Electrified car startup Lucid Motors is brief of cash and weighing its options
The Lucid Air Lucid
Build or sell? That’s the choice faced by electrical vehicle startup Lucid Motors, which is considering several acquisition offers even as it raises money to build its own assembly plant for its Tesla Model S rival, the Lucid Air.
Contrary to some reports, Ford is still very much interested in acquiring the Silicon Valley-based startup, according to one person very close to the negotiations. Jim Hackett, Ford’s fresh CEO, visited the company with a number of executives on June 28. Ford subsequently introduced Lucid with a draft contract called a term sheet. Even if Lucid agreed to sell, there would be a period of research and due diligence before the acquisition closed.
However, Recode has been told that at least two other unnamed companies are also interested in acquiring the startup, and that the Series D funding round is proceeding in parallel. One source describes the fundraising as “a work in process,” with Lucid sitting on financing offers of more than $200 million while it considers selling the company outright.
Lucid has had a turbulent history. Founded as Atieva in two thousand seven by an ex-vice president of Tesla, the company primarily focused on batteries and drivetrains for electrical cars and buses, building up a valuable store of patents. Early in 2014, Beijing Automotive Industry Holding, one of China’s leading state-owned carmakers, and LeEco, a Chinese internet company, invested $100 million so that Atieva could develop its own vehicle.
BAIC was meant to help build and market a sedan to rival the Tesla Model S in China. However, BAIC’s involvement did not last long. “They wished to be in control of the company,” said a source close to Lucid. “That was very disruptive in terms of day-to-day operations.” In April 2016, BAIC sold its shares, which ended up in the mitts of LeEco’s holder, billionaire Jia Yueting, two sources confirmed to Recode.
As it turned out, Jia was just as disruptive as BAIC. In the summer of 2014, he had calmly formed his own EV company, Faraday Future, to develop and build yet another rival high-end electrified car. Faraday Future has since suffered a series of high-profile mishaps, including a failed demonstration of autonomous technology at CES and the suspension of a $1 billion factory construction project in Nevada.
In May, Jia resigned from LeEco’s parent company amid concerns over its liquidity and his individual finances. Earlier this month, it was reported that Jia said he had sold his stake in Lucid Motors for several hundred million dollars. Lucid would be delighted to see the back of Jia and any durable association with the troubled Faraday Future. However, a source close to Lucid says that reports of Jia selling his shares are very likely untrue.
Lucid Motors did not instantaneously react to requests for comment.
Meantime, development of the $60,000 Lucid Air has been proceeding well, and it was recently shown reaching two hundred thirty five mph on a test track. However, Lucid has had its own setbacks, including abandoning attempts to design its own self-driving technology in favor of using a semi-autonomous system from Mobileye, now part of Intel.
Lucid plans to build an assembly plant in China, which would be financed entirely by local and regional government incentives. The site of its proposed U.S. factory, Casa Grande, Ariz., is being somewhat less generous. Lucid has a $1.Five million job-training grant from Arizona and is negotiating a further $Five million grant, according to a spokesperson for the state’s commerce authority. It could also apply for a tax credit program worth up to another $40 million.
However, the make-or-break loan for the $700 million facility would be a U.S. Department of Energy program to help build advanced-technology car plants. Tesla benefited from a $465 million DOE loan in 2010, while Ford secured one for $Five.9 billion. But because the loan reimburses expenses rather than paying them up front, Lucid cannot stir forward until it has financing in place.
Lucid began its fourth round of institutional fundraising earlier this year, with the help of investment bank Morgan Stanley. Ford’s acquisition suggest came as a surprise, said a source close to Lucid: “The bank approached Ford to see if they dreamed to participate in the Series D. They came back and said they desired to acquire.”
Global carmakers usually timid away from investments where they would be minority shareholders. Buying Lucid outright would let Ford loosely use its core technologies in powertrains and batteries, and secure a valuable hoard of patents for the future.
It could also mean the Casa Grande factory never gets built, thinks Joe Paluska, an automotive industry consultant. “My individual point of view is that Lucid is incapable to come to market as Lucid, due to the significant financing and operational hurdles that face any Tesla challenger,” he said. “A more likely screenplay is that they are acquired by a more traditional carmaker who may need a premium EV play to rival.”
Mark Harris is an investigative technology reporter based in Seattle. In 2014, he was Knight Science Journalism Fellow at MIT, and in two thousand fifteen he won the AAS Kavli Science Journalism Gold Award. Reach him @meharris.
