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Aston Martin to give access to Lucid Group for Electric Vehicle Technology
British luxury carmaker, Aston Martin, has agreed to grant US electric vehicle (EV) maker, Lucid Group, a 3.7% stake in its company in exchange for entry to its "high-performance" technology. Aston Martin plans to pay phased payments to Lucid that total around $232 million. On approval from shareholders, about 28.4 million new ordinary shares issued by Lucid Group will be acquired by Aston Martin. The deal will assist Aston Martin in meeting its plans to develop EVs and reduce dependence on partnerships like the one with Mercedes Benz for necessary technology.
Aston Martin Shift to Electric Mobility
Aston Martin, as a smaller carmaker, is more dependent on entrance into partnerships to transition to electric mobility. The switch is both expensive and time-consuming. Car manufacturers from around the world are pledging about $1.2 trillion to low-emission technology. Aston Martin has its first EV launch scheduled for 2025, with Mercedes being its "big brother" to offer the necessary technology needed until now.
Amendment of Aston Martin’s Agreement with Mercedes-Benz
Aston Martin has also made an announcement of agreement amendment with Mercedes-Benz where the German automaker agreed to preserve around 9% in Aston Martin and to sustain the provision of engine and EV technology to the British automaker.
PIF Common Shareholder in Lucid and Aston Martin
Both Aston Martin and Lucid Group have Saudi Arabia's Public Investment Fund (PIF) as a shareholder. Last year, PIF became Aston Martin's second-largest shareholder. PIF is Lucid's primary shareholder, and in the past month, it raised the majority of the funds for US EV maker's $3 billion stock offering. The additional funds are crucial, given that Lucid faces similar challenges as its competitors and struggles with tightening cash reserves and rising losses. Lucid, a luxury Air sedan manufacturer, cut its 2023 production plan last month and reported low first-quarter income.
The Benefits of Partnership
The partnership with Lucid Group gives Aston Martin access to the company's industry-leading technology for battery electric vehicles (BEVs), including electric powertrains and battery systems. Being reliant on entry into partnerships to make the transition to electric powertrains, this deal will aid Aston Martin in fulfilling its plans to develop EVs, eventually assisting its progress in the automobile industry.
In today's technologically advanced world, it's essential for businesses to partner or stay up to date with the latest tools and information. The recent partnership between Aston Martin and Lucid Group is an example of how new businesses can leverage established players' expertise for mutual benefits. The deal will allow Aston Martin to integrate Lucid's advanced technologies into their EV models, ultimately aiding them in competing with other automobile players that are transitioning to sustainable and eco-friendly vehicles.
However, while partnerships can be beneficial, they can also lead to reduced autonomy and inequality in partnerships. Moreover, smaller businesses may need to cede more than what they initially intended to gain a more significant market share, just like how Aston Martin agreed to grant Lucid a 3.7% stake in its company. Businesses must scrutinize their options and think long-term to avoid potential challenges.
Overall, businesses should keep themselves informed and seek relevant partnerships to maintain a competitive edge, and do so with caution and strategic foresight.