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Saudi funding fails to stem $780m losses at Lucid

Lucid EV Air Touring Lucid
The Saudi Arabia-backed startup has been struggling to ramp up production in the face of supply chain issues
  • Luxury EV firm reports $779.5m net loss in Q1 2023
  • Saudi PIF owns 65% of Lucid and gave $2.4bn of funding last year
  • CEO Peter Rawlinson says ‘entire market’ is tough at the moment

Electric vehicle maker Lucid Group’s losses continue to widen despite the Saudi government extending $2.4 billion in funding last year.

Lucid, in which the Saudi sovereign wealth fund, the PIF, owns a 65 percent stake, reported a first-quarter net loss for 2023 of $779.5 million, a year-on-year increase of 28.8 percent.

“I believe that there is a challenge to the entire market right now because of macroeconomics and because of interest rates,” Lucid CEO Peter Rawlinson told analysts on Monday.

Listed on the Nasdaq with a market cap of $12.6 billion, Lucid’s first-quarter revenue stood at $149.4 million, lower than analysts’ average estimate of $209.9 million, according to market data provider Refinitiv.

Meanwhile, cash and equivalents fell to $900 million at the end of the first quarter from $1.74 billion in the fourth quarter.

In 2022 Lucid entered into a $1.4 billion loan agreement with the Saudi Industrial Development Fund (SIDF), a related party of the PIF, along with a new five-year senior secured $1 billion asset-based revolving credit facility.

Lucid’s Q1 2023 report shows that the loans will be used to finance costs related to the development and construction of a planned second manufacturing plant, which is under construction in Saudi Arabia. When completed, it will have the capacity to build 155,000 vehicles per year.

Chief financial officer Sherry House said the company had $4.1 billion in liquidity – enough to fund it at least into the second quarter of next year.

However, in late March Lucid said it would lay off 18 percent of its workforce – around 1,300 employees – as part of a restructuring plan to rein in costs.

Total costs and expenses rose to $921.6 million at the end of the first quarter, compared with $655.2 million a year earlier.

The company is forecast to produce more than 10,000 vehicles in 2023 at its plant in Arizona.

PIF’s US stock holding was valued at $30.9 billion at the end of 2022, down from $36.8 billion at the end of September 2022. The fall was attributed to a $6.8 billion decrease in the value of Lucid.

The PIF has also tied with Apple supplier Foxconn to manufacture EVs through Saudi car maker Ceer, which will design, manufacture and sell a range of vehicles for consumers in Saudi Arabia and the Mena region.

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