Wall Street is searching for electric vehicle gold

Wall Street speculators are flocking to electric vehicle startups, assigning gigantic valuations to companies that have yet to produce any vehicles, much less any revenue or profits.

Why it matters: Searching for the next Tesla is a risky proposition. It's still unclear how quickly the electric vehicle market will develop, or how large it will ultimately become — and some of the new electric vehicle players are likely to fail.

What's happening: At least nine electric vehicle-related startups have gone public, or will soon, through a so-called reverse merger with a publicly traded shell company. These special purpose acquisition companies (SPACS) open up new paths to public markets for many companies.

• A handful of other electric vehicle startups are sticking with private financing, some backed by deep-pocketed strategic partners like Amazon, which owns a stake in Rivian, for example.
• Although they're generally lumped together, hardly any of the newcomers are actually trying to copy Tesla, which — don't forget — struggled mightily at first.
• Instead, they're trying to broaden the market Tesla created by carving out new niches, and employing different business strategies.
• Not surprisingly, each company offers a bullish view of the future — along with rosy financial projections — which Barron's cautions are highly speculative.

Here's a partial scorecard to keep track of the players and what sets them apart:

'The electric carmakers:

• Lucid, backed by Saudi Arabia's sovereign wealth fund, claims its Lucid Air luxury sedan is more efficient than a Tesla, but the $700 million cost of a new factory, now under construction in Arizona, could weigh down the company's growth.
• Fisker, which went public Oct. 30, is keeping costs down by outsourcing the electric vehicle platform and manufacturing of its Ocean midsize SUV to Magna, a big auto supplier.
• Canoo, whose SPAC deal should close by year-end, will also outsource production of its electric vans for both consumers and last-mile delivery.

The electric truck manufacturers: Commercial trucks could be first in electrification, which is why companies like Rivian and newly public Hyliion Holdings are targeting fleet customers. Others are too:

• Lordstown Motors, which started trading Oct. 26, is developing an electric pickup truck for commercial fleet buyers looking to save on fuel costs.
• Arrival, backed by Hyundai, UPS and BlackRock, plans to build its electric delivery vans in a series of low-cost microfactories.
• Nikola, the first in the pack to go public, is working on battery-electric and hydrogen fuel cell trucks and it, too, is building a huge factory in Arizona. But a potential partnership with GM is being renegotiated.

Electric vehicle parts and infrastructure:

• Romeo Systems and XL Fleet are working on electric vehicle powertrain components, while QuantumScape is developing solid-state battery technology. All three are going public through SPAC deals.
• Chargepoint sells electric vehicle charging equipment to businesses and parking lot operators, and charges them an annual fee for access to the Chargepoint network. It, too, is going public in a reverse merger.

My thought bubble: Building a car company from scratch is capital intensive, which is why so few are successful. Electric trucks make a lot more sense than passenger electric vehicles, since their routes are predictable and they can be charged overnight at a central depot.

• Of all the electric vehicle-related companies to go public, Chargepoint might be the lowest risk. It requires very little capital, its revenue is recurring, and it's not dependent on selling a lot of vehicles to succeed.

The bottom line: It can be hard to find the winners among all these unproven players, which helps explain the wild ride in electric vehicle stocks.

Editor's note: This story was corrected to note Arrival is backed by BlackRock, not Blackstone.