The deal between Newark, California-based Lucid and Churchill Capital Corp IV is the largest in a series of such tie-ups involving EV companies and blank-check firms, also known as a special purpose acquisition companies, or SPACs.
Previous SPAC deals with EV start-ups such as Nikola, Fisker and Lordstown Motors garnered pro-forma valuations of less than $4 billion, but Lucid is farther along than those companies. Lucid is set to deliver its first vehicle – a luxury sedan called the Air – this spring.
The deal will generate about $4.4 billion in cash for expansion plans for Lucid, including its current factory in Arizona.
Shares of CCIV fell by roughly 30% to $40 in extended trading.
Lucid is led by ex-Tesla engineering executive and automotive veteran Peter Rawlinson, who joined the company as chief technology officer in 2013 before adding CEO to his responsibilities in April 2019. He will continue in those roles following the expected closure of the deal in the second quarter, according to the companies.
Lucid was founded in 2007 as Atieva, a name it now uses for its engineering and tech arm that supplies batteries to electric racing circuit Formula E. The company first focused on electric battery technology before changing its name and shifting to an electric vehicle manufacturer in 2016, three years after Rawlinson joined the company to lead its technology development.
Lucid had some difficulty obtaining capital to fund its plans until September 2018 when it received $1 billion from Saudi Arabia’s sovereign wealth fund.
Rawlinson last year described SPAC deals as quick money, but not enough capital to bring a vehicle to production in-house, which has led firms such as Fisker to seek contract manufacturers.
Prior to the announcement with Klein’s firm, Rawlinson said the company had the funding to start producing the Air at a plant in Casa Grande, Arizona, which is located southeast of Phoenix.
The new funding is expected to assist Lucid in its expansion plans. Rawlinson expects the Air to be the catalyst for a lineup of future all-electric vehicles, including an SUV starting production in early 2023 and more affordable vehicles down the line.
Lucid currently employs nearly 2,000 people, with 3,000 employees expected to be added in the U.S. domestically by the end of 2022, according to the company.
The deal includes a total investment of about $4.6 billion. It is being funded by $2.1 billion in cash from CCIV and a $2.5 billion fully committed PIPE at $15 per share by Saudi Arabia’s sovereign wealth fund as well as funds and accounts managed by BlackRock, Fidelity and others.
Read More: Electric vehicle firm Lucid Motors to go public in $11.8 billion blank-check merger