Lucid (NASDAQ: LCID) announced on April 26, an agreement with the Government of Saudi Arabia to purchase 100,000 vehicles. In particular, the deal will span over a 10-year period with an initial commitment to buy 50,000 vehicles with an option to purchase an additional 50,000 over the same period.
The Saudi government agreed to invest in Lucid Air as well as other future models that will be coming out of Lucid’s existing Arizona plant as well as the new planned facility in Saudi Arabia.
In premarket trading, the stock jumped 7% with higher volumes as investors seem to be rallying on the news that Saudi Arabia is committed to getting more vehicles from LCID.
Despite the premarket pop the shares still haven’t broken out from the descending channel created from December 2021 onwards. Whether shares continue surging and testing resistance lines remains to be seen once the market opens.
Vehicle delivery extravaganza
According to the deal, the delivery of vehicles is supposed to commence no later than the second quarter of 2023, with quantities ranging between 1,000 and 2,000 units per year. Extension of deliveries will possibly start in 2025 when LCID will have to deliver 4,000-7,000 vehicles per annum.
The purchase price of vehicles will be determined by lowered retail vehicle prices available in Saudi Arabia as well as similar vehicles in the U.S. import costs will potentially be applied to the price as well before a final price is determined.
The electronic vehicle (EV) sector faced strong selling pressure as the industry leader Tesla (NASDAQ: TSLA) lost roughly 12% of its value with worries around CEO Musk’s acquisition of Twitter (NASDAQ: TWTR) as well as other worries affecting tech stocks.
News of the LCID deal offers some respite to badly battered shares of the company which are down roughly 50% year-to-date. Investors seemingly have a lot on their minds as shares across the board are being pummeled, therefore any positive news could potentially be seen as a reason to either stay in the stock or decide to jump in.
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