Tesla CEO Elon Musk is relying, at least partly, on the Saudi Arabian sovereign wealth fund to finance the automaker’s take-private move.

But the company might have to compete for that money since the fund has reportedly signed a deal to finance Lucid Motors, an EV startup aiming to compete with Tesla.

At Electrek, we have been really intrigued by Lucid Motors ever since its inception as ‘Atieva’.

The startup was founded by Bernard Tse, a former Tesla Vice President and board member. Tse was on Tesla’s board from 2003 to 2007 and he headed Tesla’s short-lived energy division during his last year at the company – long before it relaunched a new and improved ‘Tesla Energy’ division in 2015.

At first, Atieva aimed to develop energy systems and electric powertrains for other companies, but it eventually shifted to develop entire electric vehicles from the ground up and hired Peter Rawlinson, a former Tesla VP and Model S Chief Engineer, to lead the vehicle programs.

It led to the Lucid Air all-electric sedan.

The company announced an aggressive $60,000 base price for its luxury all-electric sedan with 240 miles of range and several more higher-end configurations.

In 2016, they also announced plans for an electric vehicle factory in Arizona with production to begin in 2018.

But that was dependent on closing a massive round of funding that has yet to materialize almost two years later.

Now it might finally happen as they reportedly have a term sheet with the Saudi Arabian sovereign wealth fund. Reuters reports:

“PIF and Lucid Motors have drawn up a term sheet under which PIF could invest more than $1 billion in Lucid Motors and obtain majority ownership, the sources said. PIF’s first investment in Lucid Motors, however, would be for $500 million, and subsequent cash injections would come in two stages that are contingent on Lucid Motors hitting certain production milestones, one of the sources added.”

The news comes after the fund already took a stake of almost 5 percent in Tesla and it is reportedly involved in Musk’s plans to take the company private.

Some analysts have expressed doubts about the fund’s desire or ability to do it. Even though it is worth an estimated $250 billion, it is not very liquid and it already has massive investments scheduled.

Electrek’s Take

Things are getting interesting. I’d really like Lucid Motors to get funded. I’m thinking I would have preferred for them to have been bought by an existing automaker, like Ford, in order to accelerate their own vehicle programs and launch an in-house all-electric brand, but this works too.

Based on Musk’s previous comments on the Saudis, it sounded like they wanted to buy Tesla or take a controlling stake for a while, but it is much more difficult or even impossible for them right now.

It makes much more sense to take over Lucid Motors, which is at a much earlier stage and less expensive.

Now I don’t think the deal is set in stone nor does it necessarily kill any deal with Tesla, but it is certainly a very interesting development in this saga.

What do you think? Let us know in the comment section below.

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