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Saudi Arabia’s sovereign wealth fund signed an agreement to invest more than $1 billion in aspiring U.S. electric-car maker Lucid Motors Inc., months after building a stake in rival Tesla Inc.
The deal would give Lucid the funding to take it through to the commercial launch of the Silicon Valley-based startup’s first electric vehicle, the Lucid Air, in 2020, the Public Investment Fund said in a statement.
Saudi Arabia, the world’s biggest oil exporter, has been diversifying its economy after the collapse in crude prices. As part of the plan, the kingdom plans to turn the PIF into the world’s biggest sovereign fund, controlling more than $2 trillion by 2030, and hedge against oil.
The deal between PIF and Lucid will add to the uncertainty surrounding Tesla, whose Chief Executive Officer Elon Musk tweeted on Aug. 7 that he’d secured funding to take the firm private. Musk later backtracked his tweet, while saying the Saudi wealth fund had expressed interest in helping take Tesla private. The Saudi fund has built up a stake of just under 5 percent in Tesla.
“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,” according to the PIF statement.
Tesla shares dropped as much as 1.9 percent in New York.
Read more: Tesla Wannabe Is Back in Spotlight With Shot at Saudi Investment
Last year, PIF announced plans to invest as much as $45 billion in a technology fund run by Japan’s SoftBank Group Corp., put $20 billion into a U.S infrastructure fund managed by Blackstone Group LP and build a $500 billion city called Neom on the Red Sea. It raised a loan of $11 billion this week.