Lucid Motors, identified by its stock symbol LCID.O, announced on Monday that it secured a $1 billion investment from a Saudi Public Investment Fund (PIF) affiliate, resulting in an approximate 8% surge in the company’s stock value.
This financial influx from the PIF highlights Lucid’s significant edge in the electric vehicle (EV) industry, especially amidst the financial challenges faced by EV startups.
The backing from the Saudi government, which holds a 60% stake in Lucid, forms part of a broader strategy to diversify Saudi Arabia’s economic reliance away from oil by investing billions into the EV maker.
The investment will come in the form of convertible preferred stock purchased by Ayar Third Investment Company, a PIF affiliate.
This agreement allows for the conversion of the preferred stock into about 280 million shares, as detailed in a U.S. securities regulator filing.
Lucid, headquartered in California and experiencing a demand shortfall, plans to allocate the newly acquired funds towards corporate purposes and capital expenditures.
Lucid Motors, competing in the luxury EV sector, is facing stiff competition from established players like Tesla, Mercedes-Benz, BMW, Audi, and Porsche.
Despite the market’s challenges, including a slowdown in demand growth and a competitive pricing environment led by Tesla, Lucid’s production outlook remains optimistic.
The company, led by a former Tesla executive, projects to manufacture 9,000 vehicles in 2024, an increase from the 8,428 units produced in the previous year.
Analyst Andres Sheppard from Cantor Fitzgerald suggests that this financial move could extend Lucid’s operational runway, with an estimated production of 9,500 vehicles for the current year and a significant jump to 20,000 units in 2025.
Last month, Lucid indicated in its fourth-quarter financial review that it had adequate liquidity to sustain operations “at least until 2025,” with plans to invest $1.5 billion in capital expenditures in 2024, which includes the launch of its Gravity SUV line later in the year.
As of the end of 2023, Lucid reported having $4.8 billion in available resources, including $4.3 billion in cash, positioning it strongly for future growth and innovation in the EV space.