Lucid Group Looks On in Apprehension as Saudi Arabia Actively Courts Tesla [Update: Elon Musk Lashes Out]

With the UAW strike guaranteed to make Tesla an indomitable force on its home ground, key markets across the globe are now clearly seeing the writing on the proverbial wall, as illustrated by the fact that both Turkey and Saudi Arabia have approached Tesla in recent days to set up a manufacturing footprint within their respective territories.

As per the reporting by the Wall Street Journal, Tesla and Saudi Arabia are currently engaged in preliminary talks over setting up an electric vehicle manufacturing plant within the Kingdom, with the Saudi PIF acting as a key intermediary for the talks. The Kingdom has reportedly offered Tesla preferential access to metallic ores and minerals that are essential for manufacturing EVs. This inducement has been made possible by the fact that the Saudis are already negotiating with the government of the Democratic Republic of Congo (DRC) to purchase vast troves of the country's mineral assets. Bear in mind that the DRC supplies 70 percent of the world's demand for cobalt.

As per the intricate discussions that are reportedly taking place behind the scenes, the Saudis are considering the injection of new capital in a distressed cobalt and copper mining project within the DRC. The new funding would be routed through the commodities trading giant Trafigura, with Tesla gaining preferential access to the project's cobalt and copper supplies in return for establishing a sizable manufacturing footprint within the Kingdom.

Of course, Turkish President Recep Tayyip Erdogan also urged Tesla recently to establish a Turkish Giga Factory. The exhortation reportedly came during a meeting between Erdogan and Elon Musk on the sidelines of the ongoing UN General Assembly session in New York.

Meanwhile, Lucid Group is sure to see these fast-paced developments with apprehension. For the benefit of those who might not be aware, Saudi Arabia has already awarded incentives of around $3 billion to Lucid Group to establish its AMP-2 facility in the King Abdullah Economic City (KAEC) near Jeddah. The Saudis have also signed an agreement to purchase up to 50,000 electric vehicles from the company over the next ten years, with an option to double the quantum of this initial order.

Lucid Group’s assembly plant within the confines of its gigantic AMP-2 facility in KAEC went live in September 2023. The company currently ships all pertinent parts for the Air EV from its AMP-1 facility in Arizona, with the final assembly taking place in Jeddah. Lucid Group plans to ramp up the annual production capacity of its AMP-2 facility to 150,000 units by 2026. However, the EV player has consistently struggled to ramp up its production footprint, with the company managing to produce only 2,173 vehicles in the second quarter of 2023, registering deliveries of just 1,404 EVs during the period.

Finally, as stated earlier, the ongoing UAW strike at GM, Ford, and Stellantis has already crowned Tesla the reigning champion of North America, regardless of the outcome of the strike. In every feasible scenario, the cost of production of Tesla's competitors is almost guaranteed to increase, further eroding their competitiveness vis-a-vis the EV giant.

Update: Elon Musk Denies the Wall Street Journal Report

In a surprising twist, Elon Musk has outrightly rejected the primary assertion of the Wall Strret Journal report, terming it "yet another false article." Even so, given the preliminary nature of ongoing discussions, a Saudi deal might eventually materialize. Of course, Lucid Group investors are sure to breathe a sigh of relief in the wake of Musk's harshly worded tweet.

About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.

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