- Lucid (NASDAQ:LCID) has announced plans to open a production facility in Saudi Arabia
- The country will provide Lucid with $3.4 billion in financing and incentives
- Saudi Arabia’s investment fund owns a 60% stake in LCID stock
Lucid is in the spotlight today after unveiling plans for a production facility in Saudi Arabia. Year-to-date (YTD), the electric vehicle (EV) stock has lost about 50% of its market capitalization. Shares of LCID are up roughly 9% so far today.
Upon completion, Lucid’s new facility will be capable of manufacturing 155,000 vehicles a year. The facility will also initially only serve the Saudi Arabian market. Over the next 15 years, Lucid is expected to receive up to $3.4 billion in financing and incentives from Saudi Arabia.
Lucid has a tight-knit relationship with Saudi Arabia, as the country’s Public Investment Fund (PIF) has a 60% stake in the company. PIF acquired this stake back when Lucid was still a private entity. Last month, the EV company reached an agreement with Saudi Arabia for the country to purchase 100,000 vehicles over the next 10 years.
While it may not immediately affect production output, this new facility is still huge news for the EV maker. Let’s get into the details.
LCID Stock: Lucid Discloses Saudi Expansion Plans
Lucid’s production facility in Arizona will eventually have an output of 350,000 EVs per year. So, coupled with the Saudi facility, the company now expects a capacity of 500,000 cars per year by 2025. That estimate is five years ahead of the previous estimate of 500,000 vehicles by 2030.
During its first-quarter earnings, Lucid gave 2022 production guidance of between 12,000 to 14,000 vehicles. This figure was reduced from a previous estimate of 20,000 vehicles due to component shortages.
Looking forward, Saudi Arabia has big plans to “turn the region on the west coast near Jeddah into a hub for manufacturing cars.” Last October, Industry and Minerals Resources Minister Bandar Alkhorayef said the country was seeking to establish relationships with other automakers and EV battery companies as well.
Minister of Investment Khalid al-Falih has also said the country is open to working with more EV companies. “[O]ur intent is not to stop with Lucid,” he said.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.