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Lucid secures added liquidity from Saudi investor
Expanded PIF credit facility extends beleaguered EV maker’s expected funding runway into late 2027
A Lucid Air electric vehicle at the company's showroom in Tysons, Va. (Samuel Corum/Bloomberg)
Key Takeaways:
- Lucid secured $1.75 billion in additional liquidity from Saudi Arabia’s Public Investment Fund as it reported third-quarter results Nov. 9.
- The financing extended Lucid’s funding runway into next year’s fourth quarter, despite a $1 billion third-quarter free cash flow deficit.
- Lucid plans to begin producing a lower-cost midsize electric SUV — seen as key to its future — in next year’s second half at its Saudi Arabian plant.
Lucid Group Inc. secured access to $1.75 billion in added liquidity from its largest investor, Saudi Arabia’s Public Investment Fund, providing the troubled maker of electric vehicles with additional breathing room to execute its turnaround plan.
The PIF agreed to increase an existing credit facility with Lucid by that amount, the EV maker said Nov. 9 as it reported third-quarter results that fell short of analyst estimates. After finishing the third quarter with $2 billion in total liquidity, the company said it now expects to be able to fund operations and investments into next-year’s fourth quarter.
The additional support gives CEO Silvio Napoli some additional cushion as he works to reduce cash burn and cut costs at the struggling EV manufacturer. Lucid has slashed its workforce, overhauled leadership positions and put a lid on spending in a bid by Napoli to save $1.4 billion in cash this year. The company has realized about $800 million of that goal so far and is on track to achieve the full year-target, the company said in a statement.
Despite the liquidity boost, Lucid’s shares fell after it reported an adjusted loss of $2.30 a share and $350 million of revenue, each of which missed analyst expectations. The stock was down 5% at 4:13 p.m. Nov. 9 in after-hours trading in New York.
In an interview, Napoli said the upsized PIF loan is a reflection of the company’s recent progress.
“Three months ago, we asked to be judged by the results, and today I’m happy to say we are seeing the first sign of those results,” he said.
Saudi Arabia’s PIF has continued to help keep Lucid afloat as the company increased production of its luxury EVs, which can cost upward of $100,000. Lucid on Nov. 9 said it’s on track to begin production of a new, lower-cost midsize electric SUV in next year’s second half at its plant in Saudi Arabia. That model is seen as key to helping the tiny EV maker appeal to more consumers.
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The additional $1.75 billion in added liquidity boosts Lucid’s delayed draw term loan facility with the PIF to a capacity of about $4.23 billion. Lucid’s shares tumbled this summer after an industry publication reported that the company was considering bankruptcy. Lucid dismissed the claim as “completely false” and the stock briefly rebounded, though the rout highlighted investor concerns about the company’s health.
Lucid continues to burn cash as it pursues its goals, posting about $1 billion in negative free cash flow in the third quarter. The company said that reflects about a 30% improvement compared with the second quarter. Wall Street expected Lucid to burn about $505 million last quarter, according to the average of three analyst estimates compiled by Bloomberg.
Napoli in May suspended Lucid’s annual production guidance, part of an effort to align output with actual demand. Third-quarter production declined 24% year over year. Lucid said it expects output to continue to lag deliveries in the fourth quarter.
