EV maker Lucid has secured a significant financial boost, announcing on Monday that it will receive $1 billion in funding from Ayar Third Investment Company, an affiliate of the Public Investment Fund (PIF) of Saudi Arabia. This strategic funding initiative propelled Lucid’s shares upward by approximately 8%.
A Strategic Boost Amidst Competitive Challenges
This investment marks a crucial milestone for Lucid, enhancing its position in the fiercely competitive electric vehicle sector. The funding arrangement involves the acquisition of convertible preferred stock by Ayar Third Investment Company, which may convert into about 280 million shares, as indicated in a filing with the U.S. securities regulator.
Lucid Group is getting a $1 billion cash injection from its biggest investor, an affiliate of Saudi Arabia’s Public Investment Fund, providing the troubled electric carmaker with a needed lifeline. https://t.co/FdC8raCzdP
— Bloomberg (@business) March 25, 2024
The backing from Saudi Arabia, which holds a 60% stake in Lucid through the PIF, underscores the kingdom’s commitment to diversifying its traditionally oil-dependent economy.
Facing softer demand and operational challenges, California-based Lucid plans to allocate the fresh capital towards corporate expenses and capital expenditure, aiming to fortify its market presence.
Navigating a Turbulent Market
The electric vehicle industry has witnessed volatility, characterized by fluctuating demand and intense competition, especially from market leaders like Tesla. Despite these hurdles, Lucid is setting ambitious production goals, targeting the manufacture of 9,000 vehicles in 2024, a slight increase from the 8,428 vehicles produced last year.
Lucid’s product lineup, including the Air luxury sedan, competes directly with offerings from established automotive giants such as Tesla, Mercedes-Benz, BMW, Audi, and Porsche.
Financial analysts view this investment positively, with forecasts suggesting Lucid could produce 9,500 vehicles this year and potentially double its output to 20,000 units by 2025. Andres Sheppard from Cantor Fitzgerald highlighted the company’s promising trajectory amidst the competitive landscape.
Stable Financial Footing for Future Endeavors
In its latest quarterly financial report, EV maker Lucid revealed sufficient liquidity to continue operations until at least 2025, including an anticipated $1.5 billion in capital expenditures in 2024. These funds will partly support the launch of the Gravity SUV later this year. As of the end of 2023, Lucid reported having $4.8 billion in available funds, encompassing $4.3 billion in cash, ensuring the company remains well-positioned to navigate the dynamic electric vehicle market.
Image Source: Bloomberg
