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Tesla rival Lucid Motors announces US$11.75bn SPAC deal to go public

The combination with a SPAC and fresh investment will value Lucid at US$24bn and give management around US$4bn to invest.

Tesla rival Lucid Motors announces US$11.75bn SPAC deal to go public
Lucid Air - image source: @LucidMotors / Twitter

Lucid Motors has agreed to merge with Churchill Capital Corp IV, a New York listed special-purpose acquisition company (SPAC), which will see the Silicon Valley based luxury electric vehicle (EV) company become a publicly traded stock.

The deal has a transaction equity value of US$11.75bn and brings fresh investment, at US$15 per share, to value the new entity at US$24bn – with US$4.4bn of cash included to fund Lucid.

Such deals are referred to as PIPE (private investment in a public equity) transactions.

Proceeds are earmarked to accelerate the 2021 launch of Lucid Air, a luxury EV sedan, which is set to be followed by the Lucid Gravity, a luxury electric SUV slated for 2023.

The Air sedan is designed to have a 500-mile range and is said to be capable of 0 to 60 mph in less than 2.5 seconds.

"Lucid is proud to be leading a new era of high-technology, high efficiency zero-emission transportation,” said Peter Rawlinson, Lucid’s chief executive and chief technology officer.

“Through a ground-up rethinking of how EVs are designed, our in-house-developed, race-proven technology and meticulous engineering have enabled industry-leading powertrain efficiency and new levels of performance. Lucid is going public to accelerate into the next phase of our growth.”

Lucid is based in the San Francisco Bay Area – in Newark, California – at a facility in the same neighbourhood as Tesla’s first factory.

The earlier stage EV group will hope to follow in the footprints that saw Tesla usurp the Detroit motor-city cabal of gasoline fuelled car makers to become the world’s most valuable vehicle manufacturer.

Lucid’s SPAC deal comes as EV market is heating up with competition, as the likes of Ford and General Motors scramble to meet the challenge laid by Tesla.

Building up manufacturing in Arizona

A phased expansion aims to scale up to 365,000 units per year over a three-year period. The first phase new facility was completed in December and the first model is targeted to roll-off in spring this year.

Lucid was already backed by Saudi Arabia’s Public Investment Fund, which also bought shares in the PIPE transaction.

The PIPE brings Lucid a built-in register of big name investors including funds managed by BlackRock, Fidelity, Franklin Templeton, Neuberger Berman, Wellington Management and Winslow Capital Management.

Churchill Capital Corp IV itself is an entity founded by Michael Klein who is commonly described in the business pages as a billionaire investor, Wall Street ‘rainmaker’ and former Citigroup banker.

Klein, Churchill Capital Corp IV chairman, in the statement, said: “CCIV believes that Lucid's superior and proven technology backed by clear demand for a sustainable EV make Lucid a highly attractive investment.

“We are pleased to partner with Peter and the rest of Lucid's leadership team as it delivers the highly anticipated Lucid Air to market later this year, promising significant disruption to the EV market and creating thousands of jobs across the US."

In New York, speculation over the Lucid deal saw the SPAC’s stock soar in the past month.

Churchill Capital Corp IV had risen to be priced at US$57.37 at Monday’s close, prior to the deal confirmation, and in Tuesday’s pre-market indications the SPAC is set to open US$18 lower at around US$39.35 per share.

Details of the PIPE and lock-up

The transaction sees a total investment of US$4.6bn comprising Churchill’s US$2.1bn of cash and a US$2.5bn investment from the PIPE investors, at US$15 per share.

Participants in the PIPE transaction are subject to a stock lock-up so won’t be able to sell any of their acquired shares until September, existing investors agree not to sell for six months, and Churchill’s backer committed not to sell for at least 18 months.

The transaction is due to close in the second quarter of 2021.

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