Bocconi Students for Sustainable Finance

Lucid Motors, one of several companies to have been labeled “the anti-Tesla”, is ready for a huge IPO, with a current valuation of 24 billion, up from the expected 15, without even having sold a single car.

Lucid Motors is an American car manufacturer specializing in electric cars. The company was founded in 2007 and is headquartered in Newark, California.

The company initially focused on building batteries and electric powertrains for other vehicle manufacturers and many of its employees have previously worked for other auto companies such as Mazda, Honda and, guess which one? Tesla.

The company changed its name into Lucid Motors (first “Atieva”) in October 2016 and officially announced plans to develop an all-electric and high-performance luxury vehicle.

Its manufacturing facility is estimated to be worth $ 700 million in Casa Grande, Arizona and expects to employ approximately 2,000 workers by 2025, with an initial production capacity of 20,000 cars per year, which will go to increase, according to the industrial plan, up to 130,000 units. The factory construction will finish at the end of 2019 and the expectations are very high, in order to face those of its main competitors in the industry, but also the numerous ones in Silicon Valley.

But why are we so interested in this topic?

It is now clear that the automotive sector is increasingly projected to abandon gasoline vehicles, and this could potentially have a huge impact from the environmental emissions’ point of view, reducing pollution drastically.

In fact, cars’ circulation is one of the main causes of atmospheric pollution, considering the air modification due to the gas’ emissions, which are extremely harmful to human health.

Although the introduction of more inflexible legislation has made it possible over time to significantly improve air quality compared to previous decades, nevertheless the dangerous polluting emissions continue to be traced mainly to cars.

But, returning on the main topic we were talking about, the Lucid Motors IPO, as mentioned above, will take place through SPAC, but what is a SPAC?

The SPAC is a particular type of vehicle company intended for raising venture capital through the IPO and with the objective of investing in one or more existing operating companies (“target” companies).

The term SPAC derives from the acronym Special Purpose Acquisition Companies, companies with the specific purpose of acquiring an existing business. The characteristic feature of this company is represented by the fact that the IPO is based on an investment project in which the target will be identified later and therefore the investors’ subscription takes place “almost in the dark”. At the end of the IPO phase, therefore, the only asset in the portfolio is the liquidity collected, that also represents the company market value.

A last relevant element in this operation that we could define as “unprecedented”, is the fact that for the first time, the company we are talking about (Lucid Motors) will be controlled by a Saudi sovereign fund, “Pif”, and this represents an historic change in the automotive industry.

So, if the Saudis, historic workers and oil exporters, have also decided to invest in green cars, have we officially arrived at the breaking point in the automotive sector?

Tell us your opinion through our social channels.

Author: Alberto Fabiani

RELATED

Lucid Motors, one of several companies to have been labeled “the anti-Tesla”, is ready for a huge IPO, with a current valuation of 24 billion, up from the expected 15, without even having sold a single car.

Lucid Motors is an American car manufacturer specializing in electric cars. The company was founded in 2007 and is headquartered in Newark, California.

The company initially focused on building batteries and electric powertrains for other vehicle manufacturers and many of its employees have previously worked for other auto companies such as Mazda, Honda and, guess which one? Tesla.

The company changed its name into Lucid Motors (first “Atieva”) in October 2016 and officially announced plans to develop an all-electric and high-performance luxury vehicle.

Its manufacturing facility is estimated to be worth $ 700 million in Casa Grande, Arizona and expects to employ approximately 2,000 workers by 2025, with an initial production capacity of 20,000 cars per year, which will go to increase, according to the industrial plan, up to 130,000 units. The factory construction will finish at the end of 2019 and the expectations are very high, in order to face those of its main competitors in the industry, but also the numerous ones in Silicon Valley.

But why are we so interested in this topic?

It is now clear that the automotive sector is increasingly projected to abandon gasoline vehicles, and this could potentially have a huge impact from the environmental emissions’ point of view, reducing pollution drastically.

In fact, cars’ circulation is one of the main causes of atmospheric pollution, considering the air modification due to the gas’ emissions, which are extremely harmful to human health.

Although the introduction of more inflexible legislation has made it possible over time to significantly improve air quality compared to previous decades, nevertheless the dangerous polluting emissions continue to be traced mainly to cars.

But, returning on the main topic we were talking about, the Lucid Motors IPO, as mentioned above, will take place through SPAC, but what is a SPAC?

The SPAC is a particular type of vehicle company intended for raising venture capital through the IPO and with the objective of investing in one or more existing operating companies (“target” companies).

The term SPAC derives from the acronym Special Purpose Acquisition Companies, companies with the specific purpose of acquiring an existing business. The characteristic feature of this company is represented by the fact that the IPO is based on an investment project in which the target will be identified later and therefore the investors’ subscription takes place “almost in the dark”. At the end of the IPO phase, therefore, the only asset in the portfolio is the liquidity collected, that also represents the company market value.

A last relevant element in this operation that we could define as “unprecedented”, is the fact that for the first time, the company we are talking about (Lucid Motors) will be controlled by a Saudi sovereign fund, “Pif”, and this represents an historic change in the automotive industry.

So, if the Saudis, historic workers and oil exporters, have also decided to invest in green cars, have we officially arrived at the breaking point in the automotive sector?

Tell us your opinion through our social channels.

Author: Alberto Fabiani