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Lucid Motors strikes SPAC deal to go public with $24 billion valuation

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Lucid Motors reached an agreement to become a publicly traded company through a merger with special-purpose acquisition company Churchill Capital IV Corp, in the largest deal yet between a blank-check company and electric vehicle startup. 

The combined company, in which Saudi Arabia’s sovereign fund will continue to be the largest shareholder, will have a transaction equity value of $11.75 billion. Private investment in the public equity deal is priced at $15 a share, putting the implied the pro-forma equity value at $24 billion. The announcement comes more than a week after Bloomberg, citing unnamed sources, reported a deal was close to being finalized.

Lucid follows a string of other, albeit smaller valued, SPAC mergers with electric vehicle startups that have been announced this year, including Arrival, Canoo, Fisker and Lordstown Motors. Several EV infrastructure companies including EVgo and ChargePoint have also become public companies via SPAC mergers.

Lucid might have been the most anticipated. The hype and speculation that has been rampant for weeks drove up the stock price of Churchill Capital IV Corp from its opening price of $10 a share more than 470% since January 2021. The skyrocketing share price, plummeted more than 30% after the details of the deal were announced.

The private investment and cash from Churchill will provide roughly $4.4 billion in total funding to Lucid. That capital will be put to work to speed up and expand Lucid’s plans. The company plans to begin production and deliveries of the Lucid Air in North America in the second half of this year. The Air will come to Europe in 2022, followed by China in 2023. The Gravity performance luxury SUV is expected to come to market in North America in 2023. The vehicles will be produced at its new factory in Casa Grande, Arizona. 

The funding will be used to bring those two vehicles to market as well as to expand its factory in Arizona, Lucid CEO and CTO Peter Rawlinson said Monday. The company plans to expand the factory over another three phases in the coming years to have the capacity to produce 365,000 units per year at scale. The initial phase of the $700 million factory was completed late last year and will have the capacity to produce 30,000 vehicles a year.

Lucid Motors air EV

Image Credits: Lucid Motors

The deal will also help Lucid realize its vision to supply electric vehicle technologies to third parties such as other automotive manufacturers as well as offer energy storage solutions in the residential, commercial and utility segments, Rawlinson said.

Scaling an electric vehicle company is not cheap or easy. Lucid narrowly missed imploding several years ago as it struggled to find an investor that would provide the capital it needed to bring its ultra-luxe electric Air sedan into production. That investor ended up being Saudi Arabia’s sovereign wealth fund, which agreed in September 2018 to invest $1 billion into Lucid Motors.

Lucid began in 2007 as Atieva, a company founded by former Tesla VP and board member Bernard Tse and entrepreneur Sam Weng that focused on developing electric car battery technology. The early research, development and eventual progress in the components and overall electric architecture would lay the critical ground work for the future Lucid, which emerged at the end of 2016 with new publicly stated purpose to make electric vehicles (although the company had already been working quietly at this for a couple of years). Rawlinson, who left Tesla to join Lucid in 2013 as CTO, was one of the driving forces behind this new mission. He later took on the CEO title and responsibility as well.

While Lucid is often couched as a competitor to Tesla, Rawlinson has told TechCrunch the Air is meant to be a rival of the Mercedes S Class, the internal combustion engine flagship of the German automaker. The investor presentation released Monday echoes Rawlinson’s earlier comments, noting that “Tesla is innovative but not luxury.” Lucid describes itself as “post luxury” and in competition with “established luxury” brands Audi, BMW and Mercedes-Benz.

Lucid is taking a page out of Tesla’s playbook and outlined plans to eventually offer more affordable EVs once it scales production.

Rawlinson will remain as CEO and CTO. The deal is expected to close in the second quarter.

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Covid-19: How would an NHS vaccine passport app work?

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There is growing speculation that a certificate scheme could be built into the main NHS app.

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Facebook launches rap app

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Facebook unveils another experimental app, Atlassian acquires a data visualization startup and Newsela becomes a unicorn. This is your Daily Crunch for February 26, 2021.

