California-based electric vehicle startup Lucid Motors has secured a $1 billion in funding from an affiliate of Saudi Arabia’s Public Investment Fund (PIF), the company said in a regulatory filing on Monday. This fresh capital infusion comes as Lucid grapples with lower-than-anticipated demand for its luxury Air sedan and ramps up production for its upcoming Gravity SUV.
Saudi Arabia’s Ayar Third Investment Company will buy 100,000 convertible preferred stock of Lucid for an aggregate purchase price of $1 billion in a private placement. The investment company will be able to convert the preferred stock into approximately 278.15 million shares of the EV maker’s Class A common stock.
The funding strengthens Saudi Arabia’s position as Lucid’s primary backer, increasing their ownership stake to roughly 60%, Reuters reported. The luxury EV maker reportedly intends to use the funds for various corporate purposes and capital expenditures. The funding comes at a crucial time for the company as Tesla’s price war and an overall slowdown in EV demand growth have posed challenges for Lucid.
Last month, Lucid revised its production expectations for 2024 to 9,000 units, a stark contrast to the anticipated 22,594 units forecasted by analysts surveyed by Visible Alpha and as reported by various media outlets. This is also just 10% of the company’s original projections of manufacturing and selling 90,000 EVs in 2024. Lucid produced 8,428 vehicles in 2023.
The revised projection by Lucid comes as the EV industry grapples with a myriad of challenges, including high interest rates affecting consumer purchasing power and an increasingly competitive landscape. In response to waning demand, Lucid has reportedly also implemented price cuts for its Air sedans.
Despite these efforts, the company’s fourth-quarter revenue fell short of projections, with a reported $157.2 million against an expected $179.9 million. The financial results for 2023 further revealed a loss of $2.8 billion Despite these hurdles, analysts remain cautiously optimistic. The investment likely extends Lucid’s financial runway, potentially allowing them to ramp up production.
