Lucid Motors Confirms SPAC Deal

Lucid Motors and blank check company Churchill Capital IV (CCIV) confirmed a merger deal to take the California-based EV company public. Shares of Churchill Capital were down around 25% at 10:45 a.m. ET, though coming off their session lows.

The transaction, announced on Monday evening, values Lucid at an initial pro-forma equity value of approximately $24 billion at the PIPE (private investment in public equity) offer price of $15.00 per share. It will provide the electric vehicle company with approximately $4.4 billion in cash.

The deal has a transaction equity value of $11.75 billion which includes a cash contribution from CCIV of $2.1 billion, and a PIPE investment of $2.5 billion with a lock-up provision that “binds holders well beyond closing.”

Speculation over an agreement had been circulating for more than a month prompting previous spikes in CCIV stock. In mid-February shares of Churchill Capital IV, led by investment banker Michael Klein, surged 30% following a report of a nearing agreement. On Monday the stock had gained double digit percentages after a Bloomberg report said an agreement announcement could come by Tuesday.

Many start-up electric vehicle companies are talked about as having the potential to be "the next Tesla." But Lucid is different: It has a fully developed product (and a pipeline of other products in the works), a nearly completed factory, lots of preorders, an impressive management team, genuinely advanced technology, and on and on. 

Among the key points:

• Lucid already has a factory. Lucid's Arizona factory is being built in stages. It'll expand over the next couple of years, but the first stage is nearly done: Production of Lucid's first model, the Air luxury sedan, will begin later this year.
• Lucid's race-bred EV tech is genuinely innovative. Lucid has been supplying batteries and technology to teams in the Formula E electric vehicle racing series for several years. That experience has contributed to the design of an innovative battery module, which is optimized for mass production on a huge scale, as well as its impressive fast-charging technology: Top-line Lucid Airs will be able to add 300 miles of range in just 20 minutes. Lucid also has its own unique motors, inverters, and software. 
• Lucid has a product pipeline. The Air will be followed in 2023 by a large electric luxury SUV. More -- and more affordable -- Lucids will follow over the next few years. 
• Lucid has a spectacular management team. CEO Peter Rawlinson has what must be the ultimate EV resume credential: He was chief engineer of Tesla's Model S. Other senior executives bring deep experience from companies like Apple, Ford Motor Company, Audi, Mazda Motor, and Ferrari.

The electric vehicle maker is backed by Saudi Arabia’s sovereign wealth fund. A deal with Churchill Capital IV is one of highest profile EV SPAC agreements since Nikola (NKLA) and Fisker (FSR) debuted publicly last year.

Lucid Motors has been closely watched since it is competing in the electric luxury sedan space. The company's CEO and CTO Peter Rawlinson was the chief engineer at Tesla (TSLA) for the model S prior to joining Lucid Motors in 2013.

“I think it's really important that we start at a high-end position as a true luxury brand. I'm a great believer that the first product defines the brand in way Tesla model S defined Tesla as a brand,” Rawlinson told Yahoo Finance in October of last year.

Deliveries of Lucid’s first car, the all-electric Air, are now set for the second half of this year, a delay from its earlier forecast. Production will occur at a plant the company built in southeast of Phoenix in Casa Grande, Arizona. The Air starts at $77,400, without including the federal EV tax credit.

Lucid projects it will earn $2.9 billion in EBITDA, or earnings before interest, taxes, depreciation and amortization, in 2026, according to an investor presentation. It projects to deliver 251,000 vehicles that year. In addition to the luxury Air, Lucid plans to begin producing an SUV in 2023 and eventually “more affordable” vehicles down the road. Batteries made by Lucid’s technology division, Atieva, are currently used on the electric racing circuit Formula E.

Lucid's deal with Churchill, which is expected to close in the second quarter of this year, marks one of the highest-profile SPAC arrangements in the EV space after a wave of interest in electric-vehicle startups and automotive tech suppliers. That may have been sparked by a rally in Tesla's shares over the past 12 months. Peter Rawlinson, the company's CEO and CTO, is known for his work as chief engineer at Tesla for the Model S. He joined Lucid in 2013.