What happened
Shares of electric-vehicle (EV) maker Lucid Group (LCID 6.82%) took off Monday morning, a week after the company provided its financial and operational update to investors. The stock popped about 8% as the market opened, and shares remained up 5% as of 11:32 a.m. ET.
So what
When Lucid reported its fourth-quarter and full-year results last week, news of some future plans was overshadowed by a cut in the company's 2022 production estimate. But with oil prices touching a 13-year high of $130 per barrel overnight, Lucid's announcement is taking on more significance.
The Lucid Air. Image source: Lucid Group.
Investors already knew that Saudi Arabia's sovereign wealth fund was a majority shareholder in Lucid prior to last week's report. But Lucid also informed investors it now has plans to build its second factory -- and its first outside the U.S. -- in Saudi Arabia. The project will begin construction in the first half of this year, according to the announcement.
Now what
Lucid is working with the Ministry of Investment of Saudi Arabia and other Saudi agencies to build a plant that first will be used to assemble vehicle "kits" that will be pre-manufactured at the company's Arizona plant. It intends to eventually produce as many as 150,000 complete vehicles per year at the new plant, however.
Having a strong relationship with Saudi Arabian authorities could pay dividends down the road for Lucid. And high oil prices should also help Lucid in certain ways. Consumers should be more attracted to EVs if gasoline prices are high. That would help EV companies like Lucid grow more quickly. And though Saudi Arabia is working toward decarbonization and increasing use of renewable energy, high oil prices will continue to enrich that nation. That wealth could end up benefiting Lucid as Saudi's Vision 2030 progresses and results in growing EV demand there.
