FYI: Lucid Secures $1.5 Billion Lifeline from Saudi Arabia’s Public Investment Fund
Making electric vehicles is a costly venture, especially for new startups competing with industry giants like Tesla. One of these emerging firms, Lucid Motors, has gained some financial breathing room thanks to a significant investment from Saudi Arabia’s sovereign wealth fund.
Lucid announced on Monday that an affiliate of the Public Investment Fund (PIF), its majority shareholder, will inject up to $1.5 billion into the company. This crucial funding should sustain Lucid through at least the fourth quarter of the next year.
### Lucid Motors: A Quick Overview
Lucid Motors began selling its high-end electric sedan, the Air, in 2021. The company is still on the path to profitability, with its future hinging on the successful rollout of new models aimed at the broader market. One such model is the Gravity, a three-row SUV with a starting price around $80,000, scheduled for launch later this year.
### Why This Investment Matters
For Saudi Arabia, this investment represents a strategic move to diversify as the global economy transitions away from fossil fuels. For Lucid, the PIF’s financial muscle provides a significant advantage in the capital-heavy EV industry.
The cash infusion is particularly crucial given that Lucid, akin to fellow startup Rivian, has been burning through substantial amounts of capital every quarter. The company currently sells the impressive Air sedan but not in volumes sufficient to offset its enormous operational costs. Lucid also reaffirmed its goal to manufacture 9,000 Air sedans this year, only a slight increase from 2023 projections.
### Scaling Up: Enter the Gravity SUV
Financial health for EV manufacturers hinges on scaling production volumes significantly—a costly endeavor requiring billions of dollars. This is where the Gravity SUV comes into play. Lucid hopes this new model will bring in a wider customer base, and the latest investment will aid in ramping up production at its Arizona factory. Manufacturing is expected to commence by the end of this year.
### Rivian’s Parallel Journey
Both Lucid and Rivian have amassed large sums of money, increasing their chances of navigating the challenging “valley of death,” a term referring to the tough period when scaling up production costs far exceed revenue. Notably, the same PIF affiliate invested an additional $1 billion in Lucid in March. Meanwhile, Rivian recently secured a substantial $5 billion deal with the Volkswagen Group to bolster its financial footing in the coming years.
### Conclusion
Producing electric vehicles is not only complicated but also extremely expensive. Lucid Motors’ recent funding round from PIF is a significant step toward ensuring it can continue to innovate and scale, potentially emerging as a formidable player in the EV market.
For more insights and updates, reach out to us at tips@automotive.fyi, or follow us on Twitter @automotivefyi.
Written by William Kouch, Editor of Automotive.fyi
—
This article has been meticulously crafted to offer you the latest insights into Lucid Motors’ financial maneuvers and future prospects. Stay tuned for more updates from the world of electric vehicles!
