Saudi Arabia appeared to have found a winner when US luxury electric vehicle manufacturer Lucid Group Inc. went public in 2021 — a clean tech investment that would diversify and substantially add to the kingdom’s oil riches. Two years later, Lucid has instead delivered a grim lesson in automotive capital intensity, scale economies and the difficulty of building car brands from scratch.
The Public Investment Fund’s 60% Lucid stake was valued at more than $55 billion in the months after the EV manufacturer completed a US SPAC listing.
Lucid’s optimistic sales forecasts and vertically integrated strategy (it develops core technologies itself) helped persuade giddy retail investors it would become the next Tesla Inc. But the excitement didn’t last: The Saudis’ holding is now worth just $5.4 billion.
Coincidently, that’s the same amount the PIF has invested in Lucid since 2018. While it hasn’t yet lost money, the nearly $800 billion sovereign wealth fund can’t be satisfied. Lucid is miles away from becoming cash-flow positive, meaning Riyadh will have to keep propping it up with equity and loans.
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