Saudi Arabia Invests $1 Billion In Potential Tesla Rival (cnn.com)

Saudi Arabia is investing more than $1 billion in Lucid Motors, an electric car startup that may give Tesla a run for their money. CNN reports: Lucid is planning a new high-performance electric car. It said the investment from Saudi Arabia's sovereign wealth fund announced Monday will allow it to finish engineering on its first car, the Lucid Air, as well as build a factory in Casa Grande, Arizona, and begin to sell the car by 2020. Saudi Arabia is already a big investor in Tesla. Last month Tesla CEO Elon Musk disclosed that the Saudis had taken nearly a 5% stake in his electric car company.

Musk said that the Saudis had been urging him for almost two years to take Tesla private, offering to provide funds necessary to do so. (Musk announced the plan to go private in August but quickly dropped the idea.) Saudi Arabia is investing in electric vehicles to diversify away from its dependence on oil. Lucid's Chief Technology Officer, Peter Rawlinson, was formerly a vice president and chief vehicle engineer at Tesla. He helped design the Model S, the company's breakthrough car. He left Tesla in 2012, shortly after the Model S went into production.

Comments

a bit too quick to declare it a rival.

[aepervius]

Since when firm which have not yet even engineered a car , much less have a prototype may "give tsla a run for their money" ?

Emphasis mine

Lucid is planning a new high-performance electric car. It said the investment from Saudi Arabia's sovereign wealth fund announced Monday will allow it to finish engineering on its first car, the Lucid Air, as well as build a factory in Casa Grande, Arizona, and begin to sell the car by 2020. Saudi Arabia is already a big investor in Tesla. Last month Tesla CEO Elon Musk disclosed that the Saudis had taken nearly a 5% stake in his electric car company.

Re:I smell a rat

[Xest]

No, Saudi Arabia got a shock when oil dropped from $120 per barrel down to around $30 per barrel in 2014 as it plunged their economy into deficit. This gave them a massive wake up call and created a realisation that they can't depend on oil forever.

They were surprisingly smart, where most countries such as the UK and Russia have squandered their oil wealth with nothing to show for it, other countries like Norway set up a sovereign wealth fund to see them into the future. Saudi Arabia is taking this approach of forward thinking too, and planning for the future whilst it has oil wealth, rather than waiting until the oil wealth runs out then thinking "Right, now what?" when it's ultimately too late.

This decision to plan for the future has been cemented into reality in a number of very visible ways, from using it's massive investment fund to start focussing on future tech that will only grow in value going forward such as renewables and electric cars, by strengthening it's base economy through simple things such as liberalising it's approach to women. A key realisation was that the Saudi economy could literally double in size by allowing the half of it's population that are not currently allowed to work on equal terms to do so. It will be a long process as it requires changing attitudes when there are still very dangerous hard liners in the country but we've already seen some fairly big leaps towards it, such as allowing women to drive, and allowing women to make up over 30% of the ruling council, which interestingly is a better male-female ratio than most Western democracies. When only 50% of your working age population are allowed to work, enabling the other 50% to do so as a way to obtain a quick, easy, future proof, baseline economic boost is really a no brainer.

Furthermore, we've seen things such as purges of the corrupt elite to drive corruption out the economy, which can have severe consequences as we see in Russia - where Russia has masses of natural resource wealth, it gets filtered off into Swiss and Cayman bank accounts of only a handful of individuals to the detriment of the wider and long term health of the country. In fact, the only reason Russia with all it's potential isn't a wealthy modern economy across the vast majority of it's territory and has massive pockets of 3rd world levels of poverty is almost entirely because of corruption - even where economic mismanagement is a problem, such mismanagement usually occurs precisely to aid corruption.

So it's fairly clear that Saudi Arabia is one of a few countries that gets that oil isn't going to be around forever, and that is liberalising it's economy to cater to the realisation of that fact in many ways, from more forward thinking investments, to enfranchising women, to tackling corruption. It's likely Saudi Arabia will always be, or at least for the next few decades a fairly conservative country, but that doesn't appear to be a complete barrier now to modernising their nation as it has been for the last few decades, oil is no longer king, precisely because they saw how badly oil as a dependency can let them down in 2014.

Don't assume countries can't change and that because they were dependent on oil that they'll always be dependent on oil, Saudi Arabia is undergoing a very silent, but very rapid change to make sure that it's secure even if oil prices collapse. They've still got a lot of work to do, but the trajectory should be abundantly clear to anyone paying attention to the changes the country has undergone over the last few years.

Re:Rei, come on in, you're needed!

[Rei]

Actually, I wish Lucid well. They seem to know what they're doing and have a reasonable strategy. They're way behind the curve and have a lot of slog ahead of them, but I think they could become a legitimate minor player on the high end. And that's rather high praise from me compared to my take on many EV startups.

Re:Rei, come on in, you're needed!

[lgw]

Mercedes has yet to run out of people who can afford $120,000-240,000 AMG models. The Model S is a mid-tier luxury car - plenty of volume there as luxury cars go. That's not really the point, is it?

Tesla's future is about the Model 3, not the high-end stuff. If they're making any kind of profit on them now, that's great long term, as their per-unit cost will fall over time. The question is whether they can make it through the next 6 months.