Lucid said on Monday it is raising $1 billion in capital from an affiliate of Saudi Arabia’s Public Investment Fund (PIF), sending the shares of the luxury electric carmaker up about 8%.

The latest investment by the sovereign wealth fund underscores a key advantage Lucid has in the race for survival among struggling EV startups.

The Saudi government, which has a 60% stake, has invested billions in Lucid’s success as part of a strategy to diversify the Kingdom’s economy beyond oil.

Ayar Third Investment Company, a PIF affiliate, will buy $1 billion in convertible preferred stock and will be able to convert the preferred stock into about 280 million shares, according to a filing with the US securities regulator.

The California-based company, which has been facing weaker-than-expected demand, said it intends to use the proceeds for corporate purposes and capital expenditure, among other things.

Lucid is one of several EV startups hit hard by the slowdown in demand growth and a price war sparked by Tesla TSLA.O.

The EV maker, headed by a former Tesla executive, expects to make 9,000 units in 2024, compared with the 8,428 vehicles it made last year.

Lucid’s Air luxury sedans compete with Tesla’s Model S and luxury EVs from Mercedes-Benz MBGn.DE, BMW BMWG.DE, Audi and Porsche PSHG_p.DE, among other brands.

The announcement likely extends the capital run rate, said Andres Sheppard, senior equity analyst at Cantor Fitzgerald, adding that Lucid is likely to make 9,500 vehicles this year and 20,000 units in 2025.

Lucid had said in its fourth-quarter financial presentation last month that it had sufficient liquidity “at least until 2025” and forecast $1.5 billion in capital spending in 2024 as it pushes to launch its Gravity SUV line later this year.

The company had $4.8 billion in available funds at the end of 2023, including $4.3 billion in cash.

Reuters