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The Almighty Buck Transportation Businesses

Saudi Arabia Invests $1 Billion In Potential Tesla Rival (cnn.com) 177

Posted by BeauHD from the more-competition-the-better dept.
Saudi Arabia is investing more than $1 billion in Lucid Motors, an electric car startup that may give Tesla a run for their money. CNN reports: Lucid is planning a new high-performance electric car. It said the investment from Saudi Arabia's sovereign wealth fund announced Monday will allow it to finish engineering on its first car, the Lucid Air, as well as build a factory in Casa Grande, Arizona, and begin to sell the car by 2020. Saudi Arabia is already a big investor in Tesla. Last month Tesla CEO Elon Musk disclosed that the Saudis had taken nearly a 5% stake in his electric car company.

Musk said that the Saudis had been urging him for almost two years to take Tesla private, offering to provide funds necessary to do so. (Musk announced the plan to go private in August but quickly dropped the idea.) Saudi Arabia is investing in electric vehicles to diversify away from its dependence on oil. Lucid's Chief Technology Officer, Peter Rawlinson, was formerly a vice president and chief vehicle engineer at Tesla. He helped design the Model S, the company's breakthrough car. He left Tesla in 2012, shortly after the Model S went into production.
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Saudi Arabia Invests $1 Billion In Potential Tesla Rival More

Saudi Arabia Invests $1 Billion In Potential Tesla Rival

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  • The overwhelmingly most important source of income of Saudi Arabia, by a ridiculously huge margin, is crude oil exports. And the overwhelming majority of crude oil is used for gasoline production.

    Let us be realistic for a moment: oil production is the #1 strategic concern of Saudi Arabia, and electric cars are their anathema.

    • Re:I smell a rat (Score:5, Informative)

      by Barsteward ( 969998 ) on Tuesday September 18, 2018 @04:18AM (#57332784)

      "oil production is the #1 strategic concern of Saudi Arabia, and electric cars are their anathema."

      yes, oil currently is their no #1, but they are pouring money into renewables, they see the future better than Trump

      https://www.bloomberg.com/news... [bloomberg.com]

    • Re:I smell a rat (Score:5, Insightful)

      by Xest ( 935314 ) on Tuesday September 18, 2018 @05:08AM (#57332912)

      No, Saudi Arabia got a shock when oil dropped from $120 per barrel down to around $30 per barrel in 2014 as it plunged their economy into deficit. This gave them a massive wake up call and created a realisation that they can't depend on oil forever.

      They were surprisingly smart, where most countries such as the UK and Russia have squandered their oil wealth with nothing to show for it, other countries like Norway set up a sovereign wealth fund to see them into the future. Saudi Arabia is taking this approach of forward thinking too, and planning for the future whilst it has oil wealth, rather than waiting until the oil wealth runs out then thinking "Right, now what?" when it's ultimately too late.

      This decision to plan for the future has been cemented into reality in a number of very visible ways, from using it's massive investment fund to start focussing on future tech that will only grow in value going forward such as renewables and electric cars, by strengthening it's base economy through simple things such as liberalising it's approach to women. A key realisation was that the Saudi economy could literally double in size by allowing the half of it's population that are not currently allowed to work on equal terms to do so. It will be a long process as it requires changing attitudes when there are still very dangerous hard liners in the country but we've already seen some fairly big leaps towards it, such as allowing women to drive, and allowing women to make up over 30% of the ruling council, which interestingly is a better male-female ratio than most Western democracies. When only 50% of your working age population are allowed to work, enabling the other 50% to do so as a way to obtain a quick, easy, future proof, baseline economic boost is really a no brainer.

      Furthermore, we've seen things such as purges of the corrupt elite to drive corruption out the economy, which can have severe consequences as we see in Russia - where Russia has masses of natural resource wealth, it gets filtered off into Swiss and Cayman bank accounts of only a handful of individuals to the detriment of the wider and long term health of the country. In fact, the only reason Russia with all it's potential isn't a wealthy modern economy across the vast majority of it's territory and has massive pockets of 3rd world levels of poverty is almost entirely because of corruption - even where economic mismanagement is a problem, such mismanagement usually occurs precisely to aid corruption.

