Saudi-backed electric car maker Lucid plans to raise $3bn

Saudi-backed electric carmaker Lucid Group said it plans to raise around $3bn through a stock offering, with the majority coming from the Public Investment Fund (PIF) and its affiliate Ayar Third Investment Company.

PIF, the luxury EV maker’s majority shareholder has agreed to buy 266 million shares worth about $1.8bn in a private placement. The remainder will be raised from a public offering of 173.5 million shares of common stock.

“The private placement is expected to close on June 26, 2023, and is subject to completion of the public offering and customary closing conditions,” Lucid said in a regulatory filing. Ayar expects to maintain its majority 60.5 per cent shareholding of the electric vehicle maker after the equity offering.

Lucid plans to use the proceeds from the offering and private placement for general corporate purposes including capital expenditures and working capital.

The additional funds come as the automaker, just like its peers, is struggling with mounting losses and tightening cash reserves amid recession fears and a price war sparked by market leader Tesla.

Lucid had about $3.4bn in cash and about $700m in available credit lines as of March 31, according to its first-quarter earnings report. The California-based automaker reported a wider Q1 2023 loss of $779.5m or 43 cents per share, much wider than the $81.3m or 5 cents per share, it reported in the first quarter of 2022.

However, Lucid assured investors that it had enough cash in its coffers to continue operations into next year. Lucid’s Q1 2023 revenues reached $149.4m after the automaker had produced 2,314 vehicles at its manufacturing facility in Arizona and delivered 1,406 units.

The company plans to manufacture more than 10,000 vehicles in 2023, well below the “more than 28,000″ reservations recorded, according to its Q4 2022 earnings report. Bank of America is acting as the book-running manager for the public offering.

Saudi EV ambitions

Meanwhile, Saudi Arabia invested in Lucid in 2018 and steadily accumulated more shares until it held majority ownership when the automaker went public through a merger with a special purpose acquisition company (SPAC) in 2021.

Lucid is currently working on its full production facility in Saudi Arabia in partnership with the kingdom’s Ministry of Investment, the Saudi Industrial Development Fund and the Economic City at King Abdullah Economic City.

The Saudi bet on Lucid includes plans to build an EV factory that can produce 155,000 units a year. Saudi Arabia plans to roll out hundreds of thousands of cars a year as the Gulf state looks to become a hub for automakers.

Lucid projected that the location of its first international manufacturing plant in Saudi Arabia may add up to $3.4bn in market value over 15 years. The production facility will initially serve the local market and the luxury car maker expects to later export vehicles from Saudi Arabia to global markets.

Saudi Arabia unveiled its electric car brand, Ceer, which the kingdom is working on under a joint venture with Taiwan’s Foxconn. Ceer will design, manufacture and sell a range of vehicles, including sedans and sports utility vehicles, for consumers in Saudi Arabia and the MENA region.

Read: Lucid’s Saudi EV factory to receive $3.4bn in incentives