Electric vehicle startup Lucid Motors is now a publicly traded company, following the completion of a merger where it fetched an eye-watering $4.5 billion in fresh capital. Shares of the Saudi-owned, California-based startup began trading on the Nasdaq stock exchange Monday morning.
Lucid Motors will now turn its full attention back to an even taller task: getting its first electric car on the road, where it will face stiff competition in the luxury market from Tesla, Mercedes-Benz, and others. The startup has said that it plans to start delivering its extremely powerful but serenely luxurious Air sedan later this year, and it has already built more than 100 near-final quality versions at its new factory in Arizona. It has an electric SUV called Gravity in the works, too.
The public listing is the second in the last week for the industry; fellow EV startup Faraday Future became a public company listed on the Nasdaq last Thursday and raised $1 billion in the process. The two startups are just the latest in a growing line of EV startups, autonomous vehicle companies, and automotive suppliers to go public by merging with so-called special purpose acquisition companies, or SPACs, which are publicly listed investment vehicles.
Unlike many of those other startups, though, Lucid Motors has been around for a while. It was founded in 2007 as a battery company called Atieva. But in 2016 it set out to build an all-electric sedan of its own, and tapped Peter Rawlinson — the former lead engineer of the Model S program at Tesla — to head up the project. (Rawlinson would later become CEO.)
Lucid Motors originally hoped to put the Air into production as early as 2018. But it ran into the same problem that nearly ended the journey for many of its peers: it didn’t have enough money. The startup had raised hundreds of millions of dollars 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 was much harder to come by in 2016 and 2017, though, especially as some of them — like Faraday Future — began collapsing in remarkably public fashion. Making matters worse for Lucid Motors was the fact that Faraday Future founder Jia Yueting wound up owning some 30 percent of his rival’s shares. Jia’s ownership became a major problem for potential investors because of his reluctance to sell, as Recode and The Verge have reported.
Talks with investors and even automakers like Ford eventually fell apart, and Lucid Motors took 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 a few weeks before Crown Prince Mohammed bin Salman had Washington Post journalist Jamal Khashoggi brutally murdered. That injection of cash, plus subsequent investments from the fund, have given Saudi Arabia majority ownership of Lucid Motors. (It was also a major participant in the funding round that took place alongside the SPAC merger, which is one reason for how Lucid Motors raised so much money in this transaction.)
Saudi Arabia proved to have deep enough pockets to help Lucid Motors fund its extremely expensive ambitions, while also finally buying out Jia’s stake, as filings with the Securities and Exchange Commission (SEC) show. In exchange, it got control of a startup that helps it paint bin Salman’s fantastic picture of making Saudi Arabia a futuristic and far less oil-dependent nation — while also making a boatload of money in the process.
Lucid Motors started looking at merging with a SPAC to raise money in late 2020 and hired Citi to help with the process. How the startup came together with its eventual SPAC partner is still a matter of some debate, though. In January 2021, Bloomberg reported that Lucid Motors was in talks with a SPAC run by financier Michael Klein, who used to work for Citi and has ties to Saudi Arabia. But in filings with the SEC, Lucid Motors and Churchill Capital IV (the SPAC) say that they had not held any talks before that article was published. In fact, they say that article was what brought the two sides together.
The proposed merger was announced in February and in the months since became one of the most-traded SPACs in anticipation of the deal closing. But the merger was held up at the very last minute when, on July 22nd, Lucid Motors and the SPAC had to publicly plead with shareholders to vote for a key term of the deal that hadn’t yet received enough votes. The reason? Many of those shareholders were new to the market and didn’t know about the vote, or if they did, there was a chance that the information about the vote had gone to spam. Lucid Motors and the SPAC delayed for a day, and eventually received enough votes.
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