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Key Takeaways
- Lucid Group has raised an extra $1.5 billion to help ongoing operations, with $915 million being contributed by the Saudi Arabia Public Funding Fund.
- It retains the Fund’s stake in Lucid at round 62%, persevering with their standing as a majority proprietor of the corporate.
- Regardless of nearly $1 billion in extra funding, it’s a drop within the bucket in comparison with the funds whole worth, which is estimated at over $620 billion.
- It marks a continued diversification of the oil states diversification away from fossil fuels, into a variety of funding from video video games to sports activities groups to main infrastructure tasks.
Electrical car (EV) manufacturing has come a good distance over the previous ten years. Again in 2008 when the primary era Tesla Roadster was launched, EV’s have been very a lot a curiosity.
It was the primary highway authorized manufacturing EV, and whereas lower than 2,500 Roadsters have been bought internationally, it kicked off a pattern that continues to choose up tempo right this moment.
Tesla wasn’t the primary firm to make an electrical car. They’ve been made in a single type or one other way back to 1828. However Tesla have been the primary to mass produce one which was legally in a position to be pushed on the highway, they usually made it attractive in addition.
Since then, the EV market has exploded.
There have been an enormous variety of newcomers to the house, with firms reminiscent of Rivian, Nikola, Polestar, Fisker and Lucid all vying for his or her share of the electrical gold rush. Not solely that, however conventional automakers are pumping billions of {dollars} into the sector as properly.
Firms reminiscent of Normal Motors, Mercedes-Benz, Volkswagen Group, Kia and Hyundai and others have all jumped on the bandwagon and now supply a spread of electrical automobiles alongside their inner combustion vary.
The pattern is barely going to choose up pace. Many jurisdictions at the moment are looking for to ban the sale of latest gasoline and diesel powered vehicles, reminiscent of California and all states signed as much as their Zero Emission Car Program, plus the UK and Europe, Canada, New Zealand, Singapore, Japan, Iceland, Norway and even China.
So with all that occurring within the background, it’s not a stretch to counsel that the oil states could be getting slightly nervous. It’s why we’ve seen such an enormous push from locations like Sudi Arabia, the United Arab Emirates and Oman to diversify their economies away from simply oil.
The Saudi Arabia Public Funding Fund is already a majority proprietor of Lucid Motors, and with an extra $915 million money tipped in with this spherical, their stake stays at sound 62%.
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Lucid raises $1.5 billion
Along with the $915 million added by Saudi Arabia, Lucid raised an extra $600 million by a conventional secondary inventory providing. The funds will probably be used to assist bolster the corporate’s steadiness sheet, after it posted underwhelming third quarter outcomes.
The figures confirmed supply numbers means down from expectations which had been as excessive as 20,000 automobiles in 2022. Now the quantity is anticipated to be beneath 7,000.
Lucid is now prone to have over $5 billion in money reserves, with the newly raised $1.5 billion being added to the $3.85 billion available on September 30.
After going public in January 2021, Lucid’s inventory value rose in a short time from an IPO value of $14 to hit an all-time excessive closing value of $58.05 in February of that 12 months. It got here again down quickly after to settle within the low $20 vary, earlier than working as much as the excessive $50’s once more in late 2021.
Since then the worth has crashed in 2022 and is down over 81% 12 months thus far. It at present trades at slightly below $8 per share.
What’s the Saudi Arabia Public Funding Fund?
By far the most important investor in Lucid is the Saudi Arabia Public Funding Fund (PIF), which holds round 62% of the corporate. The PIF is a sovereign wealth fund that was established by the federal government of Saudi Arabia in 1971. Its mandate is to handle the nation’s monetary belongings and make strategic investments that may contribute to the financial growth of Saudi Arabia.
The PIF is likely one of the largest sovereign wealth funds on the planet, with belongings estimated at over $620 billion. It’s a key monetary establishment in Saudi Arabia, and it’s accountable for managing a big portion of the nation’s monetary sources.
