Lucid Group Secures $1.5 Billion Investment from Saudi Arabia

Lucid Group announced Monday that its largest shareholder, Saudi Arabia’s Public Investment Fund (PIF), will inject up to $1.5 billion in cash to help the electric vehicle (EV) maker ramp up production of its new SUV, the Gravity.

Following the announcement, Lucid’s shares jumped about 6% in extended trading, recovering from a 3.9% decline during the regular session.

Key Highlights of the Investment:

• Purpose: The funds will be used for tooling to produce the Gravity SUV and to build Lucid’s factory in Saudi Arabia, which will have an annual capacity of 150,000 vehicles.
• Funding Details: Ayar Third Investment, an affiliate of the PIF, has agreed to purchase $750 million worth of convertible preferred stock and provide a similar amount as a credit line.
• Total Investment: This marks the second investment from the PIF affiliate this year, bringing the sovereign wealth fund’s total investment in Lucid to about $8 billion, solidifying its 60% stake in the company.

Production and Financial Performance:

• Production Targets: Lucid plans to start production of the Gravity SUV later this year. The company maintained its target of producing 9,000 vehicles by the end of the year, having made 3,838 vehicles in the first half of the year.
• Second-Quarter Deliveries: The company delivered 2,394 vehicles in the second quarter, exceeding market expectations.
• Revenue: Lucid reported second-quarter revenue of $200.6 million, surpassing analysts’ estimates of $192.1 million, driven by price cuts that boosted sales of its luxury electric sedans.
• Price Cuts: In February, Lucid reduced prices of its flagship Air sedans by up to 10% to revive sales amid growing consumer preference for more budget-friendly gasoline-electric hybrid cars.

Financial Position and Future Plans:

• Cash Reserves: Lucid ended the second quarter with cash and cash equivalents of $1.35 billion, slightly down from $1.37 billion at the end of 2023.
• Capital Expenditure: The company decreased its capital expenditure forecast 2024 by $200 million from its previous outlook of $1.5 billion.
• Future Product Line: Lucid is gearing up to expand its product line with a more affordable mid-size car expected to launch in late 2026.

Market Reactions and Analyst Insights:

“The $1.5 billion helps to further solidify the relationship between PIF and Lucid. There was some investor concern that if PIF became frustrated with the company, it wouldn’t provide any additional commitments,” said Andres Sheppard, senior equity analyst at Cantor Fitzgerald.

On an adjusted basis, Lucid reported a loss of 29 cents per share, which was higher than analysts’ average estimate of 27 cents.

Lucid’s strategic infusion of funds from PIF ensures sufficient financing until the fourth quarter of 2025, allowing the company to focus on its production goals and expansion plans while maintaining investor confidence.