Lucid, a US-based luxury electric carmaker, has announced a significant milestone in its financial journey with the successful procurement of $1 billion in capital from an affiliate of Saudi Arabia’s Public Investment Fund (PIF), according to a Reuters report.

This infusion of funds has propelled Lucid’s shares upwards by approximately 8%, marking a pivotal moment for the company amidst the dynamic landscape of electric vehicle (EV) startups.

The strategic investment by the sovereign wealth fund underscores Lucid’s advantageous position in the fiercely competitive realm of EV startups, where survival is contingent upon securing substantial financial backing. With the Saudi government holding a majority 60% stake, Lucid has garnered considerable support, aligning with the Kingdom’s broader economic diversification strategy away from oil dependency.

Ayar Third Investment Company, acting as a PIF affiliate, will acquire $1 billion in convertible preferred stock, granting the ability to convert the preferred stock into approximately 280 million shares, as outlined in a filing with the U.S. securities regulator.

The capital injection comes at a pivotal time for the California-based company, which has been navigating through challenges arising from softer-than-anticipated demand. Lucid intends to allocate the proceeds towards corporate initiatives, capital expenditure, and other strategic endeavours aimed at enhancing its market position and operational capabilities.

Led by a former Tesla executive, the company anticipates ramping up production to 9,000 units in 2024, building upon the 8,428 vehicles manufactured last year. Lucid’s flagship Air luxury sedans compete in the high-end EV market alongside offerings from established brands such as Tesla, Mercedes-Benz, BMW, Audi, and Porsche.

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Andres Sheppard, Senior Equity Analyst at Cantor Fitzgerald, told Reuters that the capital infusion extends Lucid’s financial runway, projecting an ambitious production target of 9,500 vehicles for the current year and a staggering 20,000 units by 2025. Lucid’s robust liquidity position, with $4.8 billion in available funds at the end of 2023, underscores its financial resilience and ability to execute its ambitious growth plans.