Lucid and Aston Martin rip big gains after inking EV supply deal
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Lucid Group (NASDAQ:LCID) and Aston Martin (OTCPK:AMGDF) both rallied by double-digits on Monday after a proposed supply agreement between the two automakers was called a game changer.
The agreement will see Aston Martin (OTCPK:AMGDF) gain access to Lucid's (LCID) ultra-high performance twin motor drive unit, battery technology, and Wunderbox, as well as technical support with proprietary technology. Lucid Group (LCID) said the partnership will provide a new revenue stream for the company and is also a strong validation of its electric powertrain system. Mercedes-Benz AG (OTCPK:MBGAF) will continue to provide access to powertrains and electric architectures to Aston Martin (OTCPK:AMGDF) for vehicle manufacturing, but the German automaker will be paid in cash, instead of Aston Martin (OTCPK:AMGDF) shares. Looking ahead, Aston Martin (OTCPK:AMGDF) plans to build its first plug-in hybrid supercar in 2024 and its first battery-electric vehicle in 2025 before eventually switching to an all-electric lineup.
Another interesting aspect of the deal is that Saudi Arabia's Public Investment Fund owns about 49% of Lucid Group (LCID) and 18% of Aston Martin (OTCPK:AMGDF).
Bloomberg Intelligence analyst Michael Dean said Aston Martin's (OTCPK:AMGDF) BEV-technology partnership with Lucid for a 3.7% stake provides comfort that the luxury brand can successfully transition to being fully electric by 2030 as targeted, as well as reducing its reliance solely on Mercedes for technology. Jefferies analyst Philippe Houchois was also positive on the deal, saying Lucid Group (LCID) was the logical partner for Aston Martin in electrification, given the efficiency of the Lucid powertrain. "The Lucid transaction should reduce future capital needs," he noted.
Shares of Lucid Group (LCID) rose 9.78% to $6.01 to bounce off the 2023 low that was carved out on Friday. The 52-week trading range for the EV stock is $5.46 to $21.78. Aston Martin (OTCPK:AMGDF) broke 10.76% in London trading.
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