Monday 17 September 2018 6:20 pm

Tesla takes a hit after Saudi fund invests $1bn in rival Lucid Motors

Tesla shares dipped this afternoon after Saudi Arabia's sovereign fund pumped $1bn into rival Lucid Motors.

Shares fell by two per cent today after it was revealed that the Public Investment Fund of Saudi Arabia (PIF) would help launch the Silicon Valley company's first electric vehicle, the Lucid Air, in 2020, but recovered to $300 later in the afternoon.

The payment, which will be made through a special purpose vehicle wholly owned by PIF, will be used to complete development and testing, construct an Arizona factory and begin production of the car.

It comes weeks after Tesla's billionaire chief executive Elon Musk claimed PIF could help him fund a $72bn deal to take the car manufacturer private.

A spokesperson for PIF said, “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.”

Lucid chief technology officer Peter Rawlinson added: “The convergence of new technologies is reshaping the automobile, but the benefits have yet to be truly realised.

"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."