In Saudi Arabia, Lucid’s electric vehicles are frequently publicly shown at public gatherings and business conferences as a representation of the country’s multibillion-dollar “Vision 2030” initiative by the crown prince.
The Public Investment Fund (PIF) of Saudi Arabia, which has been tasked with implementing the kingdom’s ambitious ambition to reduce its reliance on oil revenue, has made one of its largest U.S. investments in the electric vehicle manufacturer.
The Lucid wager is difficult for PIF.
The U.S. corporation, in which PIF holds a 60.46% share, significantly missed analyst expectations on Tuesday thanks to a dramatic decline in first-quarter sales and a lowered prognosis for output through 2023.
The Saudi Arabian government’s ambitious diversification plan, which involves the construction of an EV sector and the country’s first production facility for Lucid outside of the United States, may suffer as a result of that performance.
Prince Mohammed serves as the chairman of PIF, a $620 billion fund that is anticipated to add 1.8 million new employment and 1.2 trillion riyals ($320 billion) to the non-oil GDP through the portfolio companies it invests in.
“The EV manufacturing plan is still one of the boldest parts of the Saudi plan,” said Justin Alexander, director at Khalij Economics and Gulf analyst at GlobalSource Partners.
“Most new EV firms that aren’t Tesla (TSLA.O) are struggling.”
After the results, shares of Lucid, a California-based company with net cumulative losses of approximately $4.6 billion since Q1 2020, finished 5.6% lower at $7.28. At 1615 GMT on Wednesday, they were trading at about $7.24.
As calculated by Reuters, that made PIF’s holding worth nearly $8 billion. According to the wealth fund’s bond prospectus, its stake was worth roughly $17.4 billion in the middle of 2022 and almost $26 billion when Lucid went public in 2021.
There were no comments from PIF and Lucid.
Saudi Arabia has remained a committed investor in Lucid despite the roadblocks; according to Lucid’s Q1 investor presentation, PIF has contributed almost $3.6 billion to the company since 2018.
Additionally, the government-controlled Saudi Industrial Development Fund also provided Lucid with a loan in the amount of $1.4 billion in 2022. GIB, which is owned by the PIF at 97.2%, loaned the company around $266 million in March of this year and nearly the same sum in April of 2022.
Even earlier this year, there were rumours that PIF would completely acquire Lucid.
With Lucid, the Saudi government has promised to purchase up to 100,000 of its cars over the following ten years.
Additionally, according to local media, development of Lucid’s Jeddah plant, which aims to produce up to 155,000 cars annually at its peak, began last year. Operations for re-assembly are anticipated to start in September, according to Lucid’s presentation.
“Rather than fixing on short term results, the future of PIF’s stake in Lucid will be dependent on the plans to build a Lucid factory in Saudi, on taking Lucid private again and/or on the potential integration with Ceer,” said Global SWF Managing Director Diego Lopez of plans for a new Saudi EV maker.
Foxconn and Apple’s joint venture, Ceer, which was unveiled in November, seeks to bring in more than $150 million in foreign direct investment by 2034, generate up to 30,000 employment, and add $8 billion to Saudi Arabia’s GDP.
(Adapted from USNews.com)
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