The wealth of Saudi Arabia has been profoundly shaped by its oil reserves, yet as the global community grapples with climate change, the nation’s oil giants are pivoting towards the burgeoning electric vehicle (EV) sector.
Lucid Motors, a Newark, California-based company, announced plans to secure a $1 billion investment from Ayar Third Investment, an affiliate of the Saudi Public Investment Fund (PIF). This move will see approximately 12% of Lucid’s common stock acquired, supplementing Saudi Arabia’s existing 60% stake, as detailed in a recent regulatory filing.
Despite aiming to produce 9,000 high-end EVs in the current year, Lucid has faced challenges meeting these targets and has cut the price of its premium Air Sedan to stimulate market demand. The company is also gearing up to launch the electric Gravity SUV by the end of 2024.
Lucid’s stock experienced significant fluctuations, soaring by 20% before paring the gains, ultimately closing with a 9% increase on the day of the announcement. This comes after a year where the stock value fell by nearly two-thirds.
Peter Rawlinson, Lucid’s CEO, recently discussed the company’s financial dependencies with The Financial Times, admitting that additional capital was unavoidable but expressing caution over an overreliance on Saudi funding. The PIF has been a consistent supporter in each of Lucid’s financing rounds.
“If I adopt a mindset that there is bottomless wealth from PIF, that is very dangerous, that is something I will never do, I respect them far too much for that,” Rawlinson stated.
Lucid is not the only EV-related venture for Saudi Arabia. The PIF engaged in discussions with Elon Musk regarding Tesla in 2018 and maintained a substantial investment in the company until 2020. Following Lucid’s production slowdown announcement, Musk publicly remarked on the support Lucid receives from its Saudi backers.
In a strategic move to foster EV manufacturing within Saudi borders, the PIF launched the National Automotive and Mobility Investment Company, or Tasaru Mobility Investments, with the goal of establishing more than 5,000 EV charging stations by 2030 and strengthening the local EV supply chain.
Lucid boasts the only car manufacturing facility in Saudi Arabia, but plans for expansion are underway. A joint venture with Hyundai Motor Co. is set to produce 50,000 vehicles annually in a new factory opening in 2026, with the PIF owning the majority share. Lucid’s existing facility has the capacity to produce 155,000 vehicles yearly.
Additionally, the PIF partnered with Taiwan’s Foxconn to create Ceer Motors, marking the emergence of Saudi Arabia’s first automotive brand dedicated to EVs. However, challenges remain as reports suggest it may take until 2026 before any vehicles hit the road.
The PIF’s ambitious target is to roll out 500,000 EVs annually by 2030, yet as of September, only a limited number of vehicles had been assembled in Lucid’s local facility from kits sent from Arizona.