Why it matters: Tesla suddenly finds itself with a serious rival as Lucid lands a $1 billion investment from Saudi Arabia.
The deal would give Lucid the funding to take it through to the commercial launch of the Silicon Valley-based start-up's first electric vehicle, the Lucid Air, in 2020, the Public Investment Fund said in a statement. The Saudi fund had previously built up a stake of just under 5 per cent in Tesla.
Saudi Arabia's 33-year-old Crown Prince Mohammed bin Salman has talked about using the country's PIF to help diversify the economy of the kingdom, which relies nearly entirely on money made from its oil sales.
The fledgling automaker will use this investment to finish the development and testing of its first auto, the Air, in addition to constructing Lucid's upcoming factory in Casa Grande, Arizona.
"The convergence of new technologies is reshaping the automobile, but the benefits have yet to be truly realized", said Peter Rawlinson, chief technology officer of Lucid. Lucid's press release says the Air is now slated for a 2020 release, which is two years beyond when the company first expected to launch its electric vehicle. "At Lucid, we will demonstrate the full potential of the electric connected vehicle in order to push the industry forward".
The all-electric Lucid Air will have a range of over 400 miles (640 kilometers). The company wants to make up to 130,000 vehicles per year by 2022. This came after Tesla CEO Elon Musk indicated the PIF had shown interest in taking his firm private. Investors pushed Tesla's shares up 11 percent in a day, boosting its valuation by $6 billion. The Securities and Exchange Commission is reportedly investigating Musk's disclosure on Twitter.