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Lucid Motors is going public in a major SPAC merger

Lucid Motors is going public in a major SPAC merger


The EV startup will net $4.4 billion in cash as a result

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Photo by Amelia Holowaty Krales / The Verge

Lucid Motors is going to become a publicly traded company on the New York Stock Exchange in a deal that will leave the electric vehicle startup with $4.4 billion in cash. The California startup, which is majority-owned by Saudi Arabia’s sovereign wealth fund, plans to start shipping its first luxury electric vehicle — the 500-mile range Air sedan — later this year. An electric SUV is slated to follow in 2023.

Much like many other startups in the automotive space have done over the past year, Lucid Motors is skipping the traditional path to becoming a publicly traded company and is instead merging with a special purpose acquisition company, or SPAC. Specifically, Lucid Motors is merging with Churchill Capital Corp IV, which is already listed on the NYSE. Bloomberg first reported that Lucid Motors and Churchill — which is run by investor Michael Klein, who has orchestrated deals for Saudi Arabia in the past — were in talks back in January.

Roughly $2.1 billion of that cash will come from Churchill. Some $2.5 billion will come from a new round of funding running concurrently with the merger, which is anchored by Saudi Arabia but includes BlackRock, Fidelity Management, and others. Some will go to fees, the rest will go to the newly combined version of Lucid Motors. The deal values Lucid Motors at $24 billion. It’s expected to close in the second quarter of this year, and Lucid Motors’ shares will trade on the NYSE under the ticker “LCID.”

Lucid Motors is the latest EV startup to do a SPAC merger

Led by Peter Rawlinson, a former Tesla engineer who helped bring the Model S to life, Lucid Motors was founded way back in 2007 as Atieva. It was initially focused on battery technology, but ultimately pivoted into becoming an electric vehicle startup a few years ago. It has since grown to more than 2,000 employees and begun construction on a $700 million factory in Arizona where the Air will be built.

Like many of its peers, Lucid Motors struggled for a time as it searched for new funding. Complicating matters was the fact that Jia Yueting, the founder of fellow EV startup Faraday Future, wound up owning around 30 percent of Lucid Motors. Jia became an obstacle in the company’s fundraising efforts, which included solicitations from major OEMs like Ford. (Ford ultimately forged its own path into EVs, though it has supplemented that effort with a partnership with Volkswagen and an investment in buzzy EV startup Rivian.)

In the meantime, Lucid Motors turned to hedge funds for loans to keep the lights on, using its intellectual property as collateral, as The Verge first reported in 2018.

Lucid Motors eventually found a savior in Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, or PIF. PIF pledged more than $1 billion to Lucid Motors in 2018 (just a few weeks shy of the slaying of Jamal Khashoggi) in exchange for majority ownership in a startup that aligned with the clean energy ambitions touted by the Kingdom’s de facto ruler, Mohammed bin Salman.

According to the investor presentation published Monday, PIF currently owns 85 percent of Lucid Motors following a new injection of $600 million that is supposed to sustain the startup until the SPAC deal is closed. Jia is reportedly now out of the picture, and Faraday Future is one of the many other EV startups to announce a SPAC merger.

Since then, Lucid Motors has been hard at work prepping the tech-forward luxury Air sedan for its debut. The car leverages the company’s long history in battery technology to deliver more than 500 miles of range, which would make it as capable as Tesla’s most advanced Model S sedan. Lucid Motors also plans to sell it directly to customers, much like Tesla and other EV startups.

Unlike other EV startups, Lucid Motors has a long history

That battery tech is one reason Klein’s SPAC is investing so deeply into Lucid Motors, according to the investor presentation. Lucid Motors has “untapped potential in battery storage solutions and powertrain technology licensing,” the companies write. They imagine the batteries specifically being used in everything from commercial vehicles, to helicopters or drones and other aircraft, and heavy equipment, too.

The investor presentation also talks up Lucid Motors’ growing cache of executive talent. That includes former Apple VP Michael Bell, who helped bring the iPhone into the world. Bell was previously CTO of Rivian until he abruptly left last February. Former Tesla executives Peter Hochholdinger (manufacturing) and Peter Hasenkamp (supply chain) are also among Lucid Motors’ executive ranks.

Lucid Motors believes it can generate gross profits as soon as 2023, which is when its first SUV — called Gravity — will debut, and that it’ll get truly into the black by 2025. It expects to be able to make and sell 20,000 cars in 2022; 49,000 in 2023; and as many as 500,000 cars a year (including the Air, the Gravity SUV, and future models) by 2030.