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

Last month, Lucid agreed to a merger of special-purpose acquisition companies, an agreement that, if consummated, would allow it to negotiate publicly later this year. The merger deal values ​​Silicon Valley’s startup at about $ 24 billion.

Lucid has not publicly discussed the plans of the Saudi car plant, but at least one large institutional investor who has agreed to invest as part of the SPAC agreement was informed, according to people familiar with the discussion.

A spokesman for Lucid Motors said it “expects to establish manufacturing facilities in several geographies, including Asia-Pacific, Middle East and potentially Europe in the coming years.” The spokesman said the company’s “short-term priority” begins to occur later this year at its Arizona facility.

Churchill Capital spokesmen Corp.

CCIV 10.73%

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

Churchill Capital is run by the former Citigroup Inc.

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

, or Aramco.

PIF, a sovereign wealth fund of Saudi Arabia, first agreed to invest more than $ 1 billion in Lucid in 2018. It has agreed to boost that investment through the Lucid SPAC merger and recently provided the automaker with $ 600 million. of dollars in bridge funding to provide stability until the conclusion of the deal, Lucid CEO Peter Rawlinson told The Wall Street Journal last month. PIF will continue to be Lucid’s majority shareholder once it makes a list through its SPAC agreement, the company has reported.

Lucid, originally called Atieva, was founded in 2007 as a battery technology company before pivoting into making its own cars. In 2013 he recruited Mr. Rawlinson, formerly of Tesla Inc.,

where he was chief engineer of the company’s first Model S luxury sedan. Lucid has not sold any cars, but is among the most mature electric vehicle companies 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 making 34,000 cars a year. 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 that by 2030 he expects to produce more than 500,000 vehicles a year.

Lucid’s SPAC agreement comes amid a torrent of similar agreements between special-purpose acquisition companies, also known as blank 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 the stock exchange, companies can avoid the more typical initial public offering process.

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

Executive leaders have been pushing for more Saudi incentives to help cover costs and make up for the inefficiencies the plant’s construction would create, those people said. PIF senior executives are pushing the company to meet its 2018 commitment, these people said.

The PIF, under the leadership of Crown Prince Mohammed bin Salman, had been dedicated to investing the country’s oil wealth internationally, with the aim of making investments that could reduce the Saudi economy’s dependence on the petrochemical industry. Many of the fund’s bets explicitly sought to attract direct investment into Saudi Arabia, hoping to create jobs for young Saudis in growth sectors such as technology and advanced manufacturing.

These efforts stalled as many Western companies distanced themselves from Saudi Arabia after the assassination of Mr. Khashoggi in 2018. The assassination came after the PIF invested in Lucid that same year. Last month, the United States declassified a report blaming Crown Prince Muhammad for ordering the assassination. Prince Mohammed has said the murder happened on his watch, but has not said he ordered it.

Saudi officials, in particular, have been trying for nearly a decade to lure an automaker to build an assembly plant in Saudi Arabia. Jaguar Land Rover, owned by Indian group Tata Group, signed a letter of intent with the government in 2012 to assess the viability of a Saudi assembly plant. The plant was never built.

—Mike Colias has contributed to this article.

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