The latest EV startup SPAC merger is also the biggest
https://www.theverge.com/2021/7/26/2...bia-ev-startup
Electric vehicle startup Lucid Motors is now a publicly traded company, following the completion of a merger where it fetched an eye-watering $4.5 billion in fresh capital. Shares of the Saudi-owned, California-based startup began trading on the Nasdaq stock exchange Monday morning.
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Lucid Motors will now turn its full attention back to an even taller task: getting its first electric car on the road, where it will face stiff competition in the luxury market from Tesla, Mercedes-Benz, and others. The startup has said that it plans to start delivering its extremely powerful but serenely luxurious Air sedan later this year, and it has already built more than 100 near-final quality versions at its new factory in Arizona. It has an electric SUV called Gravity in the works, too.
The public listing is the second in the last week for the industry; fellow EV startup Faraday Future became a public company listed on the Nasdaq last Thursday and raised $1 billion in the process. The two startups are just the latest in a growing line of EV startups, autonomous vehicle companies, and automotive suppliers to go public by merging with so-called special purpose acquisition companies, or SPACs, which are publicly listed investment vehicles.
Unlike many of those other startups, though, Lucid Motors has been around for a while. It was founded in 2007 as a battery company called Atieva. But in 2016 it set out to build an all-electric sedan of its own, and tapped Peter Rawlinson — the former lead engineer of the Model S program at Tesla — to head up the project. (Rawlinson would later become CEO.)
Lucid Motors originally hoped to put the Air into production as early as 2018. But it ran into the same problem that nearly ended the journey for many of its peers: it didn’t have enough money. The startup had raised hundreds of millions of dollars to that point but needed billions, in part because it was also trying to build a factory to build the sedan.
Funding for electric vehicle startups was much harder to come by in 2016 and 2017, though, especially as some of them — like Faraday Future — began collapsing in remarkably public fashion. Making matters worse for Lucid Motors was the fact that Faraday Future founder Jia Yueting wound up owning some 30 percent of his rival’s shares. Jia’s ownership became a major problem for potential investors because of his reluctance to sell, as Recode and The Verge have reported.
Talks with investors and even automakers like Ford eventually fell apart, and Lucid Motors took loans from a hedge fund and a Chinese bus company to keep the lights on, using its intellectual property as collateral.
Lucid Motors then found a savior in Saudi Arabia’s sovereign wealth fund in 2018. The two sides announced a $1 billion deal in September of that year, just a few weeks before Crown Prince Mohammed bin Salman had Washington Post journalist Jamal Khashoggi brutally murdered. That injection of cash, plus subsequent investments from the fund, have given Saudi Arabia majority ownership of Lucid Motors. (It was also a major participant in the funding round that took place alongside the SPAC merger, which is one reason for how Lucid Motors raised so much money in this transaction.)
Saudi Arabia proved to have deep enough pockets to help Lucid Motors fund its extremely expensive ambitions, while also finally buying out Jia’s stake, as filings with the Securities and Exchange Commission (SEC) show. In exchange, it got control of a startup that helps it paint bin Salman’s fantastic picture of making Saudi Arabia a futuristic and far less oil-dependent nation — while also making a boatload of money in the process.
The merger values Lucid at $12 billion, based on the incoming cash from Churchill as part of the deal. However, CCIV’s stock price on Monday put that valuation at about $92 billion. Such a valuation would put Lucid as the fifth most valuable carmaker by market capitalization.
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