The Saudi Public Investment Fund will own over 60 percent of the company, which is expected to have a market capitalization of about $36 billion based on the SPAC’s current share price.
The listing represents the fruits of a well-timed 2018 investment in Lucid when it was struggling for survival. Its Saudi lifeline came thanks to Mohammed bin Salman, the crown prince who was pushing his country’s Public Investment Fund to spend unprecedented sums on startups as part of a bid to diversify the country’s wealth away from oil.
More recently, the Saudi investment in Lucid benefited from the meme stock phenomenon that has reshaped financial markets. A flood of amateur stock traders has pushed up prices of companies merging with SPACs, especially in the electric-vehicle space, as traders bet that startups will emulate Tesla Inc.’s stock market success leveraging the auto industry’s shift away from gasoline engines.
Lucid and the SPAC it is merging with, Churchill Capital Corp. IV, gained a particularly avid following on Reddit and Twitter. After the pending merger of the two companies was reported in January, an online frenzy pushed Churchill’s stock up more than 500 percent by February before shares retreated significantly.
Lucid’s expected market capitalization is nearly twice the valuation of Nissan Motor Co. and about two-thirds that of Ford Motor Co. , which delivered more than 4 million cars last year. Lucid has yet to sell any cars. It plans to start production later this year.
In all, more than 23 companies making electric vehicles or batteries have struck deals to go public through SPACs in the past year. The deals have raised over $17 billion for the companies, many of which have no revenue and have won over investors with projections of rapid growth. Lucid has said it expects revenue of $22 billion in 2026.
Lucid is substantially more valuable than any of the other US electric-vehicle startups that have gone public recently, and the Saudi gains are far and away the largest by total dollars. The second-most-valuable US company in the sector to list recently, battery maker QuantumScape Corp., is valued at around $9 billion. Large shareholder Volkswagen AG has logged a gain of over $1 billion on its $300 million investment in QuantumScape.
Lucid, Churchill and the Saudi Public Investment Fund declined to comment.
Lucid, formed in 2007, initially tried to make batteries before shifting its business model to making cars. For years, electric-vehicle companies weren’t en vogue among venture capitalists, and the company couldn’t find funding to build its factory.
Then Prince Mohammed embarked on a plan to sell some of the country’s state-owned oil company and plow the money into sectors including tech and electric vehicles. The Saudi fund held early talks about a possible buyout of Tesla in the summer of 2018 before later opting to take majority ownership in the much more nascent Lucid with an initial commitment of $1.3 billion. As part of the deal, Lucid committed to build a factory in Saudi Arabia, according to the company’s securities filings.