Lucid (NASDAQ: LCID), the American electric vehicle startup based in Silicon Valley, California, announced on Monday (August 5th) that it has reached a financing agreement with its major shareholder, Ayar Third Investment Company ("Ayar"), which is an affiliate of the Saudi Public Investment Fund ("PIF"). PIF acquired a $1 billion stake in Lucid in 2018, aiding the production of the company's flagship electric vehicle model, the Lucid Air.
The agreement reached between the two parties stipulates that Ayar will purchase $750 million worth of convertible preferred shares in Lucid through a private placement, and subject to certain terms and conditions, Ayar will provide Lucid with an unsecured delayed draw term loan financing of $750 million. However, Lucid has not borrowed under the delayed draw term loan facility.
This financing will ensure Lucid has sufficient funds until the fourth quarter of 2025. Lucid launched its flagship luxury electric sedan, the Lucid Air, in 2018, with a starting price of $69,900. Lucid is currently in the pre-production phase of its electric SUV model, the Lucid Gravity, at its vertically integrated factory in Arizona, and will continue to expand the production of the Lucid Air and introduce a third electric vehicle model at this factory. The company expects to achieve an annual production of about 9,000 electric vehicles this year.
Lucid Air
This funding will also aid the advancement of Lucid‘s factory in Saudi Arabia. Lucid opened a semi-assembly plant in Saudi Arabia last September, where it assembles its electric sedan, the Lucid Air, with an initial annual capacity of 5,000 vehicles. Lucid plans to increase the electric vehicle production capacity of this factory to 155,000 units per year by 2025.
Lucid Gravity
In January of this year, Lucid also previewed a mid-sized electric SUV, likely to be similar in size to the Tesla Model Y, called "Project Midsize," which combines the functions of an SUV, minivan, and station wagon, with a starting price of less than $50,000 ($48,000). Lucid plans to produce and launch this new model at the Saudi factory in 2026.
According to the latest production and delivery data released by Lucid in early July, Lucid produced 2,110 electric vehicles and delivered 2,394 in the second quarter, a 70.5% increase compared to the same period last year. In addition, Lucid's latest financial report shows that the company's revenue for the second quarter reached $200.6 million, exceeding analysts' expectations. This is due to the company's recent price reduction campaign, which increased sales of the Lucid Air in the second quarter. Earlier this year, Lucid reduced prices by 10%, allowing the base model of the Air sedan series, the Lucid Air Pure, to compete with the Tesla Model S. According to Lucid, the company "had approximately $4.28 billion in liquidity" by the end of the second quarter.
Lucid has been committed to "efforts to reduce costs," and in May, Lucid Motors announced a reduction of up to 400 employees, about 6% of its total workforce. The layoffs are expected to be completed by the end of the third quarter.
