News Ticker

Is Lucid Looking to get Acquired?

Courtesy of Lucid Motors

By Roland Murphy for Arizona Builder’s Exchange

The war to unseat Tesla as king of the lucrative (if still fledgling) luxury electric car market has taken more twists than Game of Thrones recently. The body count continued to rise earlier this month when Faraday Future announced it was scrapping its plan to build a $1B manufacturing plant in Nevada.

Could Lucid Motors, which has plans for a $700M facility in Casa Grande, be next? After an article in Bloomberg Technology July 17, rumors are swirling around automotive and financial markets that Lucid is courting Ford Motor Company to buy it.

The speculation and chatter hasn’t been calmed by the fact that officials from neither Ford, Casa Grande nor Lucid are commenting on the possibility.

Bloomberg’s sources said while Ford isn’t currently interested in buying Lucid, a deal could not be ruled out down the road.

Asked by a reporter from the Casa Grande Dispatch for comment about the impact of a potential sale, City Manager Larry Rains declined, saying only, “We have not received anything to indicate that this is anything more than a rumor.”

However, a report Thursday, July 20 by Recode, poured gasoline on the speculation fire. The story claimed, “Contrary to some reports, Ford is still very much interested in acquiring the Silicon Valley-based startup, according to one person very close to the negotiations. Jim Hackett, Ford’s new CEO, visited the company with a number of executives on June 28. Ford subsequently presented Lucid with a draft contract called a term sheet. Even if Lucid agreed to sell, there would be a period of research and due diligence before the acquisition closed.”

Recode further claimed at least two other yet unnamed companies have expressed interest in acquiring Lucid.

The Search for Funding

Faraday had already sunk at least $120M into its Nevada facility when it announced it was abandoning its plans and claimed it was going to look for an existing facility in Nevada or California to produce its vehicles, according to the Washington Post.

Faraday officials told the Post the move was the result of a shift in strategy. One probable contributor to that shift came as a result of a court in Shanghai seizing $182M in assets from LeEco and its founder Jia Yueting earlier this month. LeEco was a prominent investor in both Faraday and Lucid.

Lucid representatives said last week its Casa Grande plans were still on track and declined to comment on rumors LeEco had sold its shares in the company.

To date, according to Bloomberg, Lucid has raised more than $100M in total from Asian investors. It is currently seeking its fourth round of funding, known as Series D.

Citing an appearance at April’s New York International Auto Show, Bloomberg quoted Lucid Chief Technology Officer Peter Rawlinson as saying, “We don’t have the money in place. That’s why we need to secure Series D,” He added, “It would be irresponsible to start moving earth or start anything until we have a financial runway to execute that professionally and with absolute integrity.”

Lucid has hired Morgan Stanley to help with its fundraising efforts, according to Bloomberg.

Rawlinson told Bloomberg in another conversation the current fundraising efforts are going well. According to an April report on Motley Fool, Lucid expects to need $240M to get the Arizona factory up and running in the first of three planned phases. “That should allow the company to ramp up to producing about 8,000 to 10,000 vehicles per year, with production commencing in 2019,” the article said. “Only after all three stages are completed (expected around 2022 if all goes well) will the total investment reach $700M. At that point, the factory should have annual production capacity of 130,000 vehicles.”

Lucid may be pinning its financial hopes on the possibility of a $700M loan from the U.S. Department of Energy, according to multiple sources. Tesla received a similar loan for $465M through the department’s advanced car technology program in 2010. The Catch-22 there, however, is that those monies are used to reimburse expenditures. Lucid would still need to secure all its financing before the DOE money was even a viable consideration.

In addition to securing a variety of investors, Lucid has also won multiple incentive promises from various government entities, including the promise of a $5M grant from the Arizona Commerce Authority. Last December, ACA spokeswoman Susan Marie said Lucid also wants $1.5M for job training and that the company could, in theory, ultimately qualify for up to $40M if it creates all 2,000 jobs it eventually expects to. All the ACA monies are contingent on Lucid actually building the plant and hiring workers.

If Lucid’s plans come to fruition, its product would almost immediately be a disruptor in the luxury electric market. According to Auto Blog, Lucid’s “Air” sedan will have 1,000 horsepower, up to a 400-mile range and a starting price of around $60K.

Where Things Stand

Since announcing its intent to build in Casa Grande late last year, Lucid has made steady progress with the planning and approval process. Casa Grande approved zoning for and annexation of the 80-acre site in January. Pinal County approved an air quality permit in March and signed off on Lucid’s environmental controls.

For its part, Ford is looking to significantly expand its footprint in the electric vehicle market, having expressed an intent to electrify up to 40 percent of its offerings by 2020, according to Bloomberg. General Motors already has a long-range electric vehicle available.

Coincidentally, Tesla had considered Arizona as a potential site for its “Gigafactory” facility before ultimately choosing to build in Nevada. The company’s electric cars are built in California. A report this week by CNBC says Tesla is back in the market for a facility to build its planned SUV offering, and Arizona will likely be one of the considered sites.

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