The PIF has made quite a lot of high-profile investments in recent times, together with a $3.5 billion stake in Uber, $522 million in Meta, $495 million in Disney, $487 million in Financial institution of America, $713 million in Boeing and $522 million in Citigroup.
The fund has additionally made quite a lot of bets on gaming, at numerous instances taking minority possession in Digital Arts, Take-Two Interactive, Activision Blizzard, Capcom, Nexon and Nintendo.
It doesn’t finish there.
There have been a spread of excessive profile investments in sports activities as properly. In 2021 the fund bought English Premier League membership Newcastle United for $370 million and in addition launched LIV Golf, a excessive profile, huge cash competitor to the PGA Tour.
These investments have been made in an effort to assist the PIF diversify its portfolio and generate returns for the good thing about the Saudi authorities and its residents.
The PIF has additionally performed a key function within the Saudi authorities’s efforts to diversify the nation’s financial system away from oil. For instance, it has invested in quite a lot of infrastructure tasks, like the development of a brand new worldwide airport in Riyadh and the event of a brand new metropolis known as NEOM – the loopy, 100 mile lengthy, mirror-finished, futuristic ‘line’ within the desert.
These tasks are supposed to create jobs and stimulate financial progress in non-oil sectors, and they’re a part of the Saudi authorities’s Imaginative and prescient 2030 plan to rework the nation right into a extra diversified and trendy financial system.
The PIF is vastly essential for Saudi Arabia, and it’s anticipated to play a key function within the nation’s financial growth sooner or later. It’s accountable for managing a good portion of the nation’s monetary sources, and it’s working to make strategic investments that may contribute to the financial progress and diversification of the nation.
Why are oil states shifting away from oil?
It’s not simply the transfer to EV’s which is driving this diversification.
On the finish of the day, oil is a finite useful resource, which suggests that it’ll ultimately run out. The oil reserves in these nations usually are not infinite, and sooner or later sooner or later, they’ll be gone.
That could be a good distance off, however nonetheless it is going to occur.
This can be a concern for the governments of those nations as a result of oil has historically been the principle supply of earnings and financial exercise within the area. In the event that they don’t diversify their economies and discover different sources of earnings, they’ll be in huge hassle when oil or its demand begins to expire.
One more reason for diversification is that the demand for oil can fluctuate considerably, and this will have a huge impact on their economies. For instance, if there’s a recession or a drop in world oil costs, the economies of those nations could undergo. It is because the demand for oil decreases throughout these instances, and in consequence, the revenues that these nations generate from oil exports could lower as properly. By diversifying their economies, these nations could be much less reliant on a single useful resource and be much less susceptible to those fluctuations.
The oil states additionally acknowledge that there are growing issues in regards to the environmental impacts of fossil fuels and the necessity to transition to extra sustainable sources of power.
Diversifying their economies can assist them obtain this aim by selling extra various and sustainable sources of financial exercise, reminiscent of renewable power, tourism, and know-how.
General, diversifying their economies away from oil is seen as a means for the Center Japanese oil states to make sure their long-term financial stability and sustainability. By having a extra various and resilient financial system, they will higher climate financial downturns and different challenges, and proceed to thrive sooner or later.
How can buyers profit?
There’s no denying that shifting in the direction of a extra sustainable future is smart. Not simply from an environmental standpoint, however from an funding one as properly. There’s a big push for brand spanking new applied sciences and methods to make our financial system cleaner, and this creates an enormous alternative for firms.
In our Clean Tech Kit, we use the ability of AI to take a position throughout a spread of various inexperienced applied sciences. These embody renewable sectors reminiscent of EV producers and infrastructure producers, hydrogen gasoline cell tech, various fuels, battery manufacture, waste discount and good water applied sciences.
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This consists of three ETFs, plus a weekly allocation to between 16-19 particular person shares out of a complete universe of 58.
It’s like having knowledgeable funding supervisor, proper in your pocket.
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