The SPAC company Churchill Capital Corp IV (NYSE: CCIV) gained traction on Wallstreet after announcing their intentions to merge with EV company Lucid Motors. Lucid Motors has captivated investors after noting their ambitions to take on EV giant Tesla. Interestingly, Lucid Motors CEO Peter Rawlinson had spent time as an engineering executive at Tesla prior to launching Lucid Motors. The company is targeting the luxury EV market which is expected to be worth $733 Billion by 2026. Investors are speculating after an SEC filing that the merger is expected to close on July 23rd. This article will breakdown everything you need to know about the CCIV and Lucid Motor merger.
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Key details surrounding CCIV and Lucid Motors merger
- CCIV and Lucid are combining at a transaction equity value of $11.75 billion.
- The merger is expected to raise $4.6 billion for Lucid Motors with is $2.1 billion being funded in cash and $2.5 billion from fully committed PIPE investors. The total net cash proceeds Lucid will receive is estimated at $4.4 billion according to the company.
- Lucid plan to use the capital raised to proceeds will fund the execution of its strategic and operational initiatives. In addition, this also includes the expansion of Lucid’s manufacturing facility in Arizona.
- The merger is expected to be finalised in Q2 2021, which gives investors a timeframe between April 1st – June 30th. However, a recent SEC filing speculates the closing date may be closer to the 23rd of July.
- The majority shareholder of Lucid has entered into a Voting and Support Agreement to vote in favor of the transaction. Therefore, this vote would be sufficient to approve the transaction for Lucid shareholders according to a statement.
“Lucid is going public to accelerate into the next phase of our growth as we work towards the launch of our new pure-electric luxury sedan, Lucid Air, in 2021 followed by our Gravity performance luxury SUV in 2023.”Peter Rawlinson, CEO and CTO of Lucid, said in the official merger announcement, PRNewswire
Why the rumoured Lucid Motors merger is a big deal
Firstly, it is clear to see why this merger is making so much noise on Wallstreet. Investors are very excited at the prospect of the potential merger and the dividends it could pay if delivered. The big selling point is that Lucid are in the process of preparing deliveries. The EV model “Air” is set to begin deliveries in early 2021. The EV model boasts horse power up to 1080hp and can reach 0-60 mp/h in 2.5 seconds. It is clear Lucid Motors are challenging Tesla in the luxury EV department, similar to the Tesla S models. Lucid Motors also see potential for the use of its powertrain technology in the aerospace, heavy machinery and agricultural industries.
The SPAC merger will provide Lucid Motors with the much needed capital to expand on manufacturing and development. Unlike many other SPAC mergers, Lucid Motors can provide investors the peace of mind that deliveries are on the horizon in 2021. This translates to revenue, of which is a significant factor in the longevity of emerging EV innovators. In addition, with deliveries around the corner, the company can then begin to focus on vehicle sales margins and delivery growth. The vehicles will be manufactured in Lucid’s $700 million facility. The vehicle production capacity will initially be 34,000 units. According to CNBC, “Rawlinson believes the capacity to grow to 400,000 units by the end of the decade.” Rawlinson also added he plans to have 1 million vehicles produced by 2027.
Lucid Motors Revenue forecast for 2022 and beyond
Firstly, the revenue and delivery forecasts from Lucid Motors (Investor Presentation 02/2021) illustrated explosive performance over the next 5 years. According to Lucid Motors, the company expects to generate $2.2 Billion in 2022 and $5.5 Billion in 2023. Looking further ahead , Lucid expects to generate $22.7 Billion by 2026 which is a translation of 251,000 vehicle deliveries. In addition, the company expects to turnover $592 million in EBITDA by 2024. With such impressive numbers it is worth noting these forecasts are based off certain variables which may differ over time.
In conclusion, the merger between Lucid and CCIV is an exciting new chapter for the luxury EV manufacturer. Assuming all requirements will be met in a timely fashion, Lucid Motors will be trading publicly by July 23rd although this is yet to be confirmed by CCIV. This is an exciting prospect for EV investors as this has been one of the most talked about companies in 2021. However, CCIV has experienced strong volatility over the past few months, following suite of many other EV companies. We will continue to cover any updates on the merger was we close in on the second quarter of 2021.
Written by Tyger Fitzpatrick
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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