace than revenue. Stepping back, 2025 represented a clear step change in scale and unit economics. We are on the journey of scaling, and we are clearly witnessing the benefits of it through improved fixed cost absorption. Given our investments in manufacturing capacity, we have made significant progress, reflecting our ramp in production this year. Looking ahead to 2026, we expect to realize further meaningful gains. In addition, we had transitory ramp inefficiencies and incremental tariffs of approximately $10,000 per unit that we do not expect in 2026.

[Operator Instructions] Our first question comes from [ Cahir A ]. Will Lucid earn ongoing revenue through its partnership with Uber and Nuro, such as fleet maintenance services, software licensing or subscriptions?

Thanks for that question. For this particular arrangement that we have with Uber and Nuro, we're basically selling the cars to Uber or one of its fleet partners. So there are no further licensing or subscription revenues involved. Having said that, this is only the start of our relationship, both with Uber or with other players in the markets. So we are working on other arrangements in the future.

Our next question comes from Sung K. When does the Board plan to appoint a permanent CEO?

That is a question for the Board, and I don't have any further updates to give today.

Our next question comes from Martina. What is the clearest path to positive gross margin? And when do you realistically expect to get there?

Great question, Martina. That's exactly where our focus is in 2026. After turning the corner on production challenges in 2025 in 1 of the most challenging macro environments in memory, we expect to deliver meaningful progress in gross margin in 2026 through improved cost of materials, absorption of fixed costs through scale and improved efficiencies. When you look at our gross margin currently, what you're seeing is a company with valuable assets that we are only beginning to leverage. At our Investor Day on March 12, we're going to show you our path to profitability. We expect to drive further cost reductions through improved bond costs, ongoing efficiency initiatives and other improvements as we continue to scale.

Our next question comes from Andrew

Well, first of all, I would like to acknowledge the role that Tesla and also the Model S has played with paving the way for electromobility. And I would say we take it from here for the Model S, but also for the Model X. I think we are the natural successor of those 2 vehicles. And we are certainly seeing an uptake in customer inquiries from Model S and Model X owners. And we are working right now on plans on how to further accelerate that.

All right. Now I'd like to take questions from the phone lines. Operator?

[Operator Instructions] And our first question will come from the line of Itay Michaeli with TD Cowen.

Just the first question on the midsized platform. It sounds like you're still on track to produce it at the end of the year. Just kind of curious what sort of other milestones are there left to do between now and then are and how do you think about kind of the progress towards startup production today?

Just before we respond, I'd like to correct something I mentioned earlier in my prepared remarks, that's related to the adjusted EBITDA margin. It has improved by 46 percentage points from the prior quarter and not the 50 basis points that you might have heard earlier. With that, Marc.

Maybe I can take the question about the midsize. I mean there's a couple of milestones. First of all, we are, I would say, in the final stretch of their product development. We have built the first production validation vehicles, and there are actually 4 versions of that throughout the remainder until we go to the start of production. And we also have to finish the installation of the equipment in our plant in Saudi Arabia. So there are a number of key milestones, but we're well underway, both with the construction of the plant. And at the same time, also with finalizing all of the development and particularly the validation and homologation that we need to do.

Terrific. And then as a follow-up on Slide 13. With the launch of the point-to-point feature later this year, I'm curious whether you can share but maybe we'll talk about it on the Investor Day as well. How many miles and what the ODDs initially might look like for point-to-point as well as how you're thinking about charging for the future?

Yes. Well, we actually will talk about this more at our Investor Day on March 12. But I mean, it will be a rollout. It will not be a big bang where we have basically serve the whole world basically with -- on one day. So there will be a little bit of cadence, and yes, we will talk about that later. Same for the pricing. That's also something that we will talk about in the near future.

Perfect. I could sneak one last one in on the outlook. I'm just curious if you're seeing any constraints with DRAM memory at all in production. Just kind of curious what you're seeing out there with that situation.

Yes. Not right now. Not right now. I mean obviously, we are monitoring this situation very, very closely. We have seen cost increases, but at the same time, not a shortage. And the cost increases, given the percentage of the overall BOM cost, they are [ negligible ]. So really on a small level compared to the overall cost. So, so far, we are in good shape, but that is absolutely one of the topics that we are monitoring on a daily basis.

And our next question will come from the line of Andres Sheppard with Cantor Fitzgerald.

Marc and Taoufiq, congratulations on all the great progress. I want to maybe come back to the production guidance. I'm wondering if you can maybe help us -- how should we think about the unit mix for that guidance for this year between Air, Gravity, possibly some midsize? And should we assume anything from M2 or from robotaxi in that guidance?

Yes. Thanks, Andre. I can definitely answer that. I mean just like in Q4 last year, the main answer is the majority of our production and then also the deliveries for next year is going to be the Gravity that actually happened also in Q4. When it comes to midsize, there will not be because it's very late in the year when we start of production, there will not be any meaningful numbers to be reported. I mean the vehicles that we are building right now, the production validation vehicles and so on, they don't count. Robotaxis as well, it's a small number in 2026, and then there is ramp up next year and then following.

Got it. Super helpful. And maybe just as a quick follow-up. Taoufiq, can you just remind us now with the total liquidity of $4.6 billion funded into first half of '27, how are you thinking about capital needs and maybe cash burn between now and then?

