Lucid Motors Closer to Launching its IPO in a SPAC Deal with Churchill Capital at a $12 Billion Valuation

author: Eric Walz   

The Lucid Air sedan is strong challenger to the Tesla Model S.

Rumors of a potential deal that would result in California luxury electric vehicle startup Lucid Motors becoming a U.S. listed public company has been swirling around for the past several months. Now sources have told Reuters that a deal could be just weeks away.

According to the sources, Lucid Motors is close to a deal to go public at a $12-billion valuation after veteran dealmaker Michael Klein's special purpose acquisition company (SPAC) Churchill Capital IV Corp launched a financing effort to back the transaction, people familiar with the matter said on Tuesday.

Churchill Capital IV has initiated talks with investors to raise more than $1 billion by selling shares in a private investment in public equity (PIPE) transaction for the deal with Lucid Motors, the sources said. The size of the PIPE could reach $1.5 billion or more based on investor demand, one source added.

These funds would be in addition to the $2 billion Churchill Capital IV raised in an initial public offering (IPO) in July on the New York Stock Exchange. 

Lucid and Klein have already agreed on the key terms of the deal, according to the sources that spoke with Reuters. 

If the PIPE fundraising is successful, a deal could be announced as early as this month, according to the sources, who requested anonymity to discuss the confidential details. 

SPAC's are shell companies formed to raise funds via an IPO to finance a merger or acquisition with a privately held company. A SPAC is often referred to as a "blank check" company and are typically used by startups to attract new funding on the stock market and an alternative way to go public over a traditional IPO.

Investors in SPACs range from well-known private equity firms to the general public.

The money raised is held escrow until a combination transaction closes. However, if no acquisition is made within 24 months, the SPAC is dissolved and funds are returned to investors. 

In 2020, SPAC deals were a hot new trend in the tech industry, especially for electric vehicle startups and related companies. The possible merger between Lucid Motors and Klein's Churchill Capital IV Corp would be the latest in a series of high-profile SPAC deals by electric vehicle startup and related companies. 

The trend resulted in the recent IPOs hydrogen fuel cell truck startup of Nikola Corp, Lordstown Motors, Fisker Inc. and Volkswagen-backed lidar developer QuantumScape and Volvo-backed lidar startup Luminar. 

Churchill Capital IV's stock also jumped on the news of a possible merger with Lucid and was trading up around 30% on Wednesday reaching $52.20. The company's share price has surged more than 300% since January after Bloomberg News first reported that Churchill was in talks to merge with Lucid.

Lucid Motors is one of the most promising EV startups to emerge since Tesla and the company's possible U.S. IPO has gained the attention of investors that are looking for the next big thing in the EV sector.

Lucid is also one of the most well funded EV startups. The company received a $1 billion investment from Saudi Arabia's Public Investment Fund (PIF) in 2018. The PIF invests in renewable energy and green technologies, such as electric cars.

Lucid was founded in 2007 as Atieva Inc. by former Tesla executive Bernard Tse and entrepreneur Sam Weng. Atieva originally planned to build batteries and electric powertrains to sell to other automakers, but in 2016 decided to build its own vehicle. 

The company is based in Newark, California.

Lucid developed a luxury, performance electric sedan to rival the Tesla Model S called the Air sedan. The production version of the flagship Air sedan was officially unveiled in Sept 2020. The electric Air sedan will be available to the first reservation holders this spring with the launch of the limited-production Air Dream Edition. 

The more affordable Air Pure will be available in early 2022 and is priced at $77,400 before incentives, such as the federal EV tax credit of $7,500.

Lucid says its ultra-luxurious Air sedan is the "world's most advanced electric car" and it will define Lucid as a company. The Air made its public debut at the New York International Auto Show in April 2017.  

The Air's advanced electric powertrain offers up to 1,080 horsepower and can reach 0 to 60 mph in 2.5 seconds. The early Air prototype reached speeds of 235 mph at the Transportation Research Center (TRC) facility in Ohio. 

The Air sedan can travel over 500 miles on a single charge. In 2018, Lucid announced an agreement with EV charging operator Electrify America, giving Lucid's customers access to a nationwide ultra-fast DC charging network to charge their vehicles.

Lucid's experienced management team brings a wealth of auto industry experience to the young company.

Lucid CEO Peter Rawlingson was a former Tesla VP of vehicle engineering and worked under Elon Musk as chief designer of the Tesla Model S. Prior to Tesla, Rawlinson was Chief Engineer at Lotus Cars and Principal Engineer at Jaguar Cars.

Rawlinson replaced former Lucid CEO and co-founder Sam Weng who retired from the company in 2019.

Also in 2019, Lucid hired another former Tesla executive Peter Hochholdinger as vice president of vehicle manufacturing. Prior to joining Lucid, Hochholdinger also worked at Tesla overseeing the production of the Model 3.  At Lucid, Hochholdinger is leading the company's global manufacturing operations and manufacturing engineering at its factory in Arizona. 

Prior to Tesla, Hochholdinger spent 24 years at Audi, where he rose to Senior Director of Production for Audi A4, A5, and Q5, overseeing the assembly of over 400,000 cars annually.

Lucid's EV factory in Casa Grande, Arizona is currently under construction. Lucid broke ground on the EV factory in Dec 2019. 

Lucid's planned IPO comes as rival Tesla stock price has soared 740% over the past year, making Tesla the world's most valuable automaker. Tesla's soaring stock price has renewed investor interest in EVs and related technologies, which might help Lucid to raise billions of dollars with its IPO.

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.