Saudi Arabia Orders Up to 100,000 Electric Vehicles in Boost to Startup Lucid

Source: By Stephen Kalin, Wall Street Journal • Posted: Wednesday, April 27, 2022

Tesla competitor backed by the Saudi wealth fund plans to build a manufacturing facility in the kingdom

Electric vehicles built at Lucid’s existing Arizona factory account for some of Saudi Arabia’s planned purchases.PHOTO: CAITLIN O’HARA/REUTERS

RIYADH, Saudi Arabia—Saudi Arabia will purchase between 50,000 and 100,000 electric vehicles over the next decade from Lucid Group Inc., which is backed by the kingdom’s sovereign-wealth fund, in a boost to the car maker’s push to increase sales revenue.

The Saudi government said the decision was in line with efforts to make its fleet more environmentally friendly and diversify the national economy away from oil. Lucid was selected, the government said, because the company is setting up a full production factory in Saudi Arabia—its first international manufacturing plant, which is aiming to produce 150,000 cars annually.

“We are delighted to be supporting Saudi Arabia in achieving its sustainability goals and net zero ambitions…by bringing our advanced luxury EVs to Saudi Arabia,” said Peter Rawlinson, Lucid’s chief executive and chief technology officer.

Lucid made an undisclosed commitment to build an assembly plant here after accepting more than $1 billion from the Saudi Public Investment Fund in 2018, which The Wall Street Journal reported could cost several hundred million dollars or more. The Saudi investment fund recorded a $20 billion profit on its investment last year when Lucid went public by merging with a special-purpose acquisition company.

Saudi officials had been trying for nearly a decade to entice an auto maker to set up a local assembly plant, but the country has very little of the manufacturing footprint necessary for building cars, meaning many of the vehicles’ parts would likely need to be imported. That would potentially double the manufacturing costs at the plant, people familiar with the Saudi factory plans have said.

PIF, under the direction of Crown Prince Mohammed bin Salman, is investing Saudi Arabia’s oil wealth internationally and aiming to make investments that could reduce reliance on the petrochemical industry. Many of the fund’s bets explicitly seek to attract direct investment back into the country, in hopes of creating jobs for young Saudis in growth sectors such as technology and advanced manufacturing.

Lucid was one of the last major investments by Saudi Arabia before the 2018 killing and dismemberment of Saudi journalist Jamal Khashoggi, who had criticized some of the crown prince’s policies. Western appetite for Saudi money has remained subdued since then.

As part of this week’s agreement, Saudi Arabia pledged to purchase vehicles, including the Lucid Air and other future models, built and assembled at Lucid’s existing Arizona factory and its future Saudi facility, the company said.

The order quantity is expected to range from 1,000 to 2,000 vehicles annually beginning in 2023 and then increase to between 4,000 and 7,000 vehicles annually starting in 2025, the company said.

Lucid in October began delivering its first all-electric Air sedans, a model considered by many in the industry to be a direct competitor to Tesla Inc. It plans to introduce a second model, a battery-powered SUV called the Gravity, in late 2023.

Write to Stephen Kalin at stephen.kalin@wsj.com

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