Well, I mean, I think that the $4.6 billion and the guidance that we gave that it covers our needs until the first half 2027. Can give you an approximation of the cash burn that we will have in the upcoming quarters. So I mean, we are not guiding specifically, as you know, for the cash burn or cash usage within the year. We're providing this directional comment. So for the time being, I mean, again, that's all the information we can really share. We will be further elaborating on that during the Investor Day, but it's really all we can say at this stage.

[Operator Instructions] Our next question will come from the line of Andrew Percoco with Morgan Stanley.

Great. Maybe just to start on the margin cadence throughout the year. I know you'll probably give some more details on this in a week or 2. But -- can you just help us bridge some of the moving pieces for 2026? Obviously, you'll have an increase in production based on your guidance, but presumably, there's also some ramp cost headwinds and maybe some commodity headwinds just given where steel and lithium and memory prices are going. So just help us square that circle a little bit here in terms of what the bridge is for 2026 on some of those margin drivers.

Well, I mean, there are different moving pieces associated with the margin progression and the trajectory that we're expecting. So the first thing that I think it's important again to put emphasis on is that we're expecting an improvement overall in gross margin, '26 versus 2025. Different levers that will be activated. The first one is volume driven. So the ramp and incremental volumes have definitely an impact on our margin, and that's something that we have tried to explain in the deck that we have shared with you earlier. So fixed cost absorption is an important lever. We do expect as well significant progress when it comes to our ramp to our efficiency. So we're expecting to improve -- to continue improving our productivity in the plant. So when it comes to the throughput, the first time through and so forth, these are important KPIs that we will continue to leverage. We will improve the quality and all the costs associated with the reworks are supposed to decrease the scrap impacts, all this as part of the productivity bucket. So you mentioned some of the constraints on the supply chain. I think that what we have demonstrated last year is the agility of the company when it comes to managing some of these headwinds. The plan that we currently have is still aiming at further improvements when it comes to the bill of material of the existing programs for the Air and the Gravity. So that's something that we will continue working on. And we have made an announcement recently about the appointment of our new Head of Supply Chain, and there is a renewed level of energy in looking at opportunities from that area. So that's some -- certainly not something that where we will relax our effort. So it's really a set of key actions that we will be activating. But the volume and the scale remains an important component of the overall package.

Got it. That's helpful. And maybe just to follow up, it sounds like Europe is becoming -- or has been, but feel it's becoming a little bit more of a growth strategy for you guys this year. Can you just elaborate in terms of what your expectations are there? I don't know if you can break out what percentage of your guide do you expect to be Europe versus U.S. But just trying to get a sense of your expectations there. There's obviously a lot of focus around what China is doing. And I know it's a different part of the market. But just generally curious what your expectations are for growth in that geography.

Yes, I can take that. I mean we are planning for growth, but in this upcoming year until we have the midsized available, we're not planning for a gigantic growth. Because our vehicles that we have right now with the Air and the Gravity, they're still actually on the large side when it comes to the vehicle demand in Europe. And so therefore, there's not a tremendous growth that we're attributing to that region, which will change with the midsize. And you mentioned the Chinese and you're right, because we actually just checked the numbers. The vast majority of the growth of Chinese OEMs in Europe is linked to low-cost vehicles. When you look at the brands that are selling more higher-priced vehicles, they're actually not doing very well at all. And even, obviously, big players like BYD are, you're seeing some kind of slowdown in Europe in their expansion in recent weeks and months. So yes -- but again, from our side, when you look at our numbers, the Europe will play a much bigger role when the midsize comes around because that is also then a form factor and a size of a vehicle, which is more fitted to the European market.

[Operator Instructions] Our next question will come from the line of James Picariello with BNP Paribas.

Just first on CapEx. What portion of the $1.2 billion to $1.4 billion attributes to Lucid's M2 Saudi plant because theoretically, right -- that entire cash outlay -- well, the first phase of that cash outlay should be funded by the company's $1.4 billion SIDF loan that you have access to. Is that right?

That's correct. So the majority of CapEx that we see next year will be geared towards M2. So we will have some additional CapEx that we will do for M1. The rest of the CapEx spend will be mainly related to some vendor tooling and our commercial network. But to answer the question, the majority is M2.

And then there's just a 1 or 2 quarter -- I mean, you tell me, 1 or 2 quarter delay in terms of the accessibility of the SIDF loan?

Yes, that's about right, yes.

Okay. That's helpful. And then -- just on the OpEx savings of the $500 million over 3 years, in your prepared remarks, it did sound like it was more front-end loaded. I'm just curious on the cadence there because it sounds as though you've executed the full 12% workforce reduction already. So why does it take 3 years? And what's the approximate [ timing ] of that?

No, no, that's not the intent of the message. What we said is that the cumulative savings over the next 3 years would be the approximately $500 million that we mentioned. So it will be an equivalent proportional amount equivalent year-over-year and cumulative impact will be $0.5 billion. So there will be no specific impact from phasing other than the fact that in 2026 we will have some outflow associated with the severance related to the plan.

Right. But the $500 million in cumulative savings is achieved over 3 years. It's not all hitting in 2026, right?

Absolutely. Correct. Yes.

Yes. So my question was just like what's causing the 3 year -- if it's just workforce reductions, what's taking 3 years as opposed to it all happening this year? I'm just curious, you know...

Well, I mean, it's already happening now. So I mean the way you should look at it is $500 million divided by 3, and that's the yearly impact, and it will be the same for the 3 years.