Lucid Faces Historic Depths: Can Convertible Notes and Saudi Backing Turn the Tide?

The Stock’s Stunning Decline Amid EV Market Turmoil

Lucid Motors (NASDAQ: LCID) has witnessed a dramatic 50% erosion in shareholder value over the past year, starkly contrasting with the resilience shown by competitors Tesla (NASDAQ: TSLA) and Rivian (NASDAQ: RIVN). The question lingering among market participants is whether this represents capitulation or opportunity.

The automaker’s struggles emerge amid a perfect storm of market pressures: heightened import tariffs on vehicle components, shifting regulatory landscapes, and the phase-out of federal EV incentives that once supported industry growth. Yet paradoxically, Lucid has achieved seven consecutive quarters of rising vehicle deliveries and continues manufacturing ramp-up on its Gravity model, the cornerstone of its expansion strategy.

Management’s Transparency Push and Liquidity Measures

When Lucid’s stock hit historic lows last week, management felt compelled to address investor anxiety. Through communications leadership, the company reaffirmed its commitment to execution while emphasizing financial strength. The emphasis on transparency signals management’s awareness that confidence erosion poses as much risk as operational challenges.

Beyond messaging, Lucid backed statements with concrete action. The automaker executed a strategic refinancing maneuver: issuing $975 million in convertible senior notes due 2031, deploying approximately $750 million of proceeds to retire higher-cost 2026 convertibles. This effectively extends debt maturity and preserves flexibility during Gravity’s critical production phase and the anticipated rollout of a midsize SUV platform slated for late next year.

Saudi Arabia’s PIF Bolsters the Balance Sheet—With Strings Attached

Perhaps more significantly, the Public Investment Fund (PIF)—Saudi Arabia’s sovereign wealth vehicle—and Lucid announced an expansion of their existing credit facility from roughly $750 million to $2 billion post-quarter. Combined with existing cash and convertible proceeds, this pushed total liquidity to approximately $5.5 billion, extending the company’s runway through 2027.

This move stands out for minimizing traditional shareholder dilution—a critical advantage given Lucid’s prior capital raises, which saw shares outstanding expand considerably more than competitor Rivian’s have. However, this silver lining carries a substantial caveat: PIF now commands approximately 60% ownership, giving the Saudi fund outsized influence over strategic decisions.

The Structural Risk Nobody Wants to Discuss

While PIF’s backing provides crucial breathing room, dependency creates vulnerability. Should the sovereign fund reassess its investment thesis and reduce exposure, the resulting selling pressure would likely trigger a downward spiral. Future capital needs would become exponentially more expensive, potentially forcing dilutive terms that current shareholders would find unattractive.

The cash burn trajectory remains steep, and profitability remains distant. Most professional investors have logically concluded that Lucid’s risk-reward profile remains unfavorable in the near term, regardless of strong execution on deliveries.

When Might Risk Become Reward?

The case for patience over immediate entry is compelling. Lucid possesses adequate capital to navigate through its midsize vehicle launch—the inflection point that could fundamentally reshape investor perception. If production scales successfully and consumer demand materializes for its new platform, a meaningful rerating becomes plausible.

That scenario, however, requires years of flawless execution and market cooperation. For most investors, Lucid remains a speculative bet appropriate only for risk capital allocations, not core holdings.