By Tom Arnold
DUBAI (Reuters) - Saudi Arabia's Public Investment Fund (PIF) has agreed to invest more than $1 billion in Lucid Motors, adding to the emerging competition facing U.S. electric vehicle maker Tesla.
The funding will enable Silicon Valley-based Lucid to achieve the commercial launch of its Lucid Air electric vehicle in 2020, PIF said as it announced the deal on Monday, joining Daimler-owned Mercedes, BMW and Volkswagen's Audi and Porsche divisions in the battle for dominance in the market for premium battery cars.
The deal comes only a few weeks after Tesla founder Elon Musk said the Saudi sovereign wealth fund could help him to take his company private. Shares in Tesla initially dropped 2.2 percent on Monday's announcement before recovering to positive territory.
The Lucid investment, which PIF said is more than $1 billion but failed to give an exact figure, is also part of Saudi Arabia's efforts to build an environmentally friendly economy as it presses ahead with the Vision 2030 plan to diversify the kingdom away from reliance on crude oil.
"By investing in the rapidly expanding electric vehicle market, PIF is gaining exposure to long-term growth opportunities, supporting innovation and technological development and driving revenue and sectoral diversification for the Kingdom of Saudi Arabia," a PIF representative said.
Obtaining cheap capital is a constant challenge for carmakers, which can spend $1 billion or more engineering a single new model.
Based in Newark, California, Lucid Motors was founded in 2007 as Atieva by Bernard Tse, a former Tesla vice president and board member, and Sam Weng, a former executive at Oracle Corp and Redback Networks.
The funding, which will be made through a special-purpose vehicle wholly owned by PIF, will be used by Lucid to complete development and testing of the Lucid Air, construct a factory in Arizona and start production of the car.
"The convergence of new technologies is reshaping the automobile, but the benefits have yet to be truly realised," said Peter Rawlinson, Lucid's chief technology officer.
"This is inhibiting the pace at which sustainable mobility and energy are adopted. At Lucid, we will demonstrate the full potential of the electric connected vehicle in order to push the industry forward."
Earlier on Monday, PIF said it had raised an $11 billion international syndicated loan for general corporate purposes.
The fund has already made substantial commitments to other environmentally friendly projects, including renewables and recycling, and to technology companies or investments, including a $45 billion agreement to invest in a giant technology fund led by Japan’s SoftBank Group Corp.
(Reporting by Tom Arnold; Editing by Susan Fenton and David Goodman)
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Updated Date: Sep 18, 2018 00:05:20 IST