Making electric vehicles isn’t cheap—especially for the new crop of startups trying to do battle with Tesla. Lucid, one of those new firms, can breathe a bit easier now after getting a much-needed lifeline from Saudi Arabia’s sovereign wealth fund.
The EV startup announced on Monday that an affiliate of Saudi Arabia’s Public Investment Fund (Lucid’s majority shareholder) will provide a cash infusion of up to $1.5 billion. That pile of money, Lucid says, should help keep it funded into at least the fourth quarter of next year.
What to know about Lucid
Lucid started selling the Air, a high-end electric sedan, in 2021. It’s still working toward profitability, and its future rests on whether it can successfully roll out new models with mass appeal. The Gravity, a three-row SUV starting at around $80,000, is set to launch later this year.
For the Saudis, backing Lucid is a way to diversify as the global economy moves away from fossil fuels. For Lucid, the PIF’s deep pockets are a huge advantage in the capital-intensive EV business.
The new funding is critical because Lucid, like fellow startup Rivian, has been burning through hundreds of millions of dollars every quarter. It sells the impressive Air sedan, but not in high enough volumes to cover its enormous costs. Lucid on Monday also reaffirmed its target of making 9,000 Airs this year, only slightly more than 2023.
Scaling up to the kinds of production volumes that create financial health will take new mass-market models and billions of dollars. That’s where the Gravity, a new three-row SUV, comes in. Lucid hopes that model will bring in a vast new customer base, and this latest investment should help it ramp up production at its Arizona factory over the next year. Production is set to begin by the end of this year.
Both Lucid and Rivian have raked in large sums that make it a lot more likely that they’ll cross the so-called “valley of death”—the difficult period when the costs of scaling up still far outweigh the revenue generated by selling cars. The same PIF affiliate invested $1 billion into Lucid in March. To cross its own valley, Rivian recently inked a deal with the Volkswagen Group that will bring in $5 billion in the coming years. Making cars isn’t just hard, it’s expensive.
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