The big story: Facebook launches rap app

The new BARS app was created by NPE Team (Facebook’s internal R&D group), allowing rappers to select from professionally created beats, and then create and share their own raps and videos. It includes autotune and will even suggest rhymes as you’re writing the lyrics.

This marks NPE Team’s second musical effort — the first was the music video app Collab. (It could also be seen as another attempt by Facebook to launch a TikTok competitor.) BARS is available in the iOS App Store in the U.S., with Facebook gradually admitting users off a waitlist.

The tech giants

Atlassian is acquiring Chartio to bring data visualization to the platform — Atlassian sees Chartio as a way to really take advantage of the data locked inside its products.

Yelp puts trust and safety in the spotlight — Yelp released its very first trust and safety report this week, with the goal of explaining the work that it does to crack down on fraudulent and otherwise inaccurate or unhelpful content.

Startups, funding and venture capital

Newsela, the replacement for textbooks, raises $100M and becomes a unicorn —  If Newsela is doing its job right, its third-party content can replace textbooks within a classroom altogether, while helping teachers provide fresh, personalized material.

Tim Hortons marks two years in China with Tencent investment — The Canadian coffee and doughnut giant has raised a new round of funding for its Chinese venture.

Sources: Lightspeed is close to hiring a new London-based partner to put down further roots in Europe — According to multiple sources, Paul Murphy is being hired away from Northzone.

Advice and analysis from Extra Crunch

In freemium marketing, product analytics are the difference between conversion and confusion — Considering that most freemium providers see fewer than 5% of free users move to paid plans, even a slight improvement in conversion can translate to significant revenue gains.

As BNPL startups raise, a look at Klarna, Affirm and Afterpay earnings — With buy-now-pay-later options, consumers turn a one-time purchase into a limited string of regular payments.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Everything else

Jamaica’s JamCOVID pulled offline after third security lapse exposed travelers’ data — JamCOVID was set up last year to help the government process travelers arriving on the island.

AT&T is turning DirecTV into a standalone company — AT&T says it will own 70% of the new company, while private equity firm TPG will own 30%.

How to ace the 1-hour, and ever-elusive, pitch presentation at TC Early Stage — Norwest’s Lisa Wu has a message for founders: Think like a VC during your pitch presentation.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

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FCC authorizes $50 subsidies for Internet service for low-income families

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The FCC under its acting Democratic chairwoman, Jessica Rosenworcel, raced to stand up the program after Congress authorized it as part of a sweeping $2 trillion coronavirus aid package lawmakers approved in December. It may take up to two months before Americans can take advantage of it; the government must still fine-tune its systems so that families can apply for, and providers can receive, the emergency benefits. That task is likely to be a tall one for Washington, which historically has struggled to deploy complicated technology under tight time constraints.

Once it is up and running, though, federal policymakers, Internet service providers, educators and consumer advocates anticipate it will provide an immense financial boost to Americans who need the help at a time of high unemployment and economic dislocation. The broad support for the measure has generated political momentum for crafting a more permanent replacement that would help Americans obtain and pay for broadband services once the $3.2 billion fund runs dry.

“This is a program that will help those at risk of digital disconnection,” Rosenworcel said in a statement, citing the fact some students have had to sit in parking lots just to obtain wireless Internet to do their homework. “In short, this program can make a meaningful difference in the lives of people across the country.”

The new broadband program highlights Washington’s new, urgent campaign to close the country’s gap between those who can access the Internet and those who cannot, laid bare by the coronavirus pandemic that forced families to work, learn and communicate primarily online. At least 18 million Americans still lack speedy, reliable Web connections, the FCC found in a report released last June. Government officials said the number probably is much higher.

The U.S. government spends about $9 billion annually to help fund the buildout of broadband infrastructure nationwide, subsidize low-income Americans’ phone bills and help schools equip their classrooms with speedy access to the Web. But the aid at times has been riddled by mismanagement and neglect, undermining Washington’s efforts to address long-standing digital inequalities that disproportionately affect low-income families, people of color and students.

