lucid air raises $3 billion to shore up its finances

The electric vehicle manufacturer Lucid Motors is scheduled to complete today the sale of hundreds of millions of common shares valued at approximately $1.2 billion in an effort to shore up its finances.

In a press release published a few days ago, the company announced that the operation would consist of the sale of 173.54 million shares in the public markets via over-the-counter (OTC) transactions arranged by Bank of America Securities at a price of $6.83 per share resulting in a $1.2 billion capital raise for Lucid.

Moreover, a total of $1.8 billion worth of common shares will be sold to the company’s majority stockholder – the Public Investment Fund (PIF) of Saudi Arabia – and to one of its affiliates, the Ayar Third Investment Company.

Lucid’s at-the-market offering is expected to close today and would augment the company’s share count by 9.4% based on the number of outstanding common shares reported by the firm in its latest quarterly report.

Meanwhile, the private placement arranged with the PIF and Ayar is expected to be settled on 26 June and will represent a 14.5% increase in the firm’s share count. After this operation is completed, Ayar and the PIF will come to own 60.5% of the electric vehicle manufacturer.

Lucid Has Raised $4.5 Billion from the PIF and Other Investors in Less Than 6 Months

This is the second time that the PIF is forced to inject money into the EV company in a relatively short period. The last time was in December 2022 when the sovereign investment fund bought a portion of a $1.5 billion at-the-market share sale.

The latest changes in the macroeconomic landscape may have forced Lucid Motors (LCID) to increase its cash reserves while it still can. The company reported total revenues of $608.18 million in 2022 from the sale of its Lucid Air electric vehicles but incurred a $1.3 billion loss during this same period.

The losses primarily resulted from high manufacturing costs, which surpassed the amount of money brought in by the sale of the vehicles by at least $1 billion, along with $1.55 billion spent to run its operations.

Meanwhile, by the end of the first quarter of 2023, Lucid reported total liquidity including short-term investments of $4.1 billion along with $1.02 billion in inventory. During these first three months, the company burned $1.04 billion in cash.

Lucid’s Chief Financial Officer, Sherry House, highlighted that these reserves should give the company enough headroom to stay afloat at least until the second quarter of 2024.

Also read: Toyota Going All-In On EVs, Invests $2.1 Billion in US Battery Factory Expansion

Hence, this $3 billion capital injection would give the firm a much larger runway to keep increasing its manufacturing capacity and deliveries to possibly reduce its cash burn within the next one to two years.

“We are on track to produce over 10,000 vehicles in 2023, with company-wide initiatives ongoing that will enable Lucid to pivot to higher volumes as market conditions allow”, commented Peter Rawlinson, Lucid’s Chief Executive Officer and Chief Technology Officer back on 8 May when the firm’s Q1 2023 quarterly report was released.

There Seems to Be No Intention to Make the Company Private

logo of public investment fund saudi arabia

In January this year, rumors started to circulate about the PIF’s intentions to make Lucid Motors a private company by acquiring all of its outstanding shares. The reports rapidly sparked a 43% single-day jump in the value of Lucid stock.

However, the rumors appeared to have been unfounded and this could be confirmed by this latest share sale, which indicates the PIF’s intentions to keep providing funding to the company without taking it private.

In late March, Lucid laid off 1,300 employees as part of an ongoing restructuring process that aims to reduce its operating expenditures. On the same day this was announced, Lucid was forced to recall 637 Lucid Air units amid a malfunction that caused the vehicles to unexpectedly power down.

Other Related Articles: