Lucid Motors, the California-based luxury electric vehicle (EV) manufacturer, has announced a significant financial boost, securing a $1 billion investment from an affiliate of Saudi Arabia’s Public Investment Fund (PIF). This move, which saw Lucid’s shares initially surge by nearly 20%, represents a strategic effort by the Saudi government to diversify its economy and reduce its reliance on oil revenues.
The investment comes from Ayar Third Investment Company, a PIF affiliate, which will purchase convertible preferred stock that could translate into approximately 280 million shares. This is a clear signal of confidence in Lucid’s potential, as the company has been grappling with weaker-than-expected demand and a competitive market dominated by established players like Tesla and emerging luxury EVs from traditional automotive giants such as Mercedes-Benz, BMW, Audi, and Porsche.
Lucid’s reliance on Saudi funding is not new; the Kingdom’s sovereign wealth fund has been a consistent backer, contributing to each of Lucid’s funding rounds and holding a 60% stake in the company. This relationship is part of a broader Saudi strategy to pivot its economic focus away from oil, as the threat of climate change and the global shift towards sustainable energy solutions become increasingly pressing.
Despite the challenges, Lucid remains optimistic about its future. The company, led by a former Tesla executive, aims to produce 9,000 units in 2024, a slight increase from the 8,428 vehicles manufactured last year. Lucid’s Air luxury sedans are positioned to compete at the high end of the EV market, and the company is also gearing up to launch its Gravity SUV line later this year.
The additional capital from the PIF is expected to be allocated towards corporate purposes, capital expenditure, and other strategic initiatives. Lucid had previously reported sufficient liquidity to sustain operations until at least 2025, with $4.8 billion in available funds at the end of 2023, including $4.3 billion in cash.
Saudi Arabia’s investment in Lucid is part of a larger push to become a significant player in the EV industry. The PIF has launched Tasaru Mobility Investments to bolster EV manufacturing in the Kingdom and develop local supply chains, with plans to build over 5,000 EV charging stations by 2030. Additionally, the PIF has entered into a joint venture with Hyundai Motor Co. to establish a new factory in Saudi Arabia, aiming to produce 50,000 vehicles annually after the plant opens in 2026.
The PIF’s goal is ambitious: to produce 500,000 EVs annually by 2030. However, as of September, only 800 vehicles had been reassembled in Lucid’s Saudi factory, indicating that there is still a long road ahead.
Lucid’s recent capital raise is a testament to the company’s resilience and the faith of its investors. With the backing of the PIF, Lucid is poised to make significant strides in the luxury EV market, despite the headwinds faced by the industry. As the world continues to embrace electric mobility, Lucid’s journey will be one to watch closely.
