British luxury carmaker Aston Martin has reached a deal that will give U.S. electric vehicle (EV) maker Lucid Group a 3.7% stake in the company in return for access to its "high performance" technology, Aston Martin said on Monday.
Subject to shareholder approval, Aston Martin will issue about 28.4 million new ordinary shares to Lucid Group. It will also make phased cash payments to Lucid totaling about $232 million.
The shift to electric is phenomenally costly, with carmakers globally committing around $1.2 trillion to the low-emission technology. Smaller carmakers such as Aston Martin are more reliant on partnerships to make the transition.
Aston Martin plans its first EV in 2025 and until now had leaned on Mercedes as its "big brother" to provide the technology it needs.
In a separate announcement on Monday, Aston Martin said it had amended an agreement with Mercedes-Benz meaning the German carmaker would not increase its stake as planned, but will maintain around 9% in Aston Martin and continue to provide it with access to engine and EV technology.
The agreement with Lucid meanwhile will give "access to Lucid's industry-leading technology for its (battery electric vehicles) BEVs, including electric powertrains and battery systems".
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 $3 billion stock offering by the U.S. 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 Inc.
Lucid, which makes luxury Air sedans, trimmed its 2023 production forecast last month and reported lower-than-expected first-quarter revenue.