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Saudi Arabia pledges $1B+ to Lucid instead of backing Tesla

The Public Investment Fund of Saudi Arabia (PIF) has agreed to invest more than $1 billion in Lucid Motors, a Newark, CA-based electric car company planning to launch its first commercial vehicle, the Lucid Air luxury sedan, in 2020. Lucid will use the cash for several purposes, including to finish developing and begin production on the Air, build a factory in Arizona and launch its North American retail strategy. The startup has raised prior VC funding from Venrock and Tsing Capital.

The announcement comes about a month after reports of an investment first emerged, which in turn came days after several reports connecting the PIF to a possible deal with Tesla. The Lucid transaction falls in line with the PIF’s forward-looking plan called Vision 2030, which calls for the kingdom to pursue investments that will lessen its dependence on oil.

To that end, the PIF has been liberal in dispensing parts of its $230 billion in AUM. In 2017 alone, the wealth fund announced its intent to commit up to $20 billion to Blackstone’s planned $40 billion infrastructure fund, up to $45 billion to a SoftBank-led tech fund, and an unspecified amount toward a proposed $500 billion project to build a new city called Neom on the coast of the Red Sea. To help fund such large-scale transactions, the PIF announced on Monday that it has raised $11 billion through a syndicated loan that it plans to use for general investment purposes.

The latest news would seem to erase the possibility that the PIF has immediate plans to expand its current 5% stake in Tesla, a move that seemed much more likely when CEO Elon Musk tweeted last month that he had “funding secured” to take Tesla private. Musk since retracted his statements about taking Tesla private and is now under SEC investigation.

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