Saudi sovereign fund invests US$1b in US electric car firm
Saudi Arabia's sovereign wealth fund invested over US$1 billion Monday in an American electric car manufacturer just weeks after Tesla CEO Elon Musk earlier claimed the kingdom would help his own firm go private.
The Saudi fund also announced it had taken its first loan, US$11 billion of borrowings from global banks, as it tries to expand its investments. It wasn't immediately clear if that loan money played a part in the electric-car investment.
The Saudi Public Investment Fund said it would invest the over US$1 billion in Newark, California-based Lucid Motors, an 11-year-old private company that has yet to bring a vehicle to market.
The investment "will provide the necessary funding to commercially launch Lucid's first electric vehicle, the Lucid Air, in 2020," the sovereign wealth fund said in a statement.
"The company plans to use the funding to complete engineering development and testing of the Lucid Air, construct its factory in Arizona, enter production for the Lucid Air to begin the global roll-out of the company's retail strategy, starting in North America."
Lucid issued a statement quoting Peter Rawlinson, its chief technology officer, welcoming the investment.
"At Lucid, we will demonstrate the full potential of the electric-connected vehicle in order to push the industry forward," said Rawlinson, who worked as the lead engineer of the Tesla Model S before joining Lucid.
The over US$1-billion investment easily dwarfs prior funding for the manufacturer and puts Saudi Arabia clearly in the firm's driver seat. Three previous venture funding rounds have netted Lucid Motors some US$131 million, according to the business information website crunchbase.com.
The firm's all-electric Lucid Air will have a range of over 400 miles (640 kilometres). The company is already taking deposits for the vehicle, which they've priced at US$52,500.
Lucid plans to make the Air at a factory it's building in Casa Grande, Arizona. The company wants to make up to 130,000 vehicles per year by 2022.
The Saudi announcement comes after Musk on August 7 tweeted that he had "funding secured" to take Tesla private. Investors pushed Tesla's shares up 11 per cent in a day, boosting its valuation by US$6 billion.
There are multiple reports that the US Securities and Exchange Commission is investigating the disclosure, including asking board members what they knew about Musk's plans. Experts say regulators are likely investigating if Musk was truthful in the tweet about having the financing set for the deal.
Musk later said the Saudi Public Investment Fund would be investing in the firm, something Saudi officials never commented on. Musk on August 24 said Tesla would remain publicly traded.
The Financial Times newspaper previously reported that the Saudi sovereign wealth fund, known by the acronym PIF, had secured a near five-per cent stake in Tesla recently.
Las Vegas-based Sovereign Wealth Fund Institute estimates the Saudi fund has holdings of US$250 billion. Those include a US$3.5-billion stake in the ride-sharing app Uber.