      So it's fairly clear that Saudi Arabia is one of a few countries that gets that oil isn't going to be around forever, and that is liberalising it's economy to cater to the realisation of that fact in many ways, from more forward thinking investments, to enfranchising women, to tackling corruption. It's likely Saudi Arabia will always be, or at least for the next few decades a fairly conservative country, but that doesn't appear to be a complete barrier now to modernising their nation as it has been for the last few decades, oil is no longer king, precisely because they saw how badly oil as a dependency can let them down in 2014.

      Don't assume countries can't change and that because they were dependent on oil that they'll always be dependent on oil, Saudi Arabia is undergoing a very silent, but very rapid change to make sure that it's secure even if oil prices collapse. They've still got a lot of work to do, but the trajectory should be abundantly clear to anyone paying attention to the changes the country has undergone over the last few years.

      • Saudi arabia and other Arabic countries are "changing" since decades.
        Just look at in what companies they invest. In the 1970s "Mercedes Benz" was divided up into "Daimler Benz" and "Mercedes Benz" just so that one company owns the other one, but the stocks in that company had no votes on the other one. That was done because out of fear that specifically Saudi Arabia would by to much stock in German companies and would control them.

        SA and the other Arabs own 'half the world' already, an no one pays attention

      • by strengthening it's base economy through simple things such as liberalising it's approach to women. A key realisation was that the Saudi economy could literally double in size by allowing the half of it's population that are not currently allowed to work on equal terms to do so. {...} When only 50% of your working age population are allowed to work, enabling the other 50% to do so as a way to obtain a quick, easy, future proof, baseline economic boost is really a no brainer.

        That's an interesting point of view. Doubling the workforce without doubling the jobs is a huge economic boost?

        I'm not sure that, say, the 1970s in the US (when cultural change pushed women en masse into the workforce) really bear that out.

        • Global productivity improved for sure, but because more people got into the labor market the salaries got cut in half. At the same time women don't have time to either do household tasks or to take care of children. So family sizes decrease.

      • No, Saudi Arabia got a shock when oil dropped from $120 per barrel down to around $30 per barrel in 2014 as it plunged their economy into deficit.

        No, Saudi Arabia didn't "get a shock". Saudi Arabia engineered the price drop so that the shale oil development would die.

      • You provide a quick production boost, on paper, yes, but then you ruin your economics in the long run as you get close to negative birth rates. What it means is that what used to be not a part of the economy like child care, etc, becomes a business and then it starts showing up on GDP numbers as people get a salary.

      • Your comment was pretty interesting. Now, if you hadn't managed to misspell "its" every single time it'd been even better :P

      • They desperately want to take ARAMCO public, then really diversify. But have to keep delaying it as they know their price would currently be laughed out of the room.

    • Well, geography was not my primary interest at school, but I think Saudi Arabia gets a nice amount of sunshine. As the world divests from oil, they sure can divert the investments into solar energy.

      I think oil products won't get away entirely. Plastics can still be the best things to use in sterile environments (operating rooms), or in aeronautical structures. But throwing plastic away into the ocean or even burning oil as fuel will be an increasingly stupid idea.

  • a bit too quick to declare it a rival. (Score:5, Insightful)

    by aepervius ( 535155 ) on Tuesday September 18, 2018 @04:09AM (#57332748)
    Since when firm which have not yet even engineered a car , much less have a prototype may "give tsla a run for their money" ?

    Emphasis mine

    Lucid is planning a new high-performance electric car. It said the investment from Saudi Arabia's sovereign wealth fund announced Monday will allow it to finish engineering on its first car, the Lucid Air, as well as build a factory in Casa Grande, Arizona, and begin to sell the car by 2020. Saudi Arabia is already a big investor in Tesla. Last month Tesla CEO Elon Musk disclosed that the Saudis had taken nearly a 5% stake in his electric car company.

    • Re: (Score:2)

      by mentil ( 1748130 )

      Finishing engineering, building a factory, and bringing a car to market in only 2 years seems overly optimistic, as well. By then the Tesla Roadster 2020 will be out.

    • I was mostly wondering why it even bothered with the "To give Tesla a run for it's money" line. It's like someone just needed to have the article related to Tesla somehow.

      I mean I guess they are the electric car only company, but still seems a bit silly to go ahead and say that.

    • Re: (Score:3)

      by AmiMoJo ( 196126 )

      They do actually have a working prototype. MKBHD drove it: https://youtu.be/jbXEWi-OK4o [youtu.be]

  • I guess it's "Funding Secured" for real this time. Only it's not for Tesla, but it's "only" 1 Billion.

