As Elon Musk Hunts Saudi Funding, Saudi Arabia Is Ready to Invest in a Tesla Rival: Report

It’s not a done deal just yet, but a high-tech Tesla rival, headquartered just a few miles away from Elon Musk’s Palo Alto, California base of operations, might receive the Saudi funding the Tesla CEO so desperately craves.

According to sources who spoke to Reuters, PIF, Saudi Arabia’s sovereign wealth fund, is ready to pour $1 billion into Newark, California-based Lucid Motors. The two entities have reportedly drawn up a term sheet for the deal, which would see the the Saudis become a majority owner of the private automaker.

What does Lucid have to offer the Saudis in return for the investment? A large, technologically advanced automobile.

Lucid Motors made a splash at the 2017 New York auto show with its Air — an electric sedan with style and range to spare. First revealed in December of 2016, the Air promises Mercedes-Benz E-Class-like size and S-Class-like interior volume, with pampered occupants able to travel up to 400 miles between charges.

To build the Air, Lucid needs cash. Last year saw the company push back the anticipated start of production to 2019 amid ongoing fundraising. The company hopes to build an assembly plant in Arizona in three phases, with mass production taking place by early next decade. Should the quarter-trillion Saudi fund come through, Lucid has it made.

Per the term sheet, PIF would initially invest $500 million, the sources said, with two subsequent cash dumps tied to production milestones. Though the Saudi fund remains bullish about the potential return from startup electric car makers, recent large investments in other ventures means PIF can’t fling money around with reckless abandon.

That’s something Musk might be dismayed to hear of. Tesla’s CEO said last week that he expects the Saudi sovereign wealth fund to put up much of the money needed to take his company private, though there’s no ironclad deal to back up his “funding secured” tweet at the moment.

While Lucid generated copious amounts of hype by playing up the most impressive Air model, the vehicle’s range actually starts at a modest $52,500 after a federal tax credit. For that sum, buyers would receive a sedan with 240 miles of range. Further up the trim ladder lies a 100 kWh and 130 kWh battery pack, capable of taking the Air 315 and 400 miles between charges, respectively. A planned twin-motor, all-wheel drive model reportedly packs 1,000 combined horsepower, warranting a six-figure price tag.

[Images: Lucid Motors]