This US-Based EV Maker Just Opened a Factory in Saudi Arabia

• Lucid hasn't had the smoothest 2023, as it grappled with a targeted EV price war, production slowdowns, and internal restructuring.

• The California-based EV manufacturer is hoping to turn this trend around, as it announces the official opening of its new Saudi Arabia production facility.

• With an eventual capacity of 155,000 units annually, the AMP-2 facility is set to ease production woes and fill the Saudi Kingdom's order for 100,000 Lucid Air models.

Lucid Motors occupies a unique space within the startup EV segment. Competing head-on with Tesla, Lucid's long-standing claim to value has been its competitive engineering and luxury appointments. As a result of this approach, however, Lucid has butted heads with the biggest sales factor of all—price.

The California-based company has not been immune to the EV price war, slashing prices twice in 2023. The outlines of these incentivizing moves came late in 2022 when Lucid offered hefty discounts for wavering customers and employees alike. Even so, such incentives haven't saved Lucid from inner turmoil, as it laid off 18% of its workforce in March.

In spite of these headwinds, Lucid maintains that there is hope on the horizon, even in the face of a $779.5 million net loss in the first three months of the year. Part of this positive future prospect is the impending launch of its Gravity SUV. Still, the opening of its new plant north of Jeddah, Saudi Arabia, may fix Lucid's current production predicament.

Located within King Abdullah Economic City, the AMP-2 facility will initially function as an assembly plant for pre-manufactured models from the company's Arizona AMP-1 facility. This will yield a 5000-unit production rate until the middle of the decade. Lucid plans to eventually transition the Saudi facility to a full assembly plant, with a 155,000-unit annual production.

Lucid says it plans to employ hundreds of Saudi nationals at this plant, citing its significance within Saudi's Vision 2030 economic and environmental initiative. Specifically, Lucid hopes to make up a majority of the Kingdom's mandated 30% electrified new car sales by 2030.

"Our facility will pave the way for the country's electric automotive industry and the expansion of the supply chain, and with the support of the Saudi government, we are proud to drive local talent development in the technology industry," said Peter Rawlinson, CEO and CTO, Lucid Group.

These models will initially be delivered to Saudi Arabian customers, in an effort to stir up increased localized demand, though Saudi-produced models will eventually be sold in other markets. Additionally, the plant's location will allegedly minimize supply chain constraints, as its Red Sea location offers robust supply chain access by land and sea.

"AMP-2 in KAEC gives us the ability to efficiently fulfill the recently signed agreement with the government of Saudi Arabia to purchase up to 100,000 vehicles over a 10-year period," said Faisal Sultan, vice president and managing director Middle East, Lucid Group.

Beyond this massive order, Saudi officials have a vested interest in Lucid's success, as Saudi's Public Investment Fund owns just over 60% of the EV company. The nation is deeply invested in the future of EV success as a whole, with an investment of $6 billion into a steel plate mill and an EV battery metals plant for Ceer, a Saudi national EV brand.

Will other luxury EV manufacturers shy away from domestic production in the face of incentive price caps? Why or why not? Please share your thoughts below.