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Electrified car startup Lucid Motors is brief of cash and weighing its options
Electrified car startup Lucid Motors is brief of cash and weighing its options
The Lucid Air Lucid
Build or sell? That’s the choice faced by electrified vehicle startup Lucid Motors, which is considering several acquisition offers even as it raises money to build its own assembly plant for its Tesla Model S rival, the Lucid Air.
Contrary to some reports, Ford is still very much interested in acquiring the Silicon Valley-based startup, according to one person very close to the negotiations. Jim Hackett, Ford’s fresh CEO, visited the company with a number of executives on June 28. Ford subsequently introduced Lucid with a draft contract called a term sheet. Even if Lucid agreed to sell, there would be a period of research and due diligence before the acquisition closed.
However, Recode has been told that at least two other unnamed companies are also interested in acquiring the startup, and that the Series D funding round is proceeding in parallel. One source describes the fundraising as “a work in process,” with Lucid sitting on financing offers of more than $200 million while it considers selling the company outright.
Lucid has had a turbulent history. Founded as Atieva in two thousand seven by an ex-vice president of Tesla, the company originally focused on batteries and drivetrains for electrical cars and buses, building up a valuable store of patents. Early in 2014, Beijing Automotive Industry Holding, one of China’s leading state-owned carmakers, and LeEco, a Chinese internet company, invested $100 million so that Atieva could develop its own vehicle.
BAIC was meant to help build and market a sedan to rival the Tesla Model S in China. However, BAIC’s involvement did not last long. “They desired to be in control of the company,” said a source close to Lucid. “That was very disruptive in terms of day-to-day operations.” In April 2016, BAIC sold its shares, which ended up in the mitts of LeEco’s possessor, billionaire Jia Yueting, two sources confirmed to Recode.
As it turned out, Jia was just as disruptive as BAIC. In the summer of 2014, he had calmly formed his own EV company, Faraday Future, to develop and build yet another rival high-end electrical car. Faraday Future has since suffered a series of high-profile mishaps, including a failed demonstration of autonomous technology at CES and the suspension of a $1 billion factory construction project in Nevada.
In May, Jia resigned from LeEco’s parent company amid concerns over its liquidity and his individual finances. Earlier this month, it was reported that Jia said he had sold his stake in Lucid Motors for several hundred million dollars. Lucid would be delighted to see the back of Jia and any protracted association with the troubled Faraday Future. However, a source close to Lucid says that reports of Jia selling his shares are most likely untrue.
Lucid Motors did not instantly react to requests for comment.
Meantime, development of the $60,000 Lucid Air has been proceeding well, and it was recently shown reaching two hundred thirty five mph on a test track. However, Lucid has had its own setbacks, including abandoning attempts to design its own self-driving technology in favor of using a semi-autonomous system from Mobileye, now part of Intel.
Lucid plans to build an assembly plant in China, which would be financed entirely by local and regional government incentives. The site of its proposed U.S. factory, Casa Grande, Ariz., is being somewhat less generous. Lucid has a $1.Five million job-training grant from Arizona and is negotiating a further $Five million grant, according to a spokesperson for the state’s commerce authority. It could also apply for a tax credit program worth up to another $40 million.
However, the make-or-break loan for the $700 million facility would be a U.S. Department of Energy program to help build advanced-technology car plants. Tesla benefited from a $465 million DOE loan in 2010, while Ford secured one for $Five.9 billion. But because the loan reimburses expenses rather than paying them up front, Lucid cannot stir forward until it has financing in place.
Lucid began its fourth round of institutional fundraising earlier this year, with the help of investment bank Morgan Stanley. Ford’s acquisition suggest came as a surprise, said a source close to Lucid: “The bank approached Ford to see if they desired to participate in the Series D. They came back and said they dreamed to acquire.”
Global carmakers usually timid away from investments where they would be minority shareholders. Buying Lucid outright would let Ford loosely use its core technologies in powertrains and batteries, and secure a valuable hoard of patents for the future.
It could also mean the Casa Grande factory never gets built, thinks Joe Paluska, an automotive industry consultant. “My private point of view is that Lucid is incapable to come to market as Lucid, due to the significant financing and operational hurdles that face any Tesla challenger,” he said. “A more likely script is that they are acquired by a more traditional carmaker who may need a premium EV play to rival.”
Mark Harris is an investigative technology reporter based in Seattle. In 2014, he was Knight Science Journalism Fellow at MIT, and in two thousand fifteen he won the AAS Kavli Science Journalism Gold Award. Reach him @meharris.
Subscribe to the Recode newsletter
Sign up for our Recode Daily newsletter to get the top tech and business news stories delivered to your inbox.