The EV Industry’s Bleak Outlook
In the wake of an intensifying price war among electric vehicle (EV) manufacturers, startup companies like Lucid Group (NASDAQ:LCID), Rivian (NASDAQ:RIVN), and VinFast (NASDAQ:VFS) witnessed their stocks plummeting to unprecedented lows. This downward spiral was triggered by Ford’s (NYSE:F) aggressive reduction in prices for its F-150 Lightning pickup.
Saudi Investment in Lucid Motors
Lucid Motors, in particular, has faced significant challenges. Amidst widening losses, highlighted by an operating loss of $3.1 billion in 2023, the company has struggled to maintain profitability. However, its largest shareholder, the Saudi Arabia Public Investment Fund (PIF), has continually infused capital to sustain its operations.
PIF has demonstrated unwavering support through various funding rounds, including a private investment in public equity (PIPE) transaction and subsequent capital raises in 2022 and 2023. Most recently, an affiliate of PIF invested $1 billion in Lucid’s convertible preferred stock, consolidating its position as a key investor.
Rumors of a Saudi Acquisition
Speculation about a potential Saudi acquisition of Lucid Motors has persisted for over a year. With PIF already holding approximately 60% of Lucid’s common stock and an additional 12% through preferred stock, the prospect of a complete takeover looms large. As the EV industry faces heightened uncertainty, a Saudi buyout emerges as a potential last resort for Lucid Motors.
Potential Benefits of a Saudi Buyout
Considering Saudi Arabia’s strategic interest in the EV market, a buyout could be mutually beneficial. The kingdom has actively pursued clean energy initiatives to diversify its economy away from oil dependence. This includes partnerships with companies like Foxconn to manufacture electric vehicles domestically, with Lucid Group playing a pivotal role.
A Saudi takeover would provide Lucid Motors with much-needed financial stability amid its dwindling stock value. The current downward trajectory not only tarnishes the company’s brand image but also raises concerns among potential buyers about its long-term viability. By aligning with Saudi interests, Lucid could mitigate these concerns and focus on its core business of producing and selling EVs.
Conclusion
While Lucid Motors still maintains a comparatively robust financial position within the startup EV landscape, a Saudi buyout could offer a strategic lifeline. Such a move would not only reinforce the partnership between the two entities but also shield Lucid from the volatility associated with public trading, allowing it to navigate the challenging market landscape more effectively.
Featured Image: Megapixl
Author Faith Yakubu 
