© Reuters. The LUCID electric car logo is displayed above one of the company's retail stores in a shopping center in San Diego, California, U.S., October 20, 2023. REUTERS/Mike Blake/File Photo
(Reuters) -Lucid said on Monday it is raising $1 billion in capital from an affiliate of Saudi Arabia's Public Investment Fund (PIF), sending shares in the luxury electric car maker up about 8 percent. %.
The sovereign wealth fund's latest investment underscores a key advantage Lucid (NASDAQ ) has in the race for survival among struggling electric vehicle startups.
The Saudi government, which has a 60% stake, has invested billions in Lucid's success as part of a strategy to diversify the Kingdom's economy away from oil.
Ayar Third Investment Company, an affiliate of PIF, will buy $1 billion in convertible preferred stock and will be able to convert the preferred stock into about 280 million shares, according to a filing with the U.S. securities regulator.
The California-based company, which has faced weaker-than-expected demand, said it intends to use the proceeds for corporate purposes and capital expenditures, among other things.
Lucid is one of several electric vehicle startups that have been hit hard by slowing demand growth and the price war sparked by Tesla (NASDAQ:).
The electric vehicle maker, led by a former Tesla executive, expects to make 9,000 units in 2024, compared to the 8,428 vehicles it made last year.
Lucid's Air luxury sedans compete with Tesla's Model S and luxury electric vehicles from Mercedes-Benz (OTC:), BMW (ETR:), Audi and Porsche, among other brands.
The announcement will likely widen the capital run rate, said Andres Sheppard, senior equity analyst at Cantor Fitzgerald, adding that Lucid is likely to make 9,500 vehicles this year and 20,000 units in 2025.
Lucid had said in its fourth-quarter financial presentation last month that it had sufficient liquidity “at least through 2025” and forecast $1.5 billion in capital expenditures in 2024 as it pushes to launch its Gravity SUV line later this year. .
The company had $4.8 billion in funds available at the end of 2023, including $4.3 billion in cash.
