Saudi Arabia’s Sovereign Wealth Fund To Invest $1 Billion In Lucid Motors?

SEP 17 2018 BY MARK KANE 32

Lucid Air could enter the market with a big splash in 2020 if this proves to be true.

The rumors about Saudi PIF’s interest in Lucid Motors seem to be true and the latest news now is that Saudi Arabia’s sovereign wealth fund will invest over $1 billion into the company.

According to Bloomberg, the deal is signed and opens the way for commercialization of Lucid Air in 2020, an electric luxury car that could be a major competitor for the Tesla Model S.

“The deal would give Lucid the funding to take it through to the commercial launch of the Silicon Valley-based startup’s first electric vehicle, the Lucid Air, in 2020, the Public Investment Fund said in a statement.”

Earlier this year, the Public Investment Fund of Saudi Arabia was expected to finance taking Tesla private by Elon Musk, but it was canceled. The fund, however, didn’t lose interest in EVs and still has plenty of billions of dollars to spend, it seems.

Source: Bloomberg

Categories: Lucid

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32 Comments on "Saudi Arabia’s Sovereign Wealth Fund To Invest $1 Billion In Lucid Motors?"

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Good investment.

EV marketshare will increase substantially during the next decade.

A start-up that hasn’t even reached production, seems a very risky investment though…

Another Euro point of view

In a way yes, but by funding a company in its very infancy it is possible as a large shareholder to impose the right conditions to make it profitable in a not too distend future. For example by avoiding expensive manufacturing place, distribution options, avoiding excessive vertical integration etc. Fail doing that right at the beginning and you may end up many years later with a structurally unprofitable business venture that is very difficult to put again on the right tracks.

To believe they can make the difference, the investors would have to have a much better understanding of the business than the investors of other companies in that space…

Not to mention that even with perfect execution, any new entrant now will have a very hard time staking out a claim in a financially viable manner. It’s no longer a pristine market devoid of competition, that an entirely new player can grow at ease.

@Another Euro point of view said: “…but by funding a company in its very infancy it is possible as a large shareholder to impose the right conditions to make it profitable in a not too distend future…”
————

Lol… a sure recipe for Lucid Motors failure if that happens.

When investors get in the business of heavy handed managing corporate strategy that makes it impossible to recruit & retain talented senior management.

It’s obviously a risk they’re willing to take.

Thats 500m a leg if they dont come threw on a car.

From the perspective of “peak cheap oil” …..

Saudi Aramco has recently started to acknowledge declining oil production in aging oilfields. They are seeking ways to diversify income.

Promoting (and possibly throttling) Electric and natural gas projects make sense, as this would also serve the purpose of keeping oil from running away too high for too long — which could result in a crash of the oil market.

It’s in Saudi’s best interest to keep oil in the ‘sweet spot’.

@ carcus

How would:

Promoting (and possibly throttling) Electric and natural gas projects

serve

the purpose of keeping oil from running away too high for too long

???

How would that make sense?

Could you elaborate on that?

Thanks

Think “swing producer 2.0”.

I have never heard of a swing producer 2.0.

Not surprising, I just made that term up.

Have you heard of “swing producer”?

How about this — imagine you are Saudi Arabia. You HAVE been the swing producer to the world’s oil market since about 1970. Now, … you are facing a decline in your oil fields. — this year 10.5 mbpd. 5 years from now , … maybe 8.5 mbpd. By 2030… maybe it’s going to be 5 or 6 mbpd —-

Now, — what’s your plan?… what is your “vision 2030”?

To have more other recourses from which substantial amounts of money can be earned.

Oil is not going to make me rich anymore in the future.

There you go.

/also, .. you might be a little concerned about being strung upside down outside the palace gates. — which is the likely outcome if you can’t make some kind of a transition.

Don’t forget that they have to deal with America’s dumping oil on the market. We are constantly increasing our output.
BUT, you are correct. SA wants to control the $/bbl, and they want it high enough to not strangle the global economy, but still bring them loads of money. That money is going into investments, as well as building up their local economy, AND finally, they are building their own military.
I think that they do not want to partner with China (only an idiot crawls into bed with them), and can no longer count on American forces due to our having elected 2 idiots over the last 20 years.

The Saudis can of course in principle just sit on their oil and sell it later. But when lots of people have lots of money to make from an activity, suppressing it isn’t easy. Electrifying transportation would dampen demand, if not compared to now at least compared to demand without electrifying transportation. And that would give the Saudis more time to create something to live off when the oil runs out, and possibly prevent the political turmoils or revolution that is guaranteed to happen if the lives of most of the power elite is disrupted.

I think you got the causality all wrong. Revolution is what disrupts the lives of the power elite, not the other way around.

2020 means they will be entering a market segment proximate to the Taycan, in addition to a (possibly updated) Model S… I guess their top-specced variants could see some success in a high-performance niche above the others; but I’m not sure there is much room to go mainstream with the more affordable variants? Unless they can somehow offer much better value than the competition — which doesn’t seem very plausible to do in a financially sustainable fashion by a fresh start-up…

(⌐■_■) Trollnonymous

I wonder why they chose Lucid over Farady Future……

After the turmoil Faraday Future has been through, it was surprising to see *anyone* still willing to invest in them… From an outsider perspective at least, Lucid always seemed more down to earth.

I read they were considering investing in both just 3-4 weeks ago. They had x-number of billions to invest over the next years.
They wanted to focus a certain percentage on new technology and renewables.

Good start. An ironic investor, for sure, but a good start.

The Saudis may have just been taken for a ride. Does Lucid have a design ready to go? Do they have a battery supply lined up? Do they even have a factory to make cars if they have a design?

Maybe it will pay off….but it is a big investment into an unproven company.

They’ve got twice that much in Tesla.. spreading the eggs around.

Not to mention, .. it looks like it’s now a loan from big international banks …. so the whole thing may just just end up too big to fail.

They don’t have a factory — that’s why they needed the investment. (Though apparently they also still need to “complete engineering development and testing”…)

I don’t think battery supply will be that much of an issue. Years ago, they claimed to have a contract with Samsung or LG. (Don’t remember which.) What’s more, they probably won’t be making all that many cars (initially at least) — and in moderate quantities, the standard 21700 cells they use should be readily available.

Lucid Motors seems to be a more credible EV startup than Faraday Future but both have much common Chinese based ownership and are ultimately part of the same massive Chinese government backed IP suck-up & copy complex.

Lucid Motors will likely for a long while mostly sell into the Chinese market as a “Designed In California USA” product intended to compete against Tesla.

If they wanted to sell into the Chinese market, they wouldn’t be building their factory in the USA.

@antrik said: “If they wanted to sell into the Chinese market, they wouldn’t be building their factory in the USA.”
——————

Let’s see how it plays out… my bet is the vast majority of Lucid Air production will be for Chinese market…

I have always hoped that with the demise of the ICE car, we could just ignore the middle east (including get out of there) and that they in turn would stop being so pissed at us and not try to blow things up all the time.

Now I have to hope as well that they don’t have any reserves of scarce resources needed for making EVs……

Funding secured.

I wonder what % of Lucid they own with that?
What I find interesting is that this same fund has close to 8% of Tesla as well.
Very smart ppl behind this.