The FCC’s new emergency broadband benefit is intended to provide at least a short-term boost for these Americans while expanding the number of families who are eligible for some federal support. More than 33 million may be able to obtain the monthly aid, according to Free Press, a public-interest advocacy group, which said the number probably will be higher. Those eligible include families whose income is no greater than 135 percent of the federal poverty guidelines and others who participate in programs such as reduced school lunches.

The discounts are limited to one per household. Some families also may be eligible for a one-time credit of $100 to help them purchase a device to access broadband service. They will have to apply to receive the aid, which will be paid directly to Internet providers that register with the U.S. government and obtain permission to participate. Companies are not required to accept the benefits under the program.

AT&T said Friday morning it intends to participate. CenturyLink, Charter, Comcast, Frontier, T-Mobile and Verizon did not immediately commit to accepting the emergency benefits, although many companies and their trade groups have said in recent days they support the FCC’s work and intend to review its new implementing rules. The FCC voted unanimously late Thursday to start the program.

“Closing the affordability gap is vital to ensuring everyone has a chance to get ahead and participate in society,” said Ron Wyden (D-Ore.), the Senate architect of the program. He said he hopes to either extend the benefit or revise other government programs to provide families with a more lasting digital safety net.

“Nearly every aspect of education, health care, work and communication require reliable broadband,” Wyden continued, “so it’s high time to stop treating it like a luxury.”

The entire benefit system may take weeks to set up, meaning families aren’t yet able to apply and may not start to see any aid until April, experts predict. But some public-interest groups — mindful of the federal government’s past missteps — have expressed fears in recent weeks that early hiccups could delay the emergency credits even further. They have aired particular concern with the technology the FCC plans to use to accept most applications and verify that Americans are eligible to receive the aid.

The technology in question is called the National Verifier, an online application tool that the government has used in the past to enroll people in another low-income subsidy program. The verification system is supposed to draw on state and federal data sources to help Americans determine easily whether they qualify to participate in Lifeline, which subsidizes millions of Americans’ monthly phone bills. But fewer than half of states as of last summer had actually integrated their data properly with the National Verifier, a government watchdog found in January. The digital deficiencies meant that people in these states are more likely to be declared ineligible for federal help even when they qualify for it, the report said.

The troubles with the National Verifier first surfaced during the Trump administration, when the Republican-led FCC under then-Chairman Ajit Pai sought to implement a series of massive cuts to the Lifeline program, a Washington Post investigation found. The shortcomings threaten to create fresh technological headaches in delivering new emergency broadband benefits, warned the New America Foundation’s Open Technology Institute, which asked the commission this month to double down on technical upgrades before payments begin.

“The emergency nature of this program will likely demand less-than-perfect procedures in the interest of getting relief to people as quickly as possible,” the OTI said, “but the Commission must adopt sound verification procedures.”

The new broadband benefits are expected to be available for only a few months, until the total $3.2 billion authorized by Congress runs out. But the unprecedented size of the fund — and the expected early demand for the dollars — has left Democratic policymakers and telecom giants in rare accord over the need for a more permanent expansion of the government’s digital safety net.

Without congressional action, millions of Americans in a matter of months may see increases in their bills — or find themselves owing monthly sums they cannot pay. The sudden drop-off could send some families right back into the digital darkness.

“There’s no sense in wasting a crisis,” John Stankey, the chief executive of AT&T, said at a company event Wednesday.

Stankey praised Congress for committing to the subsidy, which will benefit telecom giants’ efforts to retain customers behind on their bills or attract new ones. But he also acknowledged the program’s limitations: “It was more of a Band-Aid,” he said. “As a result of that, by definition, it will probably be inadequate because it is not intended to be an appropriation in perpetuity.”

Speaking at a news conference last week, Rosenworcel similarly stressed the government needed to seize the “opportunity for helping those people stay in that service, even after the program might end.”

“When the funds run out,” she said, “we’ll have to turn to Congress again.”

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