Report: Saudi Fund in Talks with Lucid Motors

Saudi Arabia’s Public Investment Fund (PIF), which bought a nearly 5% stake in Tesla Inc. earlier this month, is mulling a $1 billion investment to gain majority ownership of rival electric vehicle maker Lucid Motors Inc., sources tell Reuters.

They say PIF has drawn up a term sheet with Lucid Motors, but they note that the deal hasn’t been finalized. Lucid and PIF declined to comment.

Under the reported plan, PIF would make an initial $500 million investment that would allow the struggling California-based company to launch production by the end of 2019. The other half of the $1 billion investment would be made in two installments when Lucid meets unspecified performance goals, according to the report.

Formed in 2007 by ex-Tesla and Oracle executives, Lucid started as an EV battery maker known as Atievea. The company changed its named to Lucid in 2016 and received backing from Chinese investors, including tech entrepreneur Jia Yueting and state-owned carmaker BAIC Motor Co.

Lucid had hoped to begin making a production version of its concept Air (pictured) luxury EV this year at a facility in Arizona. Those plans were contingent upon the company raising additional funds that have yet to materialize.

In addition to the $2.9 billion PIF reportedly paid for its earlier stake in Tesla, the Saudi wealth fund also could help take the Tesla private. In a series of controversial tweets over the last two weeks, CEO Elon Musk says he is considering such a scheme and that PIF has indicated strong support for it.

PIF has made several large investments in recent years as Saudi Arabia moves to diversify its economy and lower its reliance on the petroleum market. Recent deals include a $3.5 billion stake in Uber Technologies and agreement to invest in a giant technology fund led by Japan’s SoftBank Group.