Saudi Arabia’s sovereign wealth fund has become famous for taking significant bets the latest technology in the world by offering huge backing to the most exciting tech start-ups in different sectors from VR to AI, biotech, electric cars and renewable energy.
However, having already built up a 5% stake in Elon Musk’s electric car maker Tesla, yesterday’s news that the Public Investment Fund (PIF) has also just poured $1 billion into direct rival Lucid Motors might at first seem counterintuitive. Especially as many on this side of the Atlantic, and even on the other, might be hearing the company’s name for the first time.
So who exactly are Lucid Motors, should Tesla be worried and why is Saudi Arabia heavily backing two direct competitors? Lucid Motors have actually been around since 2007, just four years less than their higher profile peer Tesla. In a further twist, the company’s CTO is Peter Rawlinson, the former chief engineer for Tesla’s Model S. Based in Newark, California, Lucid originally went by the name Atieva. To date it has developed only one model, a 1000-horesepower electric sedan whose prototype was unveiled in late 2016. The PIF investment will help fund the Lucid Air’s planned 2019 production line.
There has been very little ‘buzz’ around Lucid Motors and the Air. In direct contrast to most electric car rivals keen to crescendo hype, sometimes seemingly regardless of genuine progress, Lucid has remained in ‘stealth mode’ up until the point the Lucid Air prototype was nearly ready. The company also hasn’t since pushed the kind of social media and wider media buzz campaigns common to tech start-ups, particularly in this industry.
CTO Rawlinson recently commented:
“We believe we have the next-level electric vehicle — one that is so well-suited to this new era of luxury mobility. I believe in the product and I would rather that product do the talking.”
It’s probably already clear why he perhaps felt that working under Musk wasn’t his natural environment. The Tesla CEO certainly likes to do plenty of talking. However, the size of the Saudi investment demonstrates that Rawlinson and the rest of the Lucid team are doing something right under the hood. To date, the bulk of the company’s investment has come from China but until the PIF injection Lucid had been struggling to attract the funds necessary to build their proposed factory in Casa Grande, Arizona.
From a tech and engineering point of view the Lucid Air looks like an impressive vehicle. It recently smashed the previous ‘production EV lap record’ at the popular Laguna Sec track, beating the 1:41:18 set by Jaguar’s I-Pace. The Air did it in 1:41:67. It was, however, a version of the car specially adapted for the racing track with a stripped-down interior, rollcage and high temperature breaks. But the company says the production version of the vehicle will still be able to do 0 to 60mph in less than 2.5 seconds and reach a top speed in excess of 200mph. It’s also stuffed full of swish looking tech such as the in-house engineered multi-screen driver interface.
Why Saudi Arabia’s PIF is financing a direct competitor to the Tesla, which it holds a 5% stake in, is another matter. Tesla’s share price dropped on Monday as the news broke though did subsequently recover to finish the day down just 0.12%. At least for now, it could also be debated how direct the competition between the two companies will be. Tesla has stated that it’s long term focus is on the mass market and mid-price models. Lucid’s Air is firmly targeted at the luxury segment. At least for now, it can be presumed that the PIF is simply upping its overall exposure to the electric car market it expects to be huge in coming years. Spreading risk as well as exposure, especially given Tesla’s bumpy past few months, erratic behaviour from Musk and production difficulties, perhaps simply makes sense.
One thing is for sure, while Tesla has already demonstrated $1 billion can be burned through quickly in this market, the investment does catapult Lucid firmly into the race for a slice of the electric and autonomous vehicles market. The company is not in stealth mode anymore and has well and truly broken cover.