Lucid Motors, the Bay Area electric car start-up, has been struggling to raise money for more than a year. Now it appears to have found some: more than a billion dollars from Saudi Arabia’s sovereign wealth fund.
If the deal announced Monday closes as Lucid expects, the company said it will have enough cash to finish engineering the high-end Lucid Air sedan and begin manufacturing in Arizona as scheduled in 2020. And the Saudis would be backing both the leading electric luxury car maker, Tesla, and a Tesla competitor.
“Our efforts to date have been based on proof of concept,” said Derek Jenkins, head of design at Lucid. “Going forward, this will enable us to mature our supply chain, kicking off long lead times on tooling. We can ramp up hiring and build out our plans for retail customer experience centers in major cities.” Lucid has produced working, street-ready prototypes of the Lucid Air, but it lacks manufacturing operations to build in volume.
The company — whose previous backers and target customers are primarily Chinese — is based in Newark, Calif., a few miles from Tesla’s automobile manufacturing plant.
Earlier this year, the Saudi fund bought Tesla shares on the open market totaling between 3% and 5% of the company, the Financial Times has reported. In August, when Elon Musk flirted briefly with the idea of taking Tesla private, he identified the Saudi fund, along with Volkswagen, as funding sources.
The wealth fund never affirmed such meetings on a private deal and Volkswagen denied it had committed or talked about any such funding. A Securities and Exchange Commission investigation into Tesla was revealed shortly after Musk claimed he had “funding secured” for the go-private plan.
Auto industry watchers had wondered whether Lucid would pull together enough new investment money to see the Lucid Air project through.
Lucid’s money hunt coincided with the Trump administration’s increasingly sour attitude toward Chinese investment in the United States. It’s unclear how much has been invested in Lucid thus far, but according to the FactSet data service, much of it comes from China. Investors include a Chinese venture capital firm, Chinese automaker BAIC Motor Group, and Leshi Internet Information and Technology, which also invested in another California start-up, Faraday Future of Gardena.
The Saudi investment, however, is being set up as a so-called special-purpose vehicle, legally isolated from the Saudi wealth fund, formally known as the Public Investment Fund of Saudi Arabia. In most special-purpose funds, outside investors are allowed to participate. The Lucid special-purpose vehicle is wholly owned by the Saudi fund, but it’s unclear whether non-Saudi money is involved. The fund did not answer inquiries from The Times.
The Lucid Air is a sleek, technology-loaded sedan designed under Jenkins, who is perhaps best known for the latest MX-5 Miata when he led the design team at Mazda.
The Lucid Air is aimed at customers who might otherwise consider a Mercedes S-Class or a BMW 7 Series, but with an electric drivetrain that allows a narrower design to better navigate crowded highways and narrow streets in China. Lucid expects that many Chinese buyers will have their cars driven by chauffeurs.
China’s government is pushing heavily into electric vehicles. California, which is seen as another key market, is also offering consumer incentives and issuing automaker mandates to boost electric car purchases by consumers.
Like all high-end electric cars, the Lucid Air will be powerful, with 1,000 horsepower from its dual motors. Range will extend to 400 miles on a full charge, Lucid said. Prices will range from $52,000 to more than $100,000, depending on options, which will include the latest version of autonomous driving technology. The cheapest Tesla Model 3 is priced at about $50,000, and the Model S can top out above $100,000. The top end of both models gets more than 300 miles to a charge.
If it rolls out of the Casa Grande, Ariz., factory in 2020 as planned, the Lucid Air will face intense competition from electric cars including the Jaguar I-Pace, already available in the U.S.; the Audi e-tron, unveiled in San Francisco on Monday night; and the Mercedes-Benz EQC and the Porsche Taycan, set for introduction in 2020.
Lucid will also have to prove it can avoid the problems facing Tesla. That company is under financial strain and still dealing with production problems. Lately it has acknowledged problems delivering cars to customers who have already paid for their vehicles. “Sorry, we’ve gone from production hell to delivery hell,” Tesla Chief Executive Elon Musk tweeted to a disgruntled customer on Sunday, while promising that problems would be fixed.