Saudi Arabia's FIP invests more than a billion dollars in carmaker Lucid Motors

DUBAI (Reuters) – Saudi Arabia's Public Investment Fund (PIF) has agreed to invest more than $ 1 billion in Lucid Motors, bolstering emerging competition faced by US electric vehicle manufacturer Tesla Inc. (TSLA.O).

The funding will enable Lucid, based in Silicon Valley, to launch the commercial launch of its Lucid Air electric vehicle in 2020, the PIF said in a statement on Monday. Lucid joins the Daimler property (DAIGn.DE) Mercedes, BMW (BMWG.DE) and Volkswagen (VOWG_p.DE) The Audi and Porsche divisions in the battle for dominance in the market of high-end battery cars.

Tesla shares initially fell 2.2% in Monday's announcement, before recovering in positive territory.

In August, Tesla founder Elon Musk said the Saudi sovereign wealth fund could help him take his company privately.

Lucid's investment, estimated at more than $ 1 billion, but has not given an exact figure, is also part of Saudi Arabia's plan to create an environmentally friendly economy, diversify Kingdom and no longer depend on crude oil.

"They're not just a financial partner, they're a strategic partner," Peter Rawlinson, chief technology officer at Lucid, told Reuters.

"That's all the capital we need for three things: continue car development, build the plant in Arizona and initiate deployment of our global distribution strategy that will begin in the United States as this Is our first market ". he said.

The company might consider selling in China or building SUVs at a later date, Rawlinson said.

He said the company believed itself less a direct competitor with Tesla than with luxury gas car manufacturers like Audi or BMW.

A FIP representative said that by investing in the electric vehicle market, "the PIF is exposed to long-term growth opportunities, supporting innovation and technology development and generating revenue and diversification sector for the Kingdom of Saudi Arabia.

Getting cheap capital is a constant challenge for automakers, who can spend $ 1 billion or more in engineering a unique new model.

Based in Newark, California, Lucid Motors was founded in 2007 under the name Atieva by Bernard Tse, former vice president and board member of Tesla, and Sam Weng, former executive of Oracle Corp and Redback Networks.

Earlier Monday, PIF announced it had raised an $ 11 billion international syndicated loan for general purposes.

The fund has already made substantial commitments for other environmentally friendly projects, including renewable energy and recycling, as well as for technology companies or investments, including a $ 45 billion investment to invest in a technology fund. led by SoftBank Group Corp.9984.T).