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Illustration: Shoshana Gordon/Axios

Investors have been falling out of love with electric vehicle startups — particularly the ones that have merged with SPACs.

Why it matters: EV companies were a hot target for SPACs last year as investors saw long-term growth opportunities in the global transition to clean energy.

  • But the mood has changed as incumbent automakers, Ford and GM, have stepped up their plans to become more competitive in the EV market.
  • Growing regulatory scrutiny over SPACs and broader market sentiment shifts are also casting shadows over the sector.

Driving the news: Shares of pre-revenue EV company Lordstown Motors plunged 15% after the Monday announcement that the company needs to raise additional capital — though the stock has recovered throughout the week.

  • On the flip side, shares of Ford have gained 13% since Wednesday, when the company said it expects EVs to make up 40% of its worldwide sales by 2030.
  • Ford's message, in a nutshell: We have the scale, plus manufacturing and engineering know-how, that the startups lack.

The SPAC factor: Entrepreneurs eager to capitalize on the clean energy revolution opted to fast-track pre-revenue EV companies to the public markets through SPAC deals.

By the numbers: Four EV makers that completed a SPAC merger last year — Fisker, Canoo, Lordstown and Nikola — are trading between 72% and 90% lower than their highs.

  • Shares of 19 EV and EV-adjacent companies that have gone public via SPACs have seen their share prices fall about 50% from their highs, according to an Axios analysis of SPAC Research data.
  • Even Tesla is down 16% so far this year.
  • Meanwhile, GM and Ford shares have gained 43% and 61%, respectively.

What they’re saying: The initial hype for EV stocks is similar to what happened during the early 2000s tech boom, Bill Selesky of Argus Research tells Axios.

  • Like pre-revenue tech companies then, these new EV makers have warned investors that it could take years to grow — but investors are showing more skepticism, and less patience.
  • Dan Ives at Wedbush notes that SPACs have also added more EV companies to the public markets, creating an "arms-race" feel.
  • "As appetite for risk has declined in this environment, no sector besides tech has been hit as hard as the EV landscape," Ives says.

Reality check: The chip shortage and concerns of rising inflation and subsequent rate hikes have pushed many investors to risk-off mode.

Our thought bubble: New EV companies are motivated by the idea of being the next Tesla, while investors want to find the next Tesla.

  • But history is littered with examples of car companies that have failed — even Tesla has come close many times.

The bottom line: Incumbent carmakers will likely end up winning a large portion of the EV market, while smaller companies get scooped up or fold. 

  • Some investors will get burned along the way. But the world will ultimately have a lot of EVs.

Go deeper

Ben Geman, author of Generate
Aug 27, 2021 - Energy & Environment

The other job for batteries in boosting the electric vehicle market

Illustration: Annelise Capossela/Axios

The electric mobility company Revel is installing battery storage at a New York City charging hub in a partnership that represents a growing and evolving trend in the industry.

Driving the news: Revel is adding storage from the firm Electric Era to help power its large charging "superhub" in Brooklyn that offers public access and charging for Revel's ride-hailing vehicles.

Updated 16 mins ago - Energy & Environment

Thousands without power as "hazardous" winter storm lashes East Coast

Satellite imagery of the Northeastern U.S. taken by NOAA on Jan. 17. Photo: NOAA

A major winter storm lashed much of the East Coast Sunday and Monday, causing widespread power outages and disrupting travel over the holiday weekend.

The latest: Authorities in North Carolina confirmed that two people died in a car crash and that they responded 600 vehicle accidents during the storm on Sunday, per the Washington Post.

3 hours ago - Health

CDC director says COVID-19 messaging should have been clearer

Rochelle Walensky. Photo: Stefani Reynolds-Pool/Getty Images

Rochelle Walensky, director of the Centers for Disease Control and Prevention, said in an interview with the Wall Street Journal that the messaging around the COVID-19 pandemic and changing guidance should have been clearer.

State of play: Walensky is being coached by media experts and is planning to have more press briefings by herself in order to ensure that CDC is seen as an independent, scientific entity, rather than as a political one, the Journal reports.