Lucid To Raise $3 Billion, Mostly From Saudi Majority Stockholder

Lucid Group announced on May 31 that is raising approximately $3 billion through a new equity offering, nearly two-thirds of which comes from the Saudi investment fund that controls the EV startup.

Lucid said that about $1.8 billion of the total will come from a private placement of stock with Saudi Arabia’s Public Investment Fund (PIF), which owns about 60.5% of Lucid. PIF’s stake will remain at the same level after the new funding round.

More specifically, PIF affiliate Ayar Third Investment Company has agreed to purchase from Lucid 265.7 million shares of common stock in a private placement that’s expected to close on June 26, 2023.

The transaction implies a price of about $6.80 per Lucid share, compared with the stock’s May 31 close of $7.76. In the wake of the announcement, shares of the luxury EV maker went down 9 percent after market hours.

Lucid is building an electric vehicle plant in Saudi Arabia as the Arab country’s government ordered 100,000 vehicles from the startup.

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The remaining $1.2 billion will be raised through a public offering of new shares – 173.5 million – that started on May 31, the company said. The public offering is expected to close on or about June 5, 2023.

Lucid Group said it would use the new cash for “general corporate purposes,” including capital expenditures and working capital, among other things.

According to its most recent financial report released on May 9, Lucid had about $3.4 billion in cash and about $700 million in available credit lines as of March 31. Lucid CFO Sherry House said that was enough to fund the company at least into the second quarter of 2024.

The $3 billion raised are critical for Lucid, which struggles with increasing losses and dwindling cash reserves amid recession fears and a price war sparked by Tesla.

Lucid cut its 2023 production forecast last month to “more than 10,000 vehicles” from its previous estimate of 10,000-14,000 vehicles. The company posted a first-quarter net loss of $780 million and a lower-than-expected first quarter revenue of almost $150 million. 

The EV maker expects to unveil its second vehicle, the Gravity SUV, later this year, when it will also start taking reservations. Production of the three-row SUV is on schedule to start in 2024, CEO Peter Rawlinson said on the Q1 2023 earnings call last month.