The young manufacturer of luxury electric vehicles has big ambitions to make a big splash.
Tesla (TSLA) – Get Tesla Inc Report has managed to establish itself as the center of conversations in and around the automobile industry.
Each vehicle manufacturer compares itself to the company co-founded and led by Elon Musk.
Lucid Group (LCID) – Get Lucid Group, Inc. Report wants to change this established order.
The manufacturer of luxury electric sedans has just announced an agreement on its international expansion just five months after starting car production.
Lucid has signed an agreement with Saudi Arabia to build its first international factory there. This will be its second plant overall. The group currently only has one production site based in Case Grande, Ariz.
“Lucid aspires to be a catalyst for change wherever we go, so it makes perfect sense that we are bringing electric vehicles to one of the world’s biggest oil producing nations,” said in a press release CEO Peter Rawlinson. “Establishing a global manufacturing footprint is a practical, natural step and enables us to grow our brand, scale our business, and address worldwide and untapped market demand on an entirely new level, while also taking action to address climate change through inspiring sustainable transportation.”
The agreement was signed with the ministry of Investment of Saudi Arabia (“MISA”), the Saudi Industrial Development Fund (“SIDF”), and the Economic City at King Abdullah Economic City (“KAEC”).
Lucid Motors
Start of Construction by June
Coincidence or not, it should be noted that when Elon Musk tweeted on August 7, 2018, that he wanted to take Tesla private, he said he had the support of Saudi Arabia’s sovereign wealth fund (“PIF”).
This agreement provides for a vehicle manufacturing plant in Saudi Arabia to enable the country to transform and diversify its economy through the development of sustainable energy and transportation, according to Lucid.
Lucid plans to establish operations at KAEC for re-assembly of Lucid Air vehicle “kits” that are pre-manufactured at the company’s U.S. AMP-1 Manufacturing Facility in Casa Grande, and, over time, for production of complete vehicles.
The company expects to manufacture up to 150,000 vehicles per year at the KAEC facility.
Construction of the plant is expected to start in the first half of 2022.
Vehicles in the initial phase will be slated for the market in Saudi Arabia, but Lucid plans to export finished vehicles to other global markets, including exclusive models designed to appeal to Lucid’s discerning customers in the region and beyond.
The company estimates that the location of Lucid’s first international manufacturing plant in the Kingdom of Saudi Arabia may result in up to $3.4 billion of value to Lucid over 15 years.
The facility will enable Lucid to serve international demand, the company said.
“The new manufacturing hub will be fully owned by Lucid and enable the company to meet growing international demand for luxury electric vehicles,” Lucid wrote in its press release.
Easy Access to Financing
This announcement comes at a time when Lucid is going through a tough time. The vehicle manufacturer is having production problems and on Monday again significantly lowered its production target because of supply chain issues and bottlenecks.
The company now expects to produce only between 12,000 and 14,000 cars for 2022, according to a press release, a drop of 30% to 40% less than its initial forecast of 20,000 units.
But Lucid hopes its new partnership in Saudi Arabia will provide competitive-priced commodities and energy and a newly emerging domestic supply chain, and a factory location that facilitates global logistics.
The company further expects to be able to access financing to build and equip the manufacturing facility and to train automotive workers.
“Our strong relationships with the Public Investment Fund and our partners at MISA, KAEC, and SIDF also give us unique insight into the demand for luxury cars and SUVs in Saudi Arabia and beyond, and we are thrilled to introduce the world’s most advanced electric vehicles to more global markets,” Rawlinson said.
Lucid makes a point of specifying that the agreement was validated as well by the Saudi authorities and Americans.
“Establishing Lucid’s new manufacturing hub in the Kingdom of Saudi Arabia is aligned with our national priority of diversifying the economy, and more specifically in growing and diversifying the industrial sector as part of the Kingdom’s Vision 2030”, said Bandar Alkhorayef, Saudi Arabia’s minister of industry and mineral resources and chairman of SIDF, quoted in the press release.
“The U.S. government welcomes Saudi Arabia’s effort to diversify its economy and fight climate change,” stated U.S. Chargé d’Affaires Martina Strong, the head of the U.S. Mission to the Kingdom of Saudi Arabia.
