Aston Martin Lagonda’s (LSE: AML) share price surged today, rising by 10% on the back of a transformative announcement regarding its electrification strategy.

The luxury carmaker revealed a supply agreement with Lucid Motors, a US-listed company, aimed at developing industry-leading ultra-luxury high-performance electric vehicles. This collaboration will pave the way for Aston Martin to launch its first battery electric vehicle (BEV) in 2025.

As part of the deal, the FTSE 250 listed firm will issue 28.4 million shares to Lucid Motors, granting the EV specialist a 3.7% stake in the British carmaker. Additionally, Aston Martin commits to allocating a minimum of £177 million towards the development of powertrain components. Roberto Fedeli, Chief Technology Officer of Aston Martin, said that the agreement with Lucid Motors is a significant aspect of their electrification strategy, enabling the creation of a bespoke BEV platform that can be employed across all future Aston Martin products, including hypercars, sports cars, and SUVs.

Aston Martin has ambitious plans in the EV sector, intending to launch its first hybrid vehicle, the Valhalla supercar, in the coming year. By 2030, the company aims to offer fully electrified options across its vehicle range. The collaboration with Lucid Motors provides Aston Martin with an additional pathway to achieve these targets, building upon their existing partnership with Mercedes-Benz, which supplies EV technology to the luxury carmaker.

The collaboration between Aston Martin and Lucid Motors represents a game-changing move for Aston Martin’s future growth in the EV sector. Lawrence Stroll, Executive Chair of Aston Martin, expressed confidence in the partnership, highlighting the support from both Lucid Motors and Mercedes-Benz as world-class suppliers for Aston Martin’s internal development and investments, which are crucial to executing the company’s electrification strategy.

Industry analysts have long questioned how smaller carmakers like Aston Martin would navigate the costly transition to electric-powered vehicles and the growing demand for digital technology without the backing of larger automotive groups. However, Aston Martin’s recent partnerships and investments, including the increased stake by Geely, one of China’s prominent independent carmakers, have fueled optimism. As a result, Aston Martin’s market sentiment has significantly improved, leading to an almost 80% increase in its market value over the past year.