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Tesla Challenger Lucid Motors to go Public in a $24 Billion SPAC Deal

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【Summary】California luxury electric vehicle startup Lucid Motors will become the latest startup to merging with a special purpose acquisition company (SPAC) Churchill Capital IV (NYSE: CCIV) to become a publicly traded company. Lucid Motors is one of the most promising EV startups to go public since Tesla in 2010. The company's pending IPO is already attracting the attention of investors looking for the next big thing in the EV sector.

Eric Walz    Feb 23, 2021 8:15 AM PT
Tesla Challenger Lucid Motors to go Public in a $24 Billion SPAC Deal
The fully-electric Lucid Air sedan

California luxury electric vehicle startup Lucid Motors will become the latest startup to merging with a special purpose acquisition company (SPAC) Churchill Capital IV (NYSE: CCIV) to become a publicly traded company.

The two companies announced on Monday that both have agreed to the terms of the merger. The reports of a possible merger between Lucid Motors and CCIV were first reported in January by Bloomberg.

The transaction is expected to close in the second quarter of the year.

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

Lucid Motors is one of the most promising EV startups to go public since Tesla in 2010 and the company's pending IPO is already attracting the attention of investors looking for the next big thing in the EV sector.

"Lucid is proud to be leading a new era of high-technology, high efficiency zero-emission transportation," said Peter Rawlinson, CEO and CTO of Lucid. "Through a ground-up rethinking of how EVs are designed, our in-house-developed, race-proven technology and meticulous engineering have enabled industry-leading powertrain efficiency and new levels of performance. 

CCIV and Lucid are merging at a transaction equity value of $11.75 billion. The transaction values Lucid at an initial pro-forma equity value of approximately $24 billion at the PIPE offer price of $15.00 per share and will provide Lucid with approximately $4.4 billion in cash (assuming no existing CCIV shares are redeemed for cash at closing).

The deal with CCIV includes a private investment of $2.5 billion from Saudi Arabia's Public Investment Fund (PIF) and funds managed by BlackRock. The PIF fund is one of Lucid's biggest backers and previously invested $1 billion in Lucid Motors in Sept 2018.

The merger between Lucid Motors and Klein's Churchill Capital is the latest in a series of high-profile SPAC deals by electric vehicle startups and related companies who are turning to Wall Street to raise capital.

Others include the recent IPOs hydrogen fuel cell truck startup of Nikola Corp, electric vehicle startups Lordstown Motors and Fisker Inc., Volkswagen-backed lidar developer QuantumScape and Volvo-backed lidar startup Luminar.  

SPACs 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 as 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. 

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

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

Rawlinson set out to build a much more advanced electric car than the Tesla Model S with Lucid's proprietary powertrain technology. The result was the Lucid Air, a luxury-performance electric sedan.

Lucid says its ultra-luxurious Air sedan is the "world's most advanced electric car" and it will define Lucid as a company. Lucid's EV technology was developed in-house. 

The Air made its public debut at the New York International Auto Show in April 2017. 

"CCIV believes that Lucid's superior and proven technology backed by clear demand for a sustainable EV make Lucid a highly attractive investment for Churchill Capital Corp IV shareholders, many of whom have an increased focus on sustainability. We are pleased to partner with Peter and the rest of Lucid's leadership team as it delivers the highly anticipated Lucid Air to market later this year," said Michael Klein, Chairman and CEO of CCIV. 

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

The Air's unibody structure was designed around a powerful compact 113 kWh extended-range battery pack. For comparison, the battery in the 2020 Tesla Model S Performance is rated at 100 kWh.  

The Air sedan can also travel over 500 miles on a single charge, making it one of the longest range EVs in the world.

Lucid Motors also announced that the Air will also be the fastest charging electric vehicle, with the capability to charge at rates that will add up to 20 miles per minute. This translates into 300 miles of driving range with just 20 minutes of charging in real-world conditions.

Lucid has an agreement with EV charging operator Electrify America, giving its customers access to a nationwide ultra-fast DC charging network to charge their vehicles.

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In 2019, Rawlinson was tapped to replace co-founder Sam Weng as CEO of Lucid Motors when he retired from the company, although he still serves as Lucid's CTO. 

Also in 2019, Lucid hired former Tesla executive Peter Hochholdinger as vice president of vehicle manufacturing. Prior to joining Lucid, Hochholdinger oversaw the production of the Tesla Model 3. At Lucid, Hochholdinger is leading Lucid's global manufacturing operations and manufacturing engineering at its factory in Arizona and will oversee the production of the Air sedan. 

Prior to working at Tesla, Hochholdinger spent 24 years at Audi, where he rose to Senior Director of Production for the Audi A4, A5, and Q5 models.

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.

Financing from the merger with Churchill Capital will also be used to support expansion of Lucid's factory in Arizona, which is the first greenfield purpose-built EV manufacturing facility in North America, Lucid brake ground on the new factory in Dec 2019, which is called "AMP-1." The factory has already built pre-production models of the Lucid Air sedan.

Currently, Lucid's Arizona factory can produce 34,000 vehicles annually, but with a total of three planned expansions in the next few years, the site is expected to be capable of producing approximately 365,000 vehicles per year.

Just a few miles away from the factory is Lucid's powertrain manufacturing plant, LPM-1, where Lucid will manufacture battery packs and integrated drive units.

In the future, Lucid intends to leverage its technology portfolio and expertise in electrification to other industries, like Tesla has done with its energy storage devices. Lucid sees potential for use of its electric powertrain technology in aerospace, heavy machinery, agricultural industries, as well as energy storage applications in the residential, commercial and utility sectors.

In Oct 2020, Lucid Motors officially opened its "Lucid Studio" and service center in Beverly Hills, California. The Lucid Motors Design Studios will support the company's "direct to customer sales strategy."

Like rival Tesla, Lucid Motors will not have a traditional network of brick and mortar dealerships, so the retail spaces will serve as in-person design centers, where customers can go to see the Lucid Air sedan up close and select from the various vehicle options, as well as place their order. 

The Beverly Hills Studio & service center is the company's second retail location, the first to open is at Lucid's Newark, California headquarters. The Beverly Hills Lucid Studio is one of 20 set to open throughout North America by the end of 2021. 

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