Shares in Saudi-backed EV maker Lucid tumble

Lucid

• Electric carmaker Lucid are down 88% on November peak
• Saudi PIF to invest $1.8bn in new Lucid share issue
• Lucid has liquidity to last at least until Q1 2024

Shares in electric car manufacturer Lucid Group tumbled in pre-market trading on Thursday after Saudi Arabia-backed, loss-making company said it would issue further stock to bolster its ailing finances.

Saudi Arabia has bet big on Lucid as part of its economic diversification programme, with plans afoot to build a manufacturing plant in the kingdom.

Yet the California-based company has struggled to meet production targets for its lead vehicle, Lucid Air, which it hopes can rival Tesla in the lucrative electric car sector.

• Saudi funding fails to stem $780m losses at Lucid
• Lucid’s electric vehicle hub to create 4,500 jobs in Saudi

Lucid on Wednesday announced it would sell 439.2 million new shares for $3 billion.

Of these, Saudi Arabia’s Public Investment Fund (PIF) will buy about $1.8 billion in a private placement. That would price the offering at $6.83 a share, according to AGBI calculations, with the remaining shares sold publicly.

The sale will maintain the PIF’s stake at around 60.5 percent.

Lucid’s shares fell 15.4 percent to $6.57 as of 14:19 GMT on Thursday, down 89 percent from a November 2021 peak of $57.75. That would make the PIF’s holding worth about $7.3 billion, according to AGBI calculations.

Lucid’s cash and cash equivalents fell by nearly half over the first three months of 2023 to $900 million, its latest financial statement shows.

The company made a net loss of $779.5 million in the first quarter of 2023. That compares with a loss of $81.3 million in the prior-year period and comes despite revenue nearly trebling to $149.4 million as costs soared to $921.6 million.

Its accumulated losses were $8.1 billion as of March 31.

Future losses

“We have incurred net losses each year since our inception,” a Lucid regulatory filing states. “We expect to continue to incur substantial losses and increasing expenses in the foreseeable future.

“If our product development or commercialisation of future vehicles is delayed, our costs and expenses may be significantly higher than we currently expect.

“Because we will incur the costs and expenses from these efforts before we receive any incremental revenues with respect thereto, we expect our losses in future periods will be significant.”

The pandemic disrupted Lucid’s operations and slowed production of the Lucid Air. In the first quarter, the company made 2,314 vehicles at its Arizona manufacturing plant and aims to build 10,000 this year.

“We will require significant capital to develop and grow our business,” Lucid’s filing states.

According to the PIF’s 2021 annual report, it had invested $2.8 billion in Lucid at that time, first buying into the Californian firm in 2018.

In February 2022, another PIF entity loaned Lucid $1.4 billion on interest-free terms, while in April 2022 a separate PIF company provided the carmaker with revolving credit facilities of around $582 million.

Lucid listed on US markets via a special purpose acquisition company in 2021.

Its latest financial statement says it has $4.1 billion in liquidity – enough to fund it at least into the second quarter of next year. Yet in late March the company announced it would lay off 18 percent of its workforce – around 1,300 employees – as part of a restructuring plan to cut costs.