Saudi Arabia will pour more cash into Lucid Motors, an electrical automobile startup, because it struggles to recoup its losses. Lucid introduced in its second-quarter earnings report on Monday that an affiliate of Saudi Arabia’s sovereign wealth fund will commit an extra $1.5 billion, half of which will likely be within the type of a personal placement and the opposite half in mortgage financing.
The deal additionally deepens Lucid’s ties with its majority shareholder, who has pledged to purchase at the very least 50,000 electrical automobiles over the following few years and helps the corporate construct a brand new manufacturing facility in Saudi Arabia.
That is the second time Lucid has turned to Saudi Arabia for extra since Lucid Chief Government Peter Rawlinson stated in an interview with the Monetary Occasions in March 2024 that he was cautious of overreliance on Saudi Arabia’s sovereign wealth fund. funds. He informed the monetary media: “If I’ve a mentality that PIF can present inexhaustible wealth, that may be very harmful. That is one thing I’ll by no means do. I respect them an excessive amount of for this.”
The brand new funding comes as Lucid introduced it misplaced $643 million within the second quarter of 2024 regardless of setting new gross sales data for its electrical luxurious sedan, producing $200 million in income. Lucid reported that it had $1.35 billion in money and money equivalents on the finish of the second quarter.
Rawlinson described the capital injection as “additional recognition” of Saudi Arabia’s long-term dedication to Lucid.
“We’re so aligned that it goes past simply monetary preparations,” Rawlinson stated on the corporate’s earnings name on Monday.
“We’re a cornerstone of Saudi Arabia’s formidable Imaginative and prescient 2030, which goals to remodel firms and promote sustainable financial growth, and we’re proud to be a part of it.”
He additionally dismissed the concept Saudi Arabia’s curiosity was waning. “Folks typically painting how lengthy it’ll take earlier than Saudi Arabia will get uninterested in Peter enjoying together with his automobile?” he mused. “It isn’t that, you understand, now we have common conversations. My chairman (Turqi Alnowaiser) and I are very decided and we’re each steadfast. You already know, the conversations are extra about ‘Peter getting issues on observe.’ . We wish this mid-sized product, we would like these merchandise. Is Gravity on observe?
Whereas Lucid’s second-quarter complete income numbers present year-over-year progress (each on a quarterly and six-month time horizons), a deeper look into the outcomes reveals Saudi Arabia’s affect.
From a regional perspective, Lucid’s North American gross sales within the second quarter have been US$155 million, a 12% enhance from the identical interval final yr. Nonetheless, North American gross sales income was down in comparison with outcomes for the primary six months of the yr. Lucid reported North American gross sales of $269.8 million within the first six months of the yr, down 5.7% from $286.2 million in the identical interval in 2023.
Gross sales in Saudi Arabia assist shut the hole. Within the first six months of 2024, gross sales income in Saudi Arabia surged 14 occasions in contrast with the identical interval final yr, reaching $95.2 million.
Not solely does Lucid want cash to cease the bleeding, it is also making an attempt to carve out a marketplace for its Air luxurious sedan. It additionally wants cash to assist fund the upcoming launch of its first electrical SUV, Gravity. Lucid says the Gravity will enter manufacturing by the tip of 2024 and hopes it is going to be a hit in North America, the place the shape issue is in style. The corporate laid off about 400 staff, or about 6% of its workforce, in Could 2024 as a part of a restructuring forward of the launch of the Gravity SUV.
