A battle may be shaping up between the two richest men in the world over who controls the luxury electric car market

The Frenchman, head of luxury goods group LVMH, plans to help take niche English sports car brand Lotus public through a so-called SPAC deal in the latter half of this year. 

In a statement published Tuesday, the Arnault-affiliated “blank check” investment vehicle L Catterton Asia Acquisition Corp said it agreed to a reverse merger with Lotus Technology in a deal that will effectively value the latter at $5.4 billion in combined equity and debt. 

The privately held carmaker’s existing shareholders, which include Hangzhou-based Zhejiang Geely Holding, will retain 89.7% of the merged entity assuming no LCAA investors redeem their Nasdaq-listed shares.

“The global EV market is expanding rapidly, with the luxury segment growing at a faster pace than the broader industry,” said Chinta Bhagat, co-CEO of LCAA, in the statement. “Lotus Tech is well positioned to benefit from these dynamics.” 

LVMH could not be reached by Fortune for comment.

Although Arnault cobbled together Europe’s most valuable company through decades of methodical acquisitions, it’s extremely unlikely he has any intention of rivaling Elon Musk in his own EV market.

That’s because Lotus, majority owned by Chinese automotive billionaire Li Shufu via his Geely Holding, is actually quite small—even by niche brand standards.

Lotus has the kind of heritage that appeals to Arnault

In 2021, the final year of production for the Elise, Exige and Evora car models, the Norfolk-based Lotus company sold just 1,710 new cars—and that was its best result in a decade. All told, Lotus has barely built more than 100,000 vehicles in its history.

By comparison, Tesla sold over 1.3 million vehicles last year, nearly 67,000 of which were its luxury S and X models. Tesla forecasts it could sell 1.8 million in 2023, and potentially even more.

Yet Lotus does feature what appeals to Arnault: a European heritage and luxury cachet it traces back 75 years to when cofounder Colin Chapman built his first car in a London garage.  

The brand first achieved prominence in the 1977 film The Spy Who Loved Me, when fictional British secret agent James Bond traded in his Aston Martin DBS for the wedge-shaped Lotus Esprit S1, designed by industry legend Giorgetto Giugaro. 

While it has gone through a slew of different owners that failed to translate its previous successes in motorsport into a thriving business, Lotus has still retained a certain mystique.

It was this storied reputation that helped attract the highly respected auto manager Jean-Marc Gales in May 2014 to serve as its CEO for four years. The native Luxembourger stabilized the troubled company and helped it achieve profitability prior to the 2017 sale to Shufu and the latter’s minority partner in the deal, Etika Automotiv of Malaysia.

In addition to the new Lotus Emira that launched in November and the £89,500 ($110,155)-priced Eletre SUV that rolls into markets from the first quarter of this year, the EV carmaker plans to use the funds from the reverse IPO to develop a midsize SUV and a full-size sedan over the next four years. 

Importantly, however, it aims to avoid saddling itself with any fixed costs by partnering to have its cars built at Geely’s Wuhan plant in China.

There is one more historic significance to the brand that might appeal to Arnault: due to Lotus’ longtime focus on engineering lightweight sports cars, the Elise’s chassis served as the underpinnings for the original battery-powered Tesla Roadster. 

To this day that fact still irks Musk, who two years ago called it a “super-dumb strategy.”

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