British luxury automaker Aston Martin (ARGGY) announced a "long-term strategic technology partnership" with electric vehicle maker Lucid Motors (LCID) on Monday which will see Lucid supply components and systems to power future Aston Martin EVs.
Shares of both Lucid and Aston Martin were surging on Monday following the announcement.
The agreement will see Aston Martin gain access to Lucid's high-performance twin motor drive unit, battery technology, and Wunderbox inverter, as well as technical support from Lucid.
Lucid's powertrain and battery systems are widely acclaimed and a major reason why the Lucid Air sedan secured MotorTrend's car of the year honor in 2022.
In terms of financial details, Aston Martin will issue new shares to Lucid as well as phased cash payments, totaling approximately $232 million.
Aston Martin will also commit to spending at least $225 million on Lucid's powertrain components, and will also pay another $10 million to Lucid for integrating its technology into its vehicles.
Aston Martin stock rose 10% on Monday while Lucid shares were up about 5% in afternoon trading.
"The supply agreement with Lucid is a game changer for the future EV-led growth of Aston Martin," said Lawrence Stroll, Aston Martin chairman, in a statement. "Based on our strategy and requirements, we selected Lucid, gaining access to the industry's highest performance and most innovative technologies for our future BEV products."
Aston Martin had previously worked with Mercedes-Benz on hardware and software tech for its gas-powered cars and some electrified applications. Aston Martin said Monday that Mercedes will continue to provide access to technologies for future and current vehicles.
The latest deal follows Aston Martin deepening its financial relationship with China's Geely, partnering with Honda to power its Formula 1 team, and selling a 17% stake to Saudi Arabia’s Public Investment Fund (PIF). The PIF also owns over 60% of Lucid Motors.
As for Lucid, licensing its IP — or "white labeling" its tech — to Aston Martin is the first of what investors hope will be many similar deals going forward. Lucid sees the Aston Martin deal "paving the way for more mainstream applications' of its powertrain technology.
Lucid's CEO Peter Rawlinson has said in the past that licensing Lucid's tech has "mouthwatering potential," and other car companies have approached the EV maker.
"The deal makes sense for a smaller luxury automaker such as Aston Martin who doesn’t have the R&D resources to devote to costly EV development like many larger global automakers do," CRFA analyst Garret Nelson tells Yahoo Finance. "We could see more of these types of agreements in the future from luxury automakers seeking to work with newer EV manufacturers, especially with the EV manufacturers experiencing significant losses and cash flow pressures."
As for Aston Martin’s EV plans, the automaker will develop an all-new platform that will power its electrified cars — from hypercars to SUVs — with the company's first EV launching in 2025.
By 2026, Aston Martin said all new model lines will feature an electrified powertrain option, with the aim of being fully electric by 2030.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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