After being seen as the key to Tesla CEO Elon Musk’s now-dead plans to take the EV maker private, Saudi Arabia’s sovereign wealth fund is now investing $1 billion into EV start up Lucid Motors.
The new pact gives Lucid the cash it needs to kick off production of its first-ever model, the Air, in 2020, at its plant in Arizona. Lucid officials have said the new model will cost about $60,000.
It’s widely believed the Saudis have been searching for ways to hedge against its oil exports for some time now, explaining the earlier dalliance with Tesla and Musk. The two sides had talks about the fund backing Musk’s plan, which could have required more than $40 billion from the Saudis.
Musk even mentioned having secured the funding necessary to enact the plan, attracting the attention of the U.S. Securities and Exchange Commission, sparking at least two lawsuits and raising the ire of some other investors before the two sides elected to part company, and Musk ending his efforts to go private.
(Saudis appeared to be key to taking Tesla private. Click Here for the story.)
While all of this was going on, the Saudis were also talking with Lucid executives, who were hurriedly seeking capital to get to the next step in the production process, which had already caused the company some problems.
As Saudi Arabia was looking to grow the fund, known as the Public Investment Fund, into the world’s largest sovereign fund with more than $2 trillion by 2030, according to Bloomberg, Lucid represented a safer and more appealing option.
“By investing in the rapidly expanding electric vehicle market, PIF is gaining exposure to long-term growth opportunities, supporting innovation and technological development and driving revenue and sectoral diversification for the Kingdom of Saudi Arabia,” the PIF said in a statement.
(Click Here for details about Ford’s interest in Lucid.)
PIF has already made substantial commitments to other technology companies, including a $45-billion agreement to invest in a giant technology fund led by Japan’s SoftBank Group Corp., which recently offered more than $2 billion to help finance General Motors’ autonomous vehicle subsidiary, Cruze.
Based on the edges of Silicon Valley in Newark, California, Lucid Motors was founded in 2007 as Atieva by Bernard Tse, a former Tesla vice president and board member, and Sam Weng, a former exec at Oracle Corp and Redback Networks. Over the years, it has received backing from Chinese investors, including state-owned automaker BAIC, Daimler AG’s principal Chinese partner.
Lucid’s other backers have included several venture capital funds, such as Venrock, Mitsui & Co. and Tsing Capital.
(EV maker Lucid looks to challenge BMW, Mercedes. For more on the story, Click Here.)
Lucid unveiled a prototype of its Lucid Air model, a $100,000 luxury sedan it had hoped to begin building vehicles in Arizona in late 2018, though it is unclear if the company will meet its objective.