Lucid Motors agrees to go public with $24-billion valuation

Lucid Motors Inc. is merging with a blank-check company run by financier Michael Klein that values the combined entity at a pro-forma equity value of $24 billion, the biggest in a series of deals involving electric-vehicle start-ups cashing in on investor appetite for battery-powered cars.

The electric car maker has shied away from comparisons to market leader Tesla Inc., but the public listing positions it to compete for a slice of what’s expected to become a rapidly growing market for EVs. The deal will generate about $4.4 billion in cash for the 14-year-old company, which plans to use the newly acquired funds to bring vehicles to market and expand its factory in Arizona.

Lucid is the latest beneficiary from a wave of investment targeting EV start-ups and next-generation automotive technology suppliers, sparked in part by a rally in Tesla shares over the last year as Wall Street seeks to match up investors with once-private ventures.

The reverse merger represents the largest injection of capital into Lucid since Saudi Arabia’s Public Investment Fund invested more than $1 billion in 2018. The agreement included a $2.5-billion private placement in public equity, the largest of its kind on record for a deal with a special-purpose acquisition company. It was led by existing investor Public Investment Fund as well as BlackRock, Fidelity Management, Franklin Templeton, Neuberger Berman, Wellington Management and Winslow Capital, according to a joint statement from Lucid and Churchill Capital Corp IV, the acquisition company.

The placement sold at $15 a share — or a 50% premium to Churchill’s net asset value — which translates to about $24 billion in pro-forma equity value, the companies said. The combined company has a transaction equity value of $11.8 billion.

Shares of Churchill fell as much as 34% in after-hours trading after closing at $57.37.

“I see the SPAC as just a tool, another lever to pull on, where we can accelerate our trajectory,” Lucid Chief Executive Peter Rawlinson said in an interview. “This is a technology race. Tesla gets this. It’s why they are so valuable, and Lucid also has the technology.”

The SPAC is the largest run by Klein, a former Citigroup Inc. investment banker who has played a prominent role in guiding the kingdom of Saudi Arabia’s investments, serving as an advisor to the Public Investment Fund. Among other deals, he advised on the Saudi Aramco initial public offering.

The Lucid transaction is expected to close in the second quarter.

Lucid will now start production of its first EV, a luxury sedan called the Air, in the second half of this year. The company had said deliveries of the $169,000 car would start in the second quarter.

Lucid forecasts deliveries of 20,000 vehicles in 2022 generating sales of $2.2 billion. It sees revenue rising to $5.5 billion and $9.9 billion in 2023 and 2024, respectively, according to a presentation made to investors posted to the company’s website. The company foresees positive earnings before interest, taxes, depreciation and amortization of $592 million in 2024.

Beyond its manufacturing capacity, the company expects to invest heavily in new products and will grow its workforce to 5,000 over the next year, Rawlinson said.

Lucid’s debut vehicle will be the closest car yet to challenge Tesla in the still niche market for premium EV sedans. The Air model has a range of 517 miles on a single charge, based on Environmental Protection Agency estimates. It can reach zero to 60 miles per hour in 2.5 seconds and has access to Electrify America’s network of DC fast chargers. That compares with the Model S Plaid Plus, which has a maximum range of around 520 miles, a zero-to-60 time of less than 2 seconds and access to Tesla’s nationwide network of fast chargers.

Bloomberg writer Dinesh Nair contributed to this report.