Saudi investment fund invests $1 billion in Tesla rival
Elon Musk's rocky patch isn't getting any smoother. Only weeks after the Tesla founder and CEO proclaimed he would take his company private with the help of Saudi Arabia's sovereign wealth fund, the kingdom says it's investing $1 billion in another U.S. electric car maker.
Tesla stock dipped Monday on reaction to the news, the same day that the Saudi investment fund announced it had taken its first loan, an $11 billion borrowing from global banks, as it tries to expand its investments.
The Saudi Public Investment Fund said it would invest $1 billion in Newark, California-based Lucid Motors.
The investment "will provide the necessary funding to commercially launch Lucid's first electric vehicle, the Lucid Air, in 2020," the sovereign wealth fund said in a statement. "The company plans to use the funding to complete engineering development and testing of the Lucid Air, construct its factory in Arizona, enter production for the Lucid Air to begin the global rollout of the company's retail strategy starting in North America."
Lucid issued a statement quoting Peter Rawlinson, its chief technology officer, welcoming the investment. "At Lucid, we will demonstrate the full potential of the electric-connected vehicle in order to push the industry forward," he said.
Tesla did not immediate respond to requests for comment. Shares were up around 1% later on Monday after the initial stock dip on word of the Saudi investment in Lucid.
The news about his rival comes after Musk on Aug. 7 tweeted that he had "funding secured" to take Tesla private. Investors pushed Tesla's shares up 11 percent in a day, boosting its valuation by $6 billion. On Aug. 24, Musk announced the carmaker would remain public.
There are multiple reports that the U.S. Securities and Exchange Commission is investigating the disclosure, including asking board members what they knew about Musk's plans. Experts say regulators likely are investigating if Musk was truthful in the tweet about having the financing set for the deal. Musk later said the Saudi Arabia's Public Investment Fund would be investing in the firm, something Saudi officials never comment on.
Meanwhile Monday, the sovereign wealth fund, also known by the acronym PIF, for Public Investment Fund, said it had taken its first loan, an $11 billion borrowing. It did not say how it would use the money, only describing it as going toward "general corporate purposes."
The Las Vegas-based Sovereign Wealth Fund Institute estimates Saudi Arabia's PIF has holdings of $250 billion. Those include a $3.5 billion stake in the ride-sharing app Uber.
Saudi Arabia's 33-year-old Crown Prince Mohammed bin Salman has talked about using the country's PIF to help diversify the economy of the kingdom, which relies almost entirely on money made from its oil sales.
