US premium EV pure play Lucid has raised a $1bn in convertible equity from an affiliate of the Saudi Public Investment Fund (PIF), the company's biggest backer and 60pc stakeholder.
PIF affiliate Ayar Third Investment Company will purchase 100,000 shares of Lucid convertible preferred stock in return for the $1bn sum to bolster Lucid's balance sheet. This is separate from Lucid's traded common stock, which is currently worth $2.92 per share.
The preferred stock will be convertible into just under 280mn common shares, a Lucid SEC filing says. If and when the shares are converted, the PIF will increase its stake in Lucid by another 12pc.
Ahead of a capital-intensive 2024 for the automaker, it is possible that the convertible nature of the stock is a way for Lucid to increase the PIF's stake in the business in lieu of repaying the investment amount.
Lucid management recently said they expect $1.5bn in capital expenditure for 2024. Lucid intends to use the proceeds from the investment "for general corporate purposes", which may include capital expenditures and working capital, a statement says.
Sign up for EV inFocus
EV inFocus: Hard news for the corporate e-mobility sector
No spam. Unsubscribe anytime.
"We are extremely pleased to receive this strong, continued support from the PIF, as we work to solidify our place as the world's leading EV technology company," Lucid CEO Peter Rawlinson says. "We continue to invest for the long term in both our technology and our vertically integrated manufacturing capabilities, with PIF's support a key differentiator."
As well the PIF's investment, Lucid has begun assembling EVs in the Kingdom to meet an order of at least 50,000 Air sedans from the Saudi government.
Lucid is guiding to a 6.7pc increase in production in 2024 compared to 2023, in a move which the company says will match supply to demand and improve margins.
The production guidance marks a sharp downturn in the firm's growth rate, as production for full-year 2023 saw a 17pc increase compared to 2022.
The support of the PIF, the Saudi Arabian sovereign wealth fund, gives Lucid a distinct advantage over other EV start-ups.
Fellow US EV start-up Fisker faces bankruptcy after a major OEM pulled out of an investment which would have given the pure play a liquidity lifeline.
However, Lucid's cash situation should reassure investors that it is not set to follow the trajectory of Fisker any time soon. After the fourth quarter, Lucid reported having $4.78bn in total liquidity. After this latest investment, Lucid looks to have at least twice as much liquidity as debt – $2.42bn on the Q4 balance sheet.
Fisker, by comparison, had been running with more debt than cash for some time. Lucid has said it has a liquidity runway until 2025, which should see it able to ramp up its highly anticipated Gravity SUV.
Ciaran has written about finance, politics and culture. He is passionate about e-mobility and what it means for our way of life.
Ciaran has a Masters in Ancient Philosophy from Oxford University.
