Saudi Arabia’s sovereign wealth fund on Monday invested more than US$1 billion in a Silicon Valley electric car maker just weeks after Tesla Inc CEO Elon Musk claimed that the kingdom would help his firm go private.
Tesla stock dropped briefly on Monday in reaction to the news, the same day that the Saudi Arabian fund announced that it had taken its first loan, an US$11 billion borrowing from global banks, as it tries to expand its investments.
It was not clear if the loan money played a part in the electric car investment.
The infusion represents a coup for Lucid Motors Inc, a Newark, California-based start-up whose leadership includes six former Tesla executives, including an engineer who oversaw the design of the Tesla Model S that proved electric cars could be aesthetically pleasing and fast.
The electric car investment is a bold move for Saudi Arabia, which for decades has relied on its oil wealth as the world’s top crude exporter, but now appears determined to build a more diversified portfolio to lessen its dependence on fossil fuels.
However, previous splashy market-moving promises by the kingdom’s assertive Crown Prince Mohammad bin Salman have yet to materialize.
Lucid is depending on the Saudi Arabian money to help realize its goal of delivering its first vehicle, the Lucid Air, in 2020.
Besides helping to put the final touches on the Air, Lucid plans to use the money to finish construction of its factory in Casa Grande, Arizona, where it has pledged to employ 2,000 workers by 2022, when it aims to be manufacturing 130,000 vehicles annually.
Lucid has said that the Air would sell from US$52,500, although the initial batch of vehicles would cost more than US$100,000.
The vehicle would have a battery range of 386km to 644km per charge, depending on what kind of extras are ordered. It is being designed in the mold of a jet for carrying executives, with more room in the interior cabin than cars powered by internal combustion engines.
Lucid has said that the Air is fast; in early tests on tracks, it has topped 322kph.
“We will demonstrate the full potential of the electric-connected vehicle in order to push the industry forward,” said Peter Rawlinson, Lucid chief technology officer and the former lead engineer of the Tesla Model S.
This is by far the biggest investment in Lucid, putting Saudi Arabia in the firm’s driver seat.
Three previous venture funding rounds have netted Lucid Motors about US$131 million, according to the business information Web site crunchbase.com.
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