Saudi Arabia Bankrolls Struggling EV Startup Lucid, Forcing American Investors to Foot the Bill
Lucid Motors, the electric vehicle startup, is swimming in a sea of debt and still can’t manage to turn a profit. To keep the lights on, Lucid is relying on its controlling shareholder, Saudi Arabia’s sovereign wealth fund, to cough up an additional $1.5 billion in a desperate attempt to stay afloat. And with this new funding, Lucid is essentially giving the Saudi government veto power over the company’s decisions – a scenario that should send chills down the spines of any American investor who had hoped to see some returns on their investment.
As part of this sweetheart deal, Saudi Arabia will give Lucid a loan facility of $750 million and inject another $750 million through a private placement. This brings the total amount of money Saudi Arabia has poured into Lucid to an astonishing $4.5 billion, leaving American investors holding the bag while the Kingdom gets a generous return on its investment.
This latest financial lifeline is a stark contrast to Lucid’s CEO, Peter Rawlinson’s, previous reluctance to rely too heavily on Saudi Arabia. Last March, he told the Financial Times that he was wary of being over-reliant on the Kingdom’s wealth fund, and that he wanted to diversify his investors. But with the company losing a whopping $643 million in the second quarter, Lucid seems to be more than happy to do whatever it takes to stay afloat.
And yet, despite this hemorrhaging of funds, Lucid is convinced that it will somehow magically become profitable once its electric SUV, Gravity, launches later this year. The company is banking on Americans falling head over heels for a new SUV, and that’s a questionable bet at best. With Lucid’s track record, it’s a miracle the company still has any customers left.
Saudi Arabia Pulls Strings from Behind the Scenes
Meanwhile, Saudi Arabia gets to dictate Lucid’s decision-making, calling the shots on key issues like product development, sales strategy, and even staffing. The company’s recent layoff of 400 employees, or roughly 6% of its workforce, was allegedly a result of "streamlining" its operations in preparation for the launch of Gravity. But don’t believe the spin – it’s clear that the real goal is to reduce Lucid’s operational costs to the bone, leaving it beholden to the Saudi government.
American investors deserve better. They deserve to see their money generate real returns, not funneled into a losing proposition through a proxy fund controlled by Saudi Arabia. But for now, Lucid remains stuck in the gravitational pull of the Saudi wealth fund, its future in limbo, and its very survival dependent on the whims of the Kingdom.
Author: Kayitsi.com
