Saudi PIF Injects $1.5 Billion into Lucid to Boost SUV Production

Lucid announced on August 5, 2024, that Saudi Arabia’s Public Investment Fund (PIF) will invest up to $1.5 billion to boost production of its new Gravity SUV. This announcement caused Lucid’s shares to rise 6% in extended trading, following a 3.9% drop during regular trading hours.

The investment is crucial as Lucid prepares to launch the Gravity SUV later this year. The financial boost will fund operations until Q4 2025. CEO Peter Rawlinson stated that the funds will be used for tooling, building a Saudi factory with an annual capacity of 150,000 vehicles, and other investments.

Ayar Third Investment, a PIF affiliate, will purchase $750 million in convertible preferred stock and provide an equal amount as a credit line. This is the second investment from Ayar Third Investment this year, strengthening the relationship between PIF and Lucid. With this investment, PIF’s total investment in Lucid reaches approximately $8 billion, holding a 60% stake. Cantor Fitzgerald’s senior equity analyst Andres Sheppard noted that the move alleviates investor concerns about PIF’s commitment to Lucid.

In addition to the investment news, Lucid reported better-than-expected second-quarter revenue of $200.6 million, surpassing analysts’ estimates of $192.1 million. This was driven by price cuts on its luxury electric sedans, boosting sales during the April-June period. In February, Lucid reduced prices of its Air sedans by up to 10% to compete with more budget-friendly gasoline-electric hybrid cars.

Lucid produced 3,838 vehicles in the first half of 2024 and reaffirmed its target of 9,000 units for the year. In Q2, the company delivered a record 2,394 vehicles, exceeding market expectations. Looking ahead, Lucid plans to launch a more affordable mid-size car in late 2026.

On an adjusted basis, Lucid reported a loss of 29 cents per share, slightly wider than the expected 27-cent loss. The company ended Q2 with $1.35 billion in cash and cash equivalents, down from $1.37 billion at the end of 2023. Lucid also lowered its 2024 capital expenditure forecast by $200 million from the previous outlook of $1.5 billion.