Saudi Arabia’s Public Investment Fund (PIF) on Monday announced an investment deal worth more than $1bn with Tesla rival Lucid Motors.
The agreement follows reports that the PIF was in talks with the electric carmaker last month, coinciding with a period in which Tesla CEO Elon Musk indicated the sovereign fund had shown an interest in taking his firm private.
Reuters said in August that the Lucid deal could see the PIF, which has an estimated $250bn in assets, obtain majority ownership.
The PIF said on Monday its investment would finance the commercial launch of Lucid’s first electric vehicle, the Lucid Air, in 2020 by supporting engineering development and testing.
It will also help the firm establish a factory in Arizona, start production of the vehicle and fund both its North American retail strategy and a wider global launch.
“This investment in the electric vehicle sector, which is currently witnessing rapid growth and expansion, is an added value to the Fund’s portfolio which aims to achieve growing returns on the economy in the Kingdom,” the PIF said.
“Lucid shares the vision of the Fund to establish a world class luxury electric car manufacturer. Their cooperation will continue to implement an effective strategy enabling the company to launch its electric vehicles in the market as soon as possible, in light of the rapid changes in the global car market.”
The agreement may be seen as a blow for Musk, who was forced to backtrack on comments that he had secured funding to take Tesla private. This came as it was revealed that the PIF had built a roughly 5 per cent stake in Tesla in early August.
There had been speculation that the PIF’s already substantial commitments – including $45bn in SoftBank’s Vision Fund – meant it would have been unable to support a buyout of Tesla, which is currently having production issues with its Model 3 vehicle.
Lucid unveiled a prototype for the $100,000 Lucid Air luxury sedan in 2016.
The company has already begun accepting $2,500 refundable deposits from consumers on its website and previously hoped to begin production in Arizona in late 2018, according to Reuters.
The PIF said the deal would support the kingdom’s Vision 2030 diversification plan, which includes commitments to sustainability and environmentally-friendly technology.