Lucid Group, which is backed by Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), said its new factory in the kingdom will have a production capacity of 155,000 units a year.
Its new facility is expected to address growing demand for electric vehicles by increasing Lucid’s global production capacity to 500,000 EVs per year in the coming years, the company said.
The US-listed EV maker on Wednesday hosted a ceremonial signing event to mark the February agreements with various entities including the Ministry of Investment of Saudi Arabia, the Saudi Industrial Development Fund (SIDF), the Economic City at King Abdullah Economic City and Gulf International Bank.
The agreements are estimated to provide financing and incentives worth $3.4 billion to Lucid over the next 15 years to build and operate a manufacturing facility in the kingdom, the EV maker said.
“This signing ceremony marks yet another step forward in the realisation of Lucid’s mission to inspire the adoption of sustainable energy, and I am delighted this brand-new manufacturing facility will come to fruition here in Saudi Arabia,” said Peter Rawlinson, Lucid’s chief executive and chief technology officer.
“I am truly delighted to partner with PIF, our signing partners, and the government of Saudi Arabia in advancing our shared vision of global sustainability,” Mr Rawlinson said.
Saudi Arabia, the Arab world's biggest economy, is in the midst of an economic diversification drive under its Vision 2030 agenda. A key area of focus is to support the sustainable development goals of all economic sectors, with the country aiming to achieve net-zero carbon emissions by 2060 through a circular carbon economy approach.
A part of this strategy is the transition to greener means of transportation. The rapid growth of the kingdom's EV market even led Saudi to reach a top-50 spot for the first time in New York-based consultancy AlixPartners' latest Automotive Electrification Index, which was released last month.
Last month, Lucid also signed an agreement with the kingdom's government for the sale of 100,000 cars that will support Riyadh's sustainability drive.
The deal with the kingdom's Ministry of Finance — which will include the flagship Lucid Air and other future models — covers a 10-year period and includes an initial commitment to purchase 50,000 vehicles, plus an option for up to 50,000 additional cars over the same period.
"With today’s signing ceremony, we are taking a major step towards Saudi Arabia's goal of diversifying its economy by creating a new manufacturing hub to spearhead the future of mobility for the Middle East region,” Minister of Investment Khalid Al Falih said.
“This project demonstrates the confidence investors have in Saudi Arabia's competitiveness, its ability to create opportunity and serve global demand for a highly complex product such as electric vehicles.”
At its Saudi plant, AMP-2, Lucid plans to establish operations initially for re-assembly of Lucid Air vehicle kits that are pre-manufactured at the company’s US AMP-1 facility in Casa Grande, Arizona, and, over time, for production of complete vehicles.
It expects construction of the plant to “commence shortly”. Vehicles will be initially scheduled for the Saudi Arabian market, but Lucid plans to export finished vehicles to other global markets as well.
Bandar Alkhorayef, the Minister of Industry and Mineral Resources and chairman of SIDF, said the automotive industry in the kingdom is one of the important sectors supported by the national industrial strategy.
"We look forward to working with Lucid and other leading companies, while continuing to build our global expertise,” he said.
Global sales of EVs more than doubled to 6.6 million in 2021, according to the International Energy Agency. Almost a million EVs a month will be added to the global fleet in the second half of 2022, BloombergNEF estimates showed.
“PIF partners with leading global innovators, like Lucid, to shape the economies of the future and drive the economic transformation of Saudi Arabia in line with Saudi Vision 2030,” Turqi Al Nowaiser, PIF’s deputy governor and head of international investments division, said.