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

Last month, Lucid agreed to a merger of a special purpose acquisition company, an agreement that, if implemented, will be able to trade in public later this year. The merger agreement estimated the start of Silicon Valley at about $ 24 billion.

According to people familiar with the discussion, Lucid has not yet publicly discussed the Saudi car plans, but according to one of the major investors who agreed to invest as part of the SPAC agreement.

A spokesman for Lucid Motors said he “expects to establish manufacturing facilities in several geographical areas in the coming years, including the Pacific, the Middle East and possibly Europe.” The spokesman said the company’s “short-term priority” will begin production in Arizona later this year.

Churchill Capital spokespersons Corp.

CCIV 10.73%

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

Churchill Capital is run by former Citigroup Inc.

investment banker Michael Klein. He has been working as a financier in the Middle East for many years and advises Saudi Arabia on the local listing of Saudi Arabian oil in 2019 Co.

, or Aramco.

PIF, a fund for sovereign wealth in Saudi Arabia, has agreed for the first time to invest more than $ 1 billion in Lucid in 2018. He agreed to promote the investment through Lucid’s SPAC merger, and it recently provided the carmaker with $ 600 million in bridge financing to provide stability through the conclusion of the agreement, Lucid CEO Peter Rawlinson said last month. The Wall Street Journal said. PIF will continue to be Lucid’s majority shareholder once the SPAC agreement is listed, the company announced.

Lucid, originally called Atieva, was founded in 2007 as a battery technology company before making his own cars. In 2013, it recruited Mr. Rawlinson, formerly Tesla Inc.,

where he was chief engineer on the company’s first mass production Model S luxury sedan. Lucid has not yet sold any cars, but according to analysts, it counts according to the most emerging electric vehicles in a race to one day compete with Tesla. The company plans to sell 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, Ariz. Complete, which according to the company can produce 34,000 cars annually. With the expansion, the site could increase to 365,000 vehicles per year, the company said. In a submission to investors, Lucid said by 2030, he plans to produce more than 500,000 vehicles annually.

Lucid’s SPAC agreement comes amid a flurry of similar agreements between special purpose acquisition companies, also known as blankcheck companies, and companies that want to list their shares quickly. By merging with a SPAC, essentially a large cash pool already listed on a stock exchange, companies can bypass the more typical initial public offering process.

Some people familiar with the Saudi factory promise have said that an investment could cost several hundred million dollars or more. Saudi Arabia has very little of the manufacturing footprint needed to build cars, which means that many of the parts of the cars are likely to have to be imported. According to these people, it can double the manufacturing cost at the plant.

Lucid executives have demanded more Saudi incentives to help cover the costs and compensate for the inefficiency that would result from building the plant, these people said. Senior staff members of PIF insist the company will abide by their 2018 commitment, these people said.

PIF, led by Crown Prince Mohammed bin Salman, has invested the country’s oil wealth internationally, with the aim of making investments that could reduce the Saudi economy’s confidence in the petrochemical industry. Many of the fund’s bets have explicitly sought to attract direct investment in Saudi Arabia in hopes of creating jobs for young Saudis in growth sectors such as technology and advanced manufacturing.

These efforts stalled because many Western companies distanced themselves from Saudi Arabia after the assassination of Mr. Khashoggi in 2018. The assassination took place after the PIF invested in Lucid the same year. Last month, the US downgraded a report blaming Crown Prince Mohammed for the assassination. Prince Mohammed said the murder took place on his watch but did not say he ordered it.

Saudi officials in particular have been trying for almost a decade to lure a carmaker to build an assembly plant in Saudi Arabia. Jaguar Land Rover, which is owned by the Indian Tata Group, signed a letter of intent with the government in 2012 to evaluate the feasibility of a Saudi saddle plant. The plant was never built.

—Mike Colias contributed to this article.

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