Lucid Group (NASDAQ:LCID), a retailer of luxurious EVs in addition to superior battery tech, is at present relishing within the aura of getting achieved a serious milestone. With Lucid Air EVs now hitting the street, the inventory is approaching lofty ranges final seen within the pre-merger SPAC section.
— Lucid Motors (@LucidMotors) October 30, 2021
Lucid Group is an enchanting case research. It’s, in spite of everything, a purely American model. Nevertheless, as a result of important investments from high-profile entities within the Center East – primarily the Saudi Public Funding Fund (PIF) – the corporate is taking part in an important function within the ongoing inexperienced transformation of a area lengthy believed to be a playground of the massive oil trade.
Earlier than discussing the specifics of Lucid Group’s potential windfall, allow us to first check out Saudi Arabia’s auto market. The Kingdom is host to the most important such market within the GCC, accounting for round half of all automobile imports within the area. The graphic above provides an in depth geographical breakdown of automobile import sources. Keep in mind that as a result of an absence of public transportation, the per capita automobile possession in all the GCC is sort of excessive. Furthermore, Saudi Arabia can also be witnessing an auto increase of kinds at present, with feminine drivers now permitted to hit the street. In 2020, 3 million females have been projected to start driving in distinction to 500,000 extra males. This demographic skew in favor of feminine driving is predicted to proceed because the historic imbalance now corrects itself.
This brings us to the crux of the matter. Saudi Arabia’s imaginative and prescient 2030 aims to localize at least half of the current vehicle import volume, creating a large alternative for Lucid Group and different auto producers within the course of. In 2019, the Kingdom imported automobiles value $12.5 billion. Which means that by 2030, the Kingdom goals to provide no less than $6.25 billion value of vehicles domestically. To do that, Saudi Arabia has been in talks with a number of major auto manufacturers world wide, together with Ford, Chevrolet, Normal Motors, Nissan, and Toyota. The Kingdom goals to determine a vehicle manufacturing hub at its west coast, as per the reporting by Bloomberg. Furthermore, Schneider Electrical Saudi Arabia and GREENER by IHCC just lately signed a partnership agreement to develop e-mobility infrastructure within the Kingdom.
So, how does Lucid Group match into this rising paradigm? As we’ve coated repeatedly, Lucid Group is slated to determine a $3 billion manufacturing facility in Saudi Arabia by 2024. The Saudi Requirements and Metrology authority, in addition to the Kingdom’s funding minister, have given public statements on this regard. Up to now, Lucid Group is the one main EV producer to have laid out stable plans for establishing a serious footprint within the area. Which means that the corporate stands to take pleasure in a prolific first-mover benefit.
In one other essential announcement just lately, Saudi Arabia has now mandated that no less than 30 percent of the cars in the capital Riyadh would go electrical by 2030. The plan would see town’s carbon emissions halved over this decade. With a inhabitants of round 8 million folks, this initiative alone would create a requirement for over 2 million electrical automobiles by 2030. Keep in mind that luxurious SUVs represent round 20 % of the Kingdom’s imports at present. This situation matches snuggly with the launch of Lucid Group’s Gravity SUV in 2023.
Nonetheless, detractors would argue that Tesla (NASDAQ:TSLA), as the present EV chief, stands to achieve quite a bit from this ongoing inexperienced transition. Effectively, that is the place Lucid Group’s first-mover benefit involves play. First, as per the reporting by CNBC Arabia, Saudi Arabia constitutes the second largest marketplace for Lucid Air preorders, at present numbering round 13,000.
— CNBC Arabia (@CNBCArabia) October 28, 2021
Secondly, the Kingdom is at present flaunting the Lucid Air EV on varied boards, taking delight within the sizable stake that the Saudi PIF nonetheless maintains in Lucid Group. As an illustration, look no additional than the just lately concluded fifth version of the Future Funding Initiative Discussion board held on the King Abdulaziz Worldwide Convention Heart in Riyadh. The venue showcased Lucid Air EVs at a primary spot (see the pictures within the hyperlinked report), additional cementing the corporate’s first-mover benefit. I don’t spot any Tesla on the venue. Folks usually underestimate the facility of state patronage in Saudi Arabia, which stays a potent component for industrial success.
After all, this doesn’t preclude a Tesla footprint in a while. Nonetheless, the most important EV producer on this planet must set up a large manufacturing footprint within the Kingdom to benefit from the perks at present being availed by Lucid Group.