TLDR:
- Lucid raised $1.75 billion through stock sale, providing cash runway into 2026
- CEO Rawlinson defends the timing of the capital raise as strategic
- PIF (Saudi Arabia’s Public Investment Fund) maintains 59% ownership stake
- Company is in capital-intensive phase with five major investment areas
- Lucid expects 50% increase in car deliveries in 2024 vs 2023
Electric vehicle maker Lucid Group has successfully raised $1.75 billion through a public stock offering, slightly exceeding its initial target of $1.67 billion. CEO Peter Rawlinson announced that this capital injection will provide the company with sufficient funding well into 2026.
The stock sale, completed last week, involved the issuance of approximately 262.5 million shares of common stock. Notably, Ayar Third Investment Co., an affiliate of Saudi Arabia’s Public Investment Fund (PIF), participated in the offering to maintain its approximately 59% ownership stake in the company.
Rawlinson defended the timing of the capital raise, describing it as a strategic business decision. “We’d signaled that we had a cash runway to Q4 next year. As a Nasdaq company, we have to avoid a going concern,” he explained during an interview at the company’s new Detroit offices.
The company reported having $5.16 billion in total liquidity at the end of the third quarter, including more than $4 billion in cash, cash equivalents, and investment balances. This recent funding comes just two months after securing a $1.5 billion cash commitment from Saudi Arabia’s PIF.
The capital raise coincides with Lucid’s current phase of intensive investment across five major areas. These include the expansion of its Arizona plant by nearly 3 million square feet, construction of a new facility in Saudi Arabia, preparation for the launch of its Gravity SUV, development of next-generation powertrain technology, and expansion of its retail and service network.
Market reaction to the announcement was notably negative, with Lucid’s stock experiencing its worst daily decline since December 2021, falling approximately 18% following the news. Several Wall Street analysts expressed surprise at the timing of the raise, considering the company’s existing cash reserves.
Morgan Stanley analyst Adam Jonas noted that the “cap raise was slightly larger and earlier than we had expected.” RBC Capital Markets analyst Tom Narayan similarly questioned the timing, particularly given the recent PIF capital secured in August.
Rawlinson countered these concerns, stating that the move should not have surprised investors. “This is exactly as expected. It is exactly to the playbook,” he emphasized, adding that the timing was chosen strategically rather than waiting until the company’s resources were more constrained.
The company’s immediate focus includes the launch of its Gravity SUV, scheduled to begin production before the end of the year. Additionally, Lucid is planning to introduce a mid-size crossover model in late 2026.
On the production front, Lucid has reported record deliveries in 2024 of its current model, the Air electric sedan. The company anticipates producing 9,000 vehicles this year and projects a 50% increase in deliveries for 2024 compared to 2023.
The financing arrangement included a 30-day option for underwriter BofA Securities to purchase up to nearly 39.37 million additional shares of Lucid’s common stock.
Despite some current market challenges, including higher costs and slower-than-expected demand for EVs, Rawlinson maintains an optimistic outlook on the electric vehicle market. He characterized the current market conditions as a “temporary hiccup” and “blip” rather than a long-term trend.
Regarding operational costs, Rawlinson acknowledged the need for efficiency:
“Have we got to cut costs with every car we’re making? Absolutely.”
This focus on cost management comes as the company works to scale its sales and financial performance.
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