  • so basically (Score:4, Funny)

    by Kokuyo ( 549451 ) on Tuesday September 18, 2018 @06:32AM (#57333064) Journal

    This company has only slighty better chances at being Tesla's rival as I.

    Man, I hate the news these days...

  • supercar, oh please... (Score:3)

    by sad_ ( 7868 ) on Tuesday September 18, 2018 @07:07AM (#57333136) Homepage

    we don't need another supercar, we need electric cars for normal people.
    they should be cheap to produce right? we don't need sub 2 seconds acceleration, or +300km/h top speed.
    just make it good enough to replace your regular current petrol car, i'm even willing to cut off some 100km of range, but;

    - it needs to be afforable
    - be practical (no silly sci-fi looking impractical car)

    The Nissan Leaf or Hyundai Ioniq almost have me sold, i just need a bigger boot (ie a station wagon, thank you!).

    • As Tesla is finally starting to realize, the hard part about building an electric car is not the electric part, but the car part. When the existing car manufacturers determine it is finally economically viable to build electric cars, they will wash the startups (Tesla, Faraday Future, and others) away. It's the car that matters, the method of propulsion is a distant second.

      • As Tesla is finally starting to realize, the hard part about building an electric car is not the electric part, but the car part.

        Tesla has always realized this, which is why their first car was basically a repowered Lotus. And they've already become good at making cars, which is why there's thousands of dollars of profit in every Model 3.

        When the existing car manufacturers determine it is finally economically viable to build electric cars, they will wash the startups (Tesla, Faraday Future, and others) away.

        They are all making EVs, and all of the ones they have released so far are inferior to a Tesla, and none of them are profitable.

        It's the car that matters, the method of propulsion is a distant second.

        The method of propulsion informs the design of the entire vehicle. They go hand in hand.

        • And they've already become good at making cars, which is why there's thousands of dollars of profit in every Model 3.

          False. Tesla loses about $17,000 on every car they sell, overall. If you take gross profit and subtract SG&A (selling general & administrative - costs required to actually sell and deliver a vehicle) they lose about $4000 per car. That's not including R&D or even interest on the debt required to build those cars and facilities in the first place.

          They are all making EVs, and all of the ones they have released so far are inferior to a Tesla, and none of them are profitable.

          Inferior - in your opinion. And the fact EVs are not profitable (including Teslas - or are you now stating that Tesla is not profitable, even though

          • False. Witness basically every EV on the market. They are designed remarkably similar to existing cars.

            So are Teslas.

  • These announcements about electric car investments mean that big players are scared that Tesla might succeed in shifting the market. The shareholders want a plan. For now, these announcements are probably mostly PR. But if Tesla can hang on a few years, then even if the company dies it might spring up an entire electric car industry simply by scaring other players into investing. So ultimately the human race wins even if Tesla Motors dies.

    ALTERNATE FUTURE: Tesla becomes a company that sells solar panels

  • Most people aren't going to buy electric cars until charging stations are as quick and cheap as gas or until they are much lower in price than an average ICE. I don't care if it can be charged in a garage overnight; once you go out, you're exposed to inconvenience and a time commitment to find a charging station and wait for it to charge.
    • For a home owner with a garage having the option to charge overnight and never having to visit another gas station is a huge plus
      • It's fine if you only go to work and back; but hardly anyone does that. People don't want to be scrambling for a place to charge just because they decide to go to a store on the other side of town after work.
  • of business, then once they control it, stop producing them, and it will take a decade or more for someone else to design and bring one to market, more OIL money ;)
  • If Saudi Arabia of all places is investing that much in an electric car company, then is that signalling that even they, whose wealth has depended on oil production, are acknowledging that the oil won't flow forever, and in fact will become scarce within our lifetime? Makes you think.

    • Saudi Arabia has acknowledged for many decades oil wealth won't last forever. They've been pretty good at using a large chunk of oil money to buy assets in other countries. It let's them diversify, without modifying their country too much,

      Essentially, they treat the entire nation's economy like you treat your working life... have a few decades to live on/amass a nest egg, then live on interest.

  • Wake me up when someone makes the Geo Metro of electric cars. Affordable with incredible mileage. No stupid computer in the console gimmicky crap, no GPS, no remote start, AC and electrical windows optional.

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