Luxury electric carmaker Lucid announced on Monday that it is raising $1 billion in capital from an affiliate of Saudi Arabia’s Public Investment Fund (PIF), sending its shares up about 8%.
The investment by the sovereign wealth fund underscores a key advantage Lucid has in the competitive EV market, where many startups are struggling to survive. The Saudi government, which has a 60% stake, has invested billions in Lucid’s success as part of a strategy to diversify the Kingdom’s economy beyond oil.
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Ayar Third Investment Company, a PIF affiliate, will buy $1 billion in convertible preferred stock, with the option to convert the preferred stock into about 280 million shares, according to a filing with the U.S. securities regulator. Lucid, based in California, stated that it intends to use the proceeds for corporate purposes and capital expenditure.
Lucid, headed by a former Tesla executive, has faced weaker-than-expected demand but expects to produce 9,000 units in 2024, up from 8,428 vehicles produced last year. Its Air luxury sedans compete with Tesla’s Model S and luxury EVs from Mercedes-Benz, BMW, Audi, and Porsche.
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Andres Sheppard, senior equity analyst at Cantor Fitzgerald, commented on the announcement, stating, “The announcement likely extends the capital run rate,” adding that Lucid is expected to produce 9,500 vehicles this year and 20,000 units in 2025.
In its fourth-quarter financial presentation last month, Lucid stated that it had sufficient liquidity “at least until 2025” and forecast $1.5 billion in capital spending in 2024 as it prepares to launch its Gravity SUV line later this year. The company had $4.8 billion in available funds at the end of 2023, including $4.3 billion in cash.
