Lucid Air prototype during high-speed test at Transportation Research Center, Ohio
The dealings surrounding Tesla CEO Elon Musk’s plan to take the company private just got a lot more complex with a report out that Saudi Arabia, via its Public Investment Fund (PIF), is in talks with rival electric car brand Lucid Motors about a potential investment.
Citing two people familiar with the matter, Reuters reported Sunday that PIF and Lucid have drawn up a term sheet outlining plans for PIF to invest over $1 billion in Lucid in order to gain majority ownership of the company. The investment would be broken up into an initial cash injection of $500 million and then additional injections dependent on certain production milestones being reached, one of the people said.
The report comes a month after Lucid Chief Technology Officer Peter Rawlinson said the company was in talks with potential investors in order to raise funds to get its first product, the Air electric sedan, into production in 2019. Bloomberg reported at the time that privately held Lucid was open to a sale.
Reuters in its Sunday report pointed out that the Lucid deal makes more sense given PIF’s assets totaling only $250 billion, much of which has already been earmarked for other investments. The cost of taking Tesla private at the $420 price per share Musk tweeted on August 7 has been estimated by some investment banks at $72 billion, though the price could be lower if current shareholders choose to own shares of the private company.
Musk later said it was talks between him and Saudi officials that led to the now infamous privatization tweet. However, Reuters reported on August 11 that Saudi Arabia, which already owns 5.0 percent of Tesla, was uninterested in financing the deal. This was followed on August 15 by the Securities and Exchange Commission issuing a subpoena to Tesla for more information on the deal.
Meanwhile, Musk’s savior, the Saudis, have serious problems of their own. The country is currently embroiled in a war with its neighbor Yemen, and its much-hyped initial public offering for its state-controlled oil giant Saudi Aramco, which was meant to be floated in the second half of 2018, has been put on the back burner, with many blaming a lack of transparency into the company’s operations as a cause for the lack of interest. The funds raised were to be used for Saudi Arabia’s Vision 2030 plan aimed at ending the country’s dependance on oil.
