Why it matters: Tesla suddenly finds itself with a serious rival as Lucid lands a $1 billion investment from Saudi Arabia.
The PIF said on Monday its investment would finance the commercial launch of Lucid's first electric vehicle in 2020 by supporting engineering development and testing.
Tesla stock dropped Monday on reaction to the news, the same day that the Saudi fund announced it had taken its first loan, an $11bn borrowing from global banks as it tries to expand its investments.
Saudi Arabia's 33-year-old Crown Prince Mohammed bin Salman has talked about using the country's PIF to help diversify the economy of the kingdom, which relies nearly entirely on money made from its oil sales.
FILE PHOTO - Peter Rawlinson, Chief Technology Officer and Vice President of Lucid Motors, speaks during the TechCrunch Disrupt event in New York City, U.S., May 16, 2017.
"It's all the capital we need for three things: to continue the development of the auto, to construct the factory in Arizona, and to initiate the rollout of our global retail strategy and that will commence in the USA because that's our first market", he said.
The all-electric Lucid Air will have a range of over 400 miles (640 kilometers).
Lucid plans to make the Air at a factory it's building in Casa Grande, Arizona.
The PIF has committed to US$95 billion in investments in the past two years from firms like British tycoon Richard Branson's space tourism company Virgin Galactic to high-risk tech firms such as Tesla.
The news about his rival comes after Musk on August 7 tweeted that he had "funding secured" to take Tesla private. The Securities and Exchange Commission is reportedly investigating Musk's disclosure on Twitter.