Saudi Funding Supports Lucid Motors' Continued Growth in Tough Electric Car Market, Adds $1 Billion in Stock as Company Struggles to Find Enough Wealthy Buyers

Lucid Group Inc.(NASDAQ:LCID) is off to a bad start in 2024, with shares down more than 34%.The good news is that, for now, Lucid can continue to count on the support of its largest investor to support its massive cash burn.

An affiliate of the Saudi Public Investment Fund (PIF) recently announced the purchase of $1 billion of Lucid's convertible preferred stock, providing valuable capital for Lucid and near-term security for other investors as the Saudi PIF continues to increase its stake in 60%.

With Lucid losing $2.8 billion in 2023 and ending the year with just $1.4 billion in cash, $1 billion in new funding could end up being a drop in the bucket.

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Peter Rawlinson, Lucid's chief executive, did not want to take the Saudis' continued investment as a guarantee, telling the Financial Times, "It would be very dangerous for me to get into the mindset that [the Saudi Public Investment Fund's] wealth is bottomless."

Although news of the additional Saudi investment had sent the company's stock price soaring nearly 20%, the stock price has since fallen back to the level it was at prior to the March 25th announcement.

Part of Lucid's problem stems from the fact that it's trying to charge a higher price than others in the electric car market at a time when its competitors are also cutting prices, making it tough to find a new buyer.

Last August, the company's basic Air Pure was priced at $83,900, and it's now priced at $69,900.

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Price cuts are not reassuring to investors, especially since Lucid reported a loss of $338,000 per vehicle sold in the third quarter of 2023.

Lucid Motors isn't the only struggling electric car company.Fisker Inc.(OTC:FSRN) recently announced a possible "Event of Default" and trading in the company's stock has been halted.Rivian Automotive Inc. (NASDAQ:RIVN) owns theAmazonCompany (Amazon) .com Inc. (NASDAQ:AMZN)), a well-funded backer, the company's stock price has jumped about 50% at the start of 2024.

Tesla (unit) (NASDAQ:TSLA)'s chief executive officer Elon Musk made a post on X about the state of Rivian, saying that the company's team of executives "need to live in the factory or they will die."

Even Tesla has struggled along with its industry peers, with its shares down about 28% so far this year.

Lucid's struggles may even be more personal for resonant Mars, as the company was founded by a former Tesla executive. Commenting on Lucid's recent financial news, Mareson revealed that the company expects to produce 9,000 vehicles by 2024, believing that "their Saudi sugar daddy is the only thing keeping them alive."

Doubts about how long the Saudis would be willing to continue contributing to Lucid's losses could be a risk for Lucid in the future, but have been put to rest in the short term.

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This article originally appeared on Benzinga.com Saudi Funding Keeps Lucid Motors Moving in Struggling Electric Car Market, Adding $1 Billion in Stock as the Company Struggles to Find Enough Wealthy Buyers.

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