Lucid Surges on $1 Billion Lifeline From Saudi Investor
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Lucid Group Inc. 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.
The new financing from Ayar Third Investment Co. is in the form of a private placement for convertible preferred stock and will be used in part for capital expenditure and as working capital, the company said March 25 in a statement.
Lucid rose in New York on March 25 after it had dropped 34% this year through the close on March 22.
In a note to clients, Morgan Stanley analysts led by Adam Jonas said the fresh PIF investment was a modestly positive development.
“We had begun to question the continuation of support given a range of other EV-related alternatives in the market,” they wrote. “Today’s announcement helps reinforce commitment.”
Lucid is one of few U.S.-based pure play EV names, but has strained the most to scale its output. The company told investors last month it would build around 9,000 premium Air sedans in 2024, just modestly higher than the 8,500 it built last year and far short of the tens of thousands it touted in its road to the public markets.
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The news came as EV maker Fisker Inc. said in a regulatory filing March 25 that talks with a major automaker about an investment ended without a deal, and that the company faces “significant uncertainties” as it renegotiates terms for recent financing.
Lucid has struggled since listing in a reverse merger with a special purpose acquisition company, or SPAC, in July 2021. The Newark, Calif.-based company reported a loss of 29 cents a share in the fourth quarter and said in its earnings statement it had $1.4 billion in cash and cash equivalents as of the end of 2023, down from $1.7 billion a year earlier.
But the EV maker said at the time it had enough liquidity to continue operations “at least into 2025.” The latest injection from Saudi investors should reassure the market that will stay true.
Lucid raised $3 billion from an offering of common stock and an investment by Saudi Arabia’s Public Investment Fund announced in May of last year. The Saudi fund had invested about $5.4 billion into Lucid since 2018, the EV maker said in a fourth-quarter presentation. PIF owns a roughly 60% stake, according to data compiled by Bloomberg.
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