Aston Martin reaches deal to receive technology from Lucid Motors

Aston Martin Lagonda has struck an agreement with Lucid Motors to supply the firm with technology for future battery-electric vehicle models.

The luxury vehicle manufacturer will spend at least £177million on the US EV business’ powertrain components, which are parts that power the car, such as the engine, axle and transmission..

It also intends to hand phased cash payments worth around £104million and issue shares totalling £79million to Lucid, which will get a 3.7 per cent stake in the luxury carmaker in return.

Deal: Aston Martin Lagonda has said it will spend at least £177million on powertrain components – made by Lucid Motors. (Pictured: Aston Martin DBS 770 Ultimate Volante)

Aston Martin said the deal will support the launch of its first electric vehicle in 2025 and the development of a single BEV platform that will be employed across its future electrified portfolio.

Mercedes Benz already supplies Aston Martin with technology as part of a 2020 contract, which gives the British company access to the German carmaker’s hybrid and electric drive systems.

The arrangement included a provision to provide two share tranches to Mercedes by July 2024, but Aston Martin said on Monday that the second of these payments would not happen.

Aston Martin Lagonda Holdings shares^[1] were 10.1 per cent higher at 360.2p on Monday morning, making them the best performer on the FTSE 350 Index.

Lawrence Stroll, executive chairman of Aston Martin, said the tie-up was ‘a game changer for the future EV-led growth of Aston Martin.

‘Based on our strategy and requirements, we selected Lucid, gaining access to the industry’s highest performance and most innovative technologies for our future BEV products.’

He added: ‘Along with Mercedes-Benz, we now have two world-class suppliers to support the internal development and investments we are making to deliver our electrification strategy.’

Stroll’s Yew Tree consortium, Mercedes, and Chinese carmaker Geely^[2] – Aston Martin’s third-largest shareholder – have all expressed their support for the deal.

Lucid and Aston Martin have a common shareholder in Saudi Arabia’s Public Investment Fund (PIF). The Saudi wealth fund became Aston Martin’s second-largest shareholder last year.

PIF is also Lucid’s main shareholder and last month provided a majority of the funds for a $3billion stock offering by the US EV maker.

Those additional funds are critical as Lucid, like its peers, struggles with mounting losses and tightening cash reserves in the face of recession fears and a price war sparked by market leader Tesla.

Warwickshire-based Aston Martin has likewise grappled with massive losses, posting a £74.2million loss in the first quarter^[3] despite solid demand for its sport utility DBX motor and higher average selling prices.

Last year, the business revealed losses spiked to over £500million^[4] due to currency fluctuations boosting the cost of its US dollar-denominated debt, brand investment, product launches and inventory costs aimed at reducing logistics issues.

Aston Martin could not manufacture and deliver hundreds of DBX vehicles to the Americas for part of the year due to components shortages, particularly the global scarcity of semiconductors.

References

1. ^{^} Aston Martin Lagonda Holdings shares (investing.thisismoney.co.uk)
2. ^{^} Chinese carmaker Geely (www.thisismoney.co.uk)
3. ^{^} posting a £74.2million loss in the first quarter (www.thisismoney.co.uk)
4. ^{^} Last year, the business revealed losses spiked to over £500million (www.thisismoney.co.uk)