Electric Vehicle Startup Lucid Motors is now a publicly traded company, following the completion of a merger, where it raised a staggering $4.5 billion in fresh capital. Shares of the Saudi Arabia-based startup began trading on the Nasdaq stock exchange Monday morning.
Lucid Motors will now turn its full attention back to an even bigger task: getting its first electric car on the road, where it faces stiff competition in the luxury market from Tesla, Mercedes-Benz and others. The startup has said it plans to begin shipping its extremely powerful yet serenely luxurious Air sedan later this year, and it has already built more than 100 near-final quality versions at its new Arizona facility. It also has an electric SUV called Gravity in the works.
The public listing is the industry’s second in the past week; fellow EV startup Faraday Future became a publicly traded company on the Nasdaq last Thursday, raising $1 billion. The two startups are just the latest in a growing line of EV startups, autonomous vehicle companies and auto suppliers going public by merging with so-called special purpose acquisition companies, or SPACs, which are publicly traded investment vehicles.
Unlike many of those other startups, Lucid Motors has been around for a while. It was founded in 2007 as a battery company called Atieva. But in 2016 it wanted to build its own all-electric sedan and enlisted Peter Rawlinson — the former chief engineer of the Model S program at Tesla — to lead the project. (Rawlinson would later become CEO.)
Lucid Motors originally hoped to put the Air into production as early as 2018. But he ran into the same problem that nearly ended the journey for many of his colleagues: he didn’t have enough money. The startup had raised hundreds of millions of dollars up to that point, but needed billions, in part because it was also trying to build a factory to build the sedan.
Funding for electric vehicle startups, however, was much harder to come by in 2016 and 2017, especially as some of them — like Faraday Future — began to collapse in a remarkably public fashion. Making matters worse for Lucid Motors was the fact that Faraday Future founder Jia Yueting owned some 30 percent of his rival’s stock. Jia’s property became a big problem for potential investors because of his reluctance to sell recode and The edge have reported.
Discussions with investors and even car manufacturers like Ford eventually fell apart and Lucid Motors took out loans from a hedge fund and a Chinese bus company to keep the lights on, using its intellectual property as collateral.
Lucid Motors then found a savior in Saudi Arabia’s sovereign wealth fund in 2018. The two sides announced a $1 billion deal in September of that year, just weeks before Crown Prince Mohammed bin Salman. had Washington Post journalist Jamal Khashoggi brutally murdered murder. That cash injection, plus the fund’s subsequent investments, gave Saudi Arabia a majority stake in Lucid Motors. (It was also a key participant in the funding round that took place alongside the SPAC merger, which is one reason Lucid Motors raised so much money with this transaction.)
Saudi Arabia turned out to have enough money to help Lucid Motors fund its extremely expensive ambitions, while also eventually buying out Jia’s stake, as evidenced by filings with the Securities and Exchange Commission (SEC). In return, it took control of a startup that is helping it paint Bin Salman’s fantastic picture of turning Saudi Arabia into a futuristic and much less oil-dependent nation — while also making a boatload of money in the process.
Lucid Motors began looking at a merger with a SPAC in late 2020 to raise funds and hired Citi to help with the process. However, how the startup came together with its eventual SPAC partner is still a matter of debate. In January 2021, Bloomberg reported that Lucid Motors was in talks with a SPAC owned by financier Michael Klein, who formerly worked for Citi and has ties to Saudi Arabia. But in SEC filings, Lucid Motors and Churchill Capital IV (the SPAC) say they had no talks before that article was published. In fact, they say that article brought the two sides together.
The proposed merger was announced in February and has become one of the most traded SPACs in the months since, pending the closing of the deal. But the merger was postponed at the last minute when, on July 22, Lucid Motors and the SPAC had to publicly beg shareholders to vote for a key part of the deal that hadn’t gotten enough votes. The reason? Many of those shareholders were new to the market and knew nothing about the vote, or if they did, there was a chance that the voting information had ended up in the spam folder. Lucid Motors and the SPAC delayed for a day, eventually getting enough votes.