British ultra-luxury sports car maker Aston Martin has signed a deal with Lucid Group, the California-based electric luxury car startup. Lucid will provide electric motors under the arrangement and battery systems for Aston Martin's future electric vehicles.
Aston Martin announced last year that it plans to produce its first fully electric model by 2025. Saudi Arabia's Public Investment Fund is the largest shareholder in Lucid and the second-largest in Aston Martin, after billionaire chairman Lawrence Stroll. Chinese automotive conglomerate Geely, which owns Volvo and Lotus, among other brands, doubled its stake in Aston Martin last month to about 17%. And Lucid will take a 3.7% stake in Aston Martin as part of the newly announced arrangement.
Lucid said it was selected by Aston Martin "through a competitive process" in its Monday announcement of the deal. In total, the contracts with Aston Martin are worth more than $450 million, according to Lucid. Aston Martin plans to develop its own electric vehicle engineering using Lucid's components.
The British automaker already has arrangements with Mercedes-Benz for various components used in its gasoline-powered and electric vehicles.
As a relatively independent auto brand, Aston Martin is a rarity in the automotive industry. Most of its competitors are part of global auto giants such as Volkswagen Group, which owns Bentley; and BMW, which owns Rolls-Royce. Those brands can rely on the purchasing power and technology of their parent companies. Aston Martin's deals with other automakers can help it gain some of the benefits of the sort of technology-sharing its competitors have.
The Lucid Air electric luxury car, which has a starting price of around $90,000, has won various awards, including the MotorTrend Car of the Year in 2021. The company has struggled to sell the cars, though, with executives blaming "macroeconomic conditions." The company posted third quarter earnings far below industry estimates while cutting its production forecasts.
Aston Martin, despite losing money as it invests in the development of future models, has boasted of strong sales, particularly of its DBX SUV model. Aston Martin has said it plans to invest over £2 billion, equivalent to about $2.5 billion, over the next five years as it transitions to offering electric and plug-in hybrid models.
Shares of Aston Martin rose almost 10% in premarket trading Monday on news of the deal. Lucid's stock also rose about 9%.
