(Reuters) -Lucid is raising $1 billion in capital from an affiliate of Saudi Arabia's Public Investment Fund (PIF), it said on Monday, sending the shares of the luxury electric carmaker up 18% before the bell.

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 regulatory filing with the U.S. 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.

The company, 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, BMW, Audi and Porsche, among other brands.

Lucid had last month said in its fourth-quarter financial presentation 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.

(Reporting by Akash Sriram in Bengaluru and Joe White in Detroit; Editing by Arun Koyyur)