No one understands the challenges of raising capital on Wall Street quite like CEO Henry C. Nicholas III, who formed Elon Musk’s beloved SpaceX program by taking a $12 million initial investment from his aerospace company and nearly doubled the amount he invested three years later by selling shares at a $3 billion valuation. Nicholas left Elon Musk’s SpaceX when Elon Musk took on the helm of Tesla in August of last year, but he has remained intimately involved in the very same model of manufacturing engineering and development of an electric car. In a Monitor interview, he explains the challenges of fundraising and explaining Lucid’s potential.
What has been your biggest challenge as Lucid Air takes shape?
Huge equity investments. We have to operate with hundreds of millions of dollars in capital at any given time. A company that provides a pretty substantial market opportunity, we have to have a lot of liquidity at any given time.
What are the challenges of fundraising?
Venture capitalists are starting to ask more and more questions about why we are using a warehouse in LA County instead of a plant in the Midwest to build the cars.
What about attracting more outside investment?
We just completed a $650 million funding round, and that was led by some great new investors, including Allen & Company. There is a big investor community that is very supportive of our new platform. It’s not as if you have to recruit investors away from the other leaders of the industry – that just simply hasn’t happened.
How does your investment in Tesla help Lucid?
The biggest story in the space right now is Elon Musk and the guys at Tesla. It’s such a great story and a great story for the auto industry as a whole. They have raised a ton of money – it’s hard to single out the sum over the years. These are raising big piles of money, and that is very helpful to a potential manufacturer.
Where do you think Tesla’s mistakes have affected you, and how do you plan to work through them?
They are going to have some challenges, sure. It is very hard to build an assembly line that is really, really fast. They’ve got to keep the battery assembly to move. That makes them special. They’ve spent a lot of money trying to learn that process and establish that system, which is a lot of money. Even though Tesla hasn’t done it yet, it’s hard to execute on such a large scale. A lot of high-volume manufacturing that has been successful in other industries haven’t worked because they haven’t learned how to do it.
At the same time, you’ve got a lot of other things – you’ve got Autopilot, a lot of software, batteries, and engine development. In a lot of ways, my skills and my connections are very helpful to Lucid Air. The reason I’m still here and for a reason Elon liked me for in the first place is that I’ve learned how to work through these major obstacles. I’ve been in several big talks with companies. We are not working closely on the actual production of the vehicles, but they are asking us to help demonstrate that they can do things faster.
What role does Lucid’s manufacturing help play in all of this?
I think we are starting to bring some of the production engineering that Elon brought to Tesla to a real-world car. That’s been incredibly valuable to me because it is what we are doing for a real-world vehicle that people can drive. We’ve got a lot of really smart manufacturing people who are going to be working on how to put together a real-world production line.
Read the full interview: Lucid Air
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