Oil made — and continues to make — Saudi Arabia one of the world’s richest countries. But as the threat of climate change becomes too large to ignore, “Big Oil” is looking to cash in on the renewed interest in cleaner alternatives, namely electric vehicles.
Newark, California-based Lucid Motors said Monday that it would raise $1 billion from an affiliate of the Public Investment Fund(PIF), Saudi Arabia’s wealth management fund, called Ayar Third Investment. Ayer is purchasing about 12% of Lucid’s outstanding Common stock, adding to Saudi Arabia’s existing 60% ownership, according to a regulatory filing.
The lifeline comes about a month after Lucid told investors it expects to make 9,000 luxury EVs this year. That would be an increase from 8,500 in 2023 but well below analysts’ expectations of 14,000.
The automaker has struggled to find buyers for its expensive Air Sedan and has repeatedly slashed prices to drive up demand. Lucid aims to produce its electric Gravity SUV by the end of 2024.
Lucid stock climbed as much as 20% in trading Monday before shedding some gains. The stock was up 9% in mid-afternoon trading. The company’s stock price has dropped almost 63% over the past year.
Earlier this month, Lucid CEO Peter Rawlinson spoke with The Financial Times about his company’s reliance on Saudi Arabia for funding. He acknowledged that a capital raise was “inevitable.” But he also said he was wary of relying on the country to keep it afloat. The PIF has contributed to each of Lucid’s funding rounds.
“If I adopt a mindset that there is bottomless wealth from PIF, that is very dangerous, that is something I will never do, I respect them far too much for that,” Rawlinson said.
But Lucid isn’t Saudi Arabia’s only bet on EVs.
Famously, the government’s PIF was in talks with Elon Musk to take Tesla private in 2018 and held millions of shares in the automaker until 2020. Last month, after Lucid said it would slow production, Musk took a jab at the company, writing on X that, “Their Saudi sugar daddy is the only thing keeping them alive.”
Last October, the PIF launched a new company — National Automotive and Mobility Investment Company, or Tasaru Mobility Investments — to boost EV manufacturing in the country and develop local supply chains. The firm aims to build more 5,000 EV charging stations by 2030 across Saudi Arabia.
Although Lucid operates the only car manufacturing facility in the kingdom, the PIF has agreed to a joint venture with Hyundai Motor Co. to establish a new factory in Saudi Arabia. The PIF, which owns 70% of the venture, aims to build 50,000 vehicles annually after the more than $500 million plant opens in 2026.
Lucid’s facility is expected to produce 155,000 vehicles per year, far more capacity than the startup currently requires.
Ceer Motors, a joint venture between the PIF and Taiwan’s Foxconn, was launched in November 2022 as the kingdom’s first automotive brand to build EVs. Reuters, citing an unnamed person familiar with the company, said it was “unlikely” to have a vehicle on the road before 2026.
The PIF has a goal to produce 500,000 EVs annually by 2030. But as of September, only 800 vehicles had been reassembled in Lucid’s factory, based on kits supplied from Arizona.