Lucid might be Drawing Inspiration from Rivian's Strategy?
Lucid might be Drawing Inspiration from Rivian's Strategy?
The automotive sector has a tendency to mimic successful strategies of its competitors. When a company like Lucid achieves success with a specific approach, other brands in the vicinity tend to pay attention. There are indications that Lucid is engaging in discussions with several automakers regarding a possible collaboration – potentially resembling Rivian's collaboration deal with Volkswagen.
Lucid CEO Peter Rawlinson mentioned that the firm is currently engaged in negotiations with a couple of automakers to provide its technology. Lucid's EV technology is highly regarded in the industry, and the company aims to share its technology in exchange for a partner with a robust supply chain and manufacturing operations.
Lucid has previously agreed to a partnership with luxury British automaker Aston Martin. According to the agreement, Lucid will supply its EV powertrain technology for Aston Martin to develop a new EV platform.
"It would be delightful if we could offer technology to a traditional automaker, aiding them in their transition towards sustainability," said Rawlinson during an interview with Bloomberg. "Perhaps we can derive benefits from their parts inventory and other business aspects."
Why it's important
Potential partnerships or deals can yield substantial returns for emerging EV manufacturers. For instance, Rivian benefited from a collaboration deal with Volkswagen worth up to $5.8 billion. Volkswagen initially invested $1 billion into Rivian, and the remaining $1.3 billion will be injected upon the completion of the joint venture. The remaining $3.5 billion is due to be obtained through equity convertible notes and other debt at a later stage.
The timing could not be more suitable for Rivian, as the company prepares to launch its R2 crossover in 2026. Volkswagen will bear 75% of the joint venture's platform costs, with Rivian covering the remaining 25%.
Lucid is in a similar position, having recently launched its Gravity SUV and planning to introduce a series of mid-sized EVs targeting Tesla's core Model 3 and Model Y markets. The first vehicle will be an electric SUV priced around $50,000, with production slated to begin in 2026.
Lucid could certainly benefit from additional financial backing and a more established supply chain to alleviate concerns about its reliance on Saudi Arabia's Public Investment Fund (PIF), which recently injected $1.5 billion into the company. In fact, the PIF owns approximately 60% of Lucid and continues to invest billions into the company.
Ramping up
At present, Lucid will focus on expanding production of its second model in anticipation of boosting sales. This will necessitate the production of more vehicles at a faster pace than ever before. If Lucid succeeds in securing a collaboration or partnership of some kind, leveraging its advanced EV technology, it could be particularly beneficial during the Gravity's production ramp-up.
This is a critical juncture for Lucid, and a successful execution of the Gravity launch could result in more substantial revenues and potentially achieve profitability several years down the line. Keep an eye out; any potential deal for Lucid could be significant.
Lucid's CEO, Peter Rawlinson, expressed interest in sharing the company's highly regarded EV technology with traditional automakers, seeing potential benefits from their parts inventory and other business aspects. Such collaborations or investments, as seen with Rivian and Volkswagen, can bring substantial financial returns to emerging EV manufacturers, aiding in their transition towards sustainability and alleviating concerns about reliance on external investors.