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Aston Martin has abandoned its plan to purchase batteries from Mercedes-Benz and instead has entered into a partnership with Lucid, a US start-up. As part of the agreement, Lucid will acquire a stake in Aston Martin, allowing the luxury carmaker to avoid financial obligations to Mercedes. This decision comes as Aston Martin grapples with financial difficulties, evidenced by a significant increase in pre-tax losses last year.
Aston Martin, led by Canadian entrepreneur Lawrence Stroll, aims to revitalize the company’s performance and transition towards electric vehicles. Their strategy includes integrating Lucid’s cutting-edge batteries and driving units into their electric car models, which are scheduled to launch in 2025. In addition to technology transfer, Lucid will receive a 3.7% stake in Aston Martin and up to £186mn worth of cash and shares.
The deal with Lucid enables Aston Martin to access innovative technologies and high-performance solutions for their future battery electric vehicles. Lucid, under the leadership of CEO Peter Rawlinson, a prominent figure in the development of the Tesla Model S, has garnered acclaim for their battery and drivetrain technology. However, like other start-ups, Lucid has faced challenges in scaling up production.
Lucid is primarily owned by Saudi Arabia’s sovereign wealth fund, which also holds a stake in Aston Martin. Rawlinson described the partnership as a significant collaboration between Aston Martin, a renowned luxury brand with an illustrious racing history, and Silicon Valley’s top-notch innovation and technology from Lucid.
While Lucid will play a central role in Aston Martin’s electric ambitions, the British automaker will continue to utilize some electric systems from Mercedes, as well as engines and in-car technology from their previous 2020 agreement. Originally, Aston Martin was obligated to issue new shares and make a substantial payment to Mercedes by the end of this year in exchange for access to Mercedes’ new battery systems for their electric cars.
The agreement with Mercedes was made when Aston Martin’s stock was trading above £12, potentially benefitting the German carmaker. Although Aston Martin’s shares have rebounded from their record low last year, they are still valued below £4. In morning trading on Monday, Aston Martin’s shares experienced a 6% increase.
Franz Reiner, representing Mercedes on the Aston Martin board, stated that the partnership with Lucid provides Aston Martin with access to a wide range of Mercedes-Benz technologies while also allowing the iconic British automaker to explore new opportunities.
The payments to Lucid will be staggered, starting with an initial £26mn and the remaining amount being paid throughout 2025 and 2026. Aston Martin has also committed to spending at least £177mn on purchasing parts from Lucid, along with an additional £8mn integration fee. The agreement with Lucid precedes Aston Martin’s upcoming strategic update, where new targets are expected to be outlined.
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