Lucid, long before SPAC, promised to build the Saudi plant

Last month, Lucid agreed to a merger of a special purpose procurement company, a transaction that, if completed, would allow it to trade publicly later this year. The merger agreement estimated the launch of Silicon Valley at about $ 24 billion.

Lucid did not discuss the plans of the Saudi car factory in public, but at least one large institutional investor who agreed to invest in the SPAC agreement was informed about them, according to people familiar with the discussion.

A Lucid Motors spokesman said it “expects to set up production facilities in several geographical areas, including Asia-Pacific, the Middle East and potentially Europe in the coming years”. A spokesman said the company’s “short-term priority” would begin production later this year at its Arizona headquarters.

Spokesmen for Churchill Capital Body.

CCIV 10.73%

IV, SPAC which agreed to merge with Lucid, and PIF did not return the requests for comments.

Churchill Capital is run by the former Citigroup Inc.

investment banker Michael Klein. He worked for years as a financier in the Middle East and advised Saudi Arabia on local Saudi oil listing in 2019. Co.

, or Aramco.

PIF, a sovereign wealth fund of Saudi Arabia, has agreed to invest more than $ 1 billion in Lucid in 2018. It has agreed to increase this investment through the merger of Lucid’s SPAC and recently offered carmaker 600 million dollars in bridge funding to provide stability by concluding the deal, Lucid CEO Peter Rawlinson told The Wall Street Journal last month. The company revealed that PIF will continue to be the majority shareholder of Lucid after listing by its agreement SPAC.

Lucid, originally called Atieva, was founded as a battery technology company in 2007, before pivoting to make their own cars. In 2013, he recruited Mr. Rawlinson, previously from Tesla Inc.,

where he was chief engineer on the first Model S luxury sedan, mass-produced. Lucid has not sold any cars, but ranks among the most mature electric vehicle start-ups in a race to one day compete with Tesla, according to analysts. The company plans to start selling its first model, a luxury sedan called the Air, later this year.

Lucid recently completed the first phase of a $ 700 million plant in Casa Grande, Arizona, which the company says is capable of producing 34,000 cars annually. With the expansion, the site is able to increase production to 365,000 vehicles a year, the company said. In a presentation to investors, Lucid said by 2030 it intends to produce more than 500,000 vehicles annually.

Lucid’s SPAC agreement comes amid a torrent of similar agreements between special-purpose procurement companies, also known as unverified companies and startups that want to list their shares quickly. By merging with a SPAC, essentially a large cash fund that is already listed on a stock exchange, companies can circumvent the more typical initial public offering process.

Some people familiar with the promise of the Saudi factory said that such an investment could cost several hundred million dollars or more. Saudi Arabia has very little of the manufacturing footprint needed to build the machines, which means that many of the machine parts should probably be imported. According to these people, this could double the manufacturing costs at the plant.

Lucid executives have worked for more Saudi incentives to help cover costs and make up for the inefficiencies that building the factory would create, the people said. High-ranking PIF executives are pushing the company to meet its 2018 commitment, these people said.

The PIF, under the guidance of Crown Prince Mohammed bin Salman, has invested the country’s oil wealth internationally, seeking to make investments that could reduce the Saudi economy’s dependence on the petrochemical industry. Many of the fund’s bets have explicitly sought to attract direct investment back to Saudi Arabia, hoping to create jobs for young Saudi people in growth sectors such as technology and advanced production.

These efforts have stalled as many Western companies have distanced themselves from Saudi Arabia following the 2018 assassination of Mr Khashoggi. The murder took place after PIF invested in Lucid in the same year. Last month, the United States declassified a report accusing Crown Prince Mohammed of ordering the killing. Prince Mohammed said the killing happened at the clock, but did not say he ordered it.

Saudi officials have, in particular, tried for almost a decade to persuade a carmaker to build an assembly plant in Saudi Arabia. Jaguar Land Rover, owned by Tata Group of India, signed a letter of intent with the government in 2012 to assess the feasibility of a Saudi assembly plant. The factory was never built.

—Mike Colias contributed to this article.

Write to Summer Said at [email protected] and Ben Foldy at [email protected]