Elon Musk’s Aim To Take Tesla Private Potentially Threatened By Lucid Motors

While Elon Musk opens up, analysts are expecting Tesla to go down. What hope there was in Saudi Arabia’s sovereign fund taking Tesla private has been put into doubt by Reuters reporting that the same fund is looking to invest in Lucid Motors.

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Investing in Lucid Motors is cheap compared to buying Tesla, as Reuters pointed out. The smaller electric car company has raised just $131 million in funding, according to Crunchbase. When compared to rivals like NIO and Faraday Future, which have raised over $4.1 billion collectively, it’s possible Lucid Motors offers more bang for the buck.

But there’s also history behind the startup that may give Saudi Arabia a reason to pause.

Jia Yeuting, a Lucid Motors investor, is also the founder of Faraday Future. A prolific figure in China’s tech industry (once referred to as the Steve Jobs of China), Jia has run afoul of the Chinese government due to unpaid debts, mostly related to his company LeEco, a Chinese video streaming company. And while there are claims that Jia has sold his shares in Lucid Motors, ReCode reporting casts doubt on the claim. Faraday Future also hasn’t been immune to the troubles Jia brought to LeEco. The EV startup could hardly get its car started at debut.

Aside from awkward association with Jia, Lucid Motors also has yet to actually start selling its EV known as the Lucid Air. According to Business Insider, the company will start production of the Lucid Air in 2019. If the company will meet that production target remains to be seen. The much-larger Tesla is only now reaching Model 3 production targets after numerous delays. So what may be cheap in Lucid Motors is also unproven.

Furthermore, Tesla already has a $2 billion investment from Saudi Arabia’s sovereign fund announced two weeks ago. Saudi Arabia betting on a competitor so soon after such a large investment would be surprising. However, investment funds and tech giants have a tendency to blur the lines when it comes to cars. For example, Alphabet holds a stake in both Uber and Lyft.

And despite Tesla’s lead in EVs, it’s still possible for established automakers, such as GM, to take the lead in electric vehicles and snuff out the smaller competitors with more experience in producing cars at a mass scale.

For Tesla, competition from the bottom and top of the EV market puts it in an uncomfortable position. And the possibility of being openly spurned by an investor is yet another strike against Tesla—although those shorting the company likely won’t complain.

Illustration: Li-Anne Dias