Lucid Motors announced yesterday that it will receive a $1 billion investment from the Saudi Arabian public investment fund.

Lucid is a Silicon Valley-based electric car builder working on a direct competitor to the Tesla Model S.

In August, Tesla chief executive Elon Musk suggested that he had held talks with the same Saudi investment fund about taking Tesla private. Such a deal would have required significantly more than $1 billion from the Saudi fund.

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The Saudi investment will give the automaker the resources to build a factory in Casa Grande, Arizona, to build the Lucid Air, finish development work, and begin selling the car in 2020, Lucid said.

Some observers have referred to the Air as the Tesla Model S 2.0. It is a little shorter than the Model S yet is said to be more spacious. Top-trim versions offer reclining lounge-like rear seats.

Lucid claims it will offer a maximum range of 400 miles and a pair of electric motors good for up to 1,000 horsepower. The price is reported to start at $64,000 for a 240-mile, 400-hp version.

Lucid Air electric luxury sedan prototype [photo: David Noland]

Lucid Air electric luxury sedan prototype [photo: David Noland]

Founded in 2007 by former Tesla vice president and board member Bernard Tse and partner Sam Weng as Atieva Motors, Lucid started by building batteries for electric buses, cars, and motorcycles.

The news that the fund is seeking an investment in Lucid confirms that the Saudis are interested in investing in an electric carmaker to diversify their oil holdings at a time when electric cars are poised to make a serious dent in demand for oil.

READ MORE: Saudi investment fund reportedly wants stake in Lucid Motors

A spokesperson for the Saudi public investment fund said in a statement, “By investing in the rapidly expanding electric vehicle market, PIF is gaining exposure to long-term growth opportunities, supporting innovation and technological development, and driving revenue and sectoral diversification for the Kingdom of Saudi Arabia. PIF’s international investment strategy aims to strengthen PIF’s performance as an active contributor in the international economy, an investor in the industries of the future and the partner of choice for international investment opportunities. Our investment in Lucid is a strong example of these objectives.”

Reuters noted in an earlier report that Lucid is a much more affordable investment for the Saudi fund than Tesla. The fund is reportedly worth about $250 billion, but also has other commitments. 

Lucid Air

Lucid Air

Peter Rawlinson, chief technology officer at Lucid, said in a statement, "The convergence of new technologies is reshaping the automobile, but the benefits have yet to be truly realized. This is inhibiting the pace at which sustainable mobility and energy are adopted. At Lucid, we will demonstrate the full potential of the electric connected vehicle in order to push the industry forward,” 

Lucid is one of several startup companies planning to introduce new luxury electric cars and SUVs in the next couple of years, including SF Motors, another Silicon Valley startup, and Chinese automakers Byton, and Faraday Future.

The Saudi investment in Lucid is still subject to regulatory approval and other conditions.