Lucid CEO Peter Rawlinson. US electric carmaker Lucid Motors announced on Monday that it will go public via a merger with a company that values it at $24 billion. - AFP

SAN FRANCISCO: US electric carmaker Lucid Motors announced Monday that it will go public via a merger with a company that values it at $24 billion. The California-based start-up has chosen to go through a SPAC, or "Special Purpose Acquisition Company," which is a company with no commercial activity whose aim is to raise funds by going public.

The SPAC, Churchill Capital Corp IV (CCIV), contributed $2.1 billion, and Lucid also negotiated $2.5 billion from investors including BlackRock, Fidelity Management & Research LLC, Franklin Templeton and Neuberger Berman. "The transaction values Lucid at an initial pro-forma equity value of approximately $24 billion," the carmaker said in a statement, and will bring in "approximately $4.4 billion in cash."

IPOs via SPACs exploded in the United States in 2020. They allow companies to go public with a windfall. "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," the automaker's CEO, Peter Rawlinson, said in the statement.

The funds will also enable the Silicon Valley-based company to expand its Arizona plants, which are expected to produce approximately 365,000 vehicles per year within the next few years. Lucid employs nearly 2,000 people and hopes to hire an additional 3,000 by the end of the year.

The start-up expects to close the deal in the second quarter of 2021. "CCIV believes that Lucid's superior and proven technology backed by clear demand for a sustainable EV make Lucid a highly attractive investment," Michael Klein, the SPAC's CEO, said in the statement. Several major automakers such as Ford and GM recently announced major investments in electric vehicles, a market dominated by California-based Tesla. -AFP