Jul 14, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning. Today's Smart Brevity count: 1,393 words, 5.5 minutes.

🎵And later this month marks 40 years since AC/DC released "Back in Black," so they'll play us into today's edition...

1 big thing: The EV money jolt

Illustration: Sarah Grillo/Axios

These are heady days for electric vehicle companies, and if you haven't made any cars yet, well, you're still in the club — you might even be a popular member.

Driving the news: Fisker has reached a $2.9 billion deal to go public via a merger with an Apollo Global Management-backed special purpose acquisition company.

  • The deal unveiled Monday will bring Fisker — a member of the hasn't-built-a-car-yet club — over $1 billion in new funding, with heavyweight investors including AllianceBernstein and BlackRock-managed funds.

Why it matters: The capital infusion is the latest in a busy stretch of deals and market moves that suggest private investors and equity markets see big potential in technologies that now represent a tiny slice of the global vehicle fleet.

Catch up fast: There's a lot of private capital and, in Tesla's case, shareholder interest in EV companies lately.

  • The Fisker deal came the same day that Tesla's stock soared, at one point trading near $1,800-per-share (!!), before cooling off to close slightly down at roughly $1,500, but still triple its value the beginning of the year.
  • On Friday, Rivian closed a $2.5 billion funding round ahead of the production launch next year of its SUV, pickup and delivery vehicles for Amazon.
  • Fisker, which hopes to launch production of its Ocean SUV in 2022, last week announced a separate $50 million fundraising round.
  • Karma Automotive, which is in the early stages of producing a plug-in hybrid sports car, has raised another $100 million.
  • Nikola Motors, which has yet to build anything but plans electric and hydrogen-powered pickups and big rigs, saw its stock price soar after going public in June via a transaction similar to Fisker's.

What they're saying: "The EV uprising is real, but the scale of investment into what I would view as fledgling companies is staggering," Wood Mackenzie analyst Ram Chandrasekaran tells E&E News.

The intrigue: What's fascinating to me is that the fundraising and market success spans several business models, from SUVs to delivery fleet vehicles to heavy trucks.

  • I can't say for sure, but when it comes to Rivian, I suspect that their big deal with Amazon (for up to 100,000 electric delivery vehicles by 2030) is part of the reason why investors are jazzed.
  • Big corporate climate pledges are now the coin of the realm, so giant companies could see EV procurement as a way to help reach their goals — even if EVs remain a tiny slice of the consumer market for the foreseeable future.

Don't forget: This item is about startups, but legacy automakers are also rolling out more and more models. This morning BMW took the wraps off of its iX3 electric SUV.

Bonus: On the record with Fisker's CEO

The planned Fisker Ocean SUV. Image courtesy of Fisker Inc.

Fisker CEO Henrik Fisker spoke with Axios' Dan Primack about the company's plans to go public. You can catch some of the interview on the "Axios Re:Cap" podcast, but here are a few snapshots...

What they're saying: Fisker offered several reasons why he's bullish on EV adoption, including:

  • "We are seeing a big push outside the U.S.. both in Europe and China," he said, citing legislative efforts in the European Union.
  • "I think coming out of COVID-19, people had a short glimpse of what the world would look like if it didn't have all these polluting gasoline cars driving around, with the blue sky showing up all over the world," he said.

The big picture: Fisker also touted the merger with Spartan Energy Acquisition Corp. that will enable his company to go public.

  • "I don't think that there's tons of money in the private market. it's a very unstable way to raise money when it's, when you have a venture that's very capital intensive, like the auto market," he said.
  • “We didn't want to take the risk of having to go out and do multiple private rounds. I don't really think that ... typical Silicon Valley investors are the right investors for this type of venture.
  • "So we thought a [special purpose acquisition company] is the right way because that way, we got all the funding to get us all the way to production with our Fisker Ocean."

What we're watching: The U.S. election. If he wins, Joe Biden has vowed to accelerate EV deployment, including much stronger vehicle CO2 rules and a big charging infrastructure buildout.

Go deeper: Fisker wants to use Volkswagen’s EV platform to power its electric SUV (The Verge)

2. Biden to push for major energy spending boost

Joe Biden's imminent expansion of his energy platform will call for investing $2 trillion over four years on climate-friendly sources and a mandate to fully decarbonize U.S. power by 2035, Bloomberg reports.

Why it matters: Tuesday's rollout will provide specifics on the long-anticipated plan to move his platform further left and make it more expansive.

  • A "clean energy standard" for electricity is among the proposals last week from a task force that Biden and former rival Bernie Sanders set up.
  • The spending goal, meanwhile, is substantially higher than what Biden had proposed when he unveiled his climate and energy platform last year.

What's next: The presumptive nominee is slated to make a speech this afternoon in Wilmington, Delaware, to discuss infrastructure and energy planks of his economic recovery plan.

Driving the news: Bloomberg's piece has some other specifics on the plan, including...

  • A "climate conservation corps" modeled after New Deal-era programs.
  • Inclusion of Senate Minority Leader Chuck Schumer's proposal to give big discounts to consumers who trade in gasoline-powered cars for U.S.-made electric models.

Reality check: The new policy and spending proposals, like several pillars of Biden's existing plan, would require new legislation.

  • So they're unlikely to go far unless Democrats also regain control of the Senate.
  • And even then, major energy and climate bills will face big hurdles unless Democrats scrap or weaken filibuster rules.
3. Offshore wind surge aids renewables despite COVID-19
Reproduced from BloombergNEF; Chart: Axios Visuals 

A big rise in offshore wind power deals pushed global investment in new renewable power capacity in the first half of 2020 above the same period last year, new data shows.

Why it matters: It signals how the renewables sector as a whole has proven rather resilient to the pandemic, despite some declines in onshore wind and solar investment, BloombergNEF analysts said.

  • An International Energy Agency analysis in May showed COVID-19 isn't battering renewables as hard as oil-and-gas and other energy industries.
  • However, it's still taking a toll in the form of project slowdowns and layoffs.

By the numbers: Final investment decisions for offshore wind projects totaled $35 billion in the first half of 2020, which is over 300% more than the same period in 2019.

  • "The first half of this year saw investment decisions made on 28 sea-based wind farms, including the largest ever, the 1.5GW Vattenfall Hollandse Zuid array off the coast of the Netherlands, costing an estimated $3.9 billion," it states.

The big picture: Overall investment in new renewable power capacity (excluding large dams) totaled $132.4 billion in the first half of 2020, which is up 5% from the same period last year.

  • But onshore wind investment fell 21% and solar investment fell 12%.

Don't forget: The cost of renewables is declining, which means that each dollar invested brings more bang for the buck — so absolute investment levels do not tell the whole story.

4. States team up in electric truck push

A new pact to speed deployment of zero-emissions trucks, vans, buses and other big vehicles that move lots of people and objects around was unveiled by 15 states plus D.C. this morning.

Why it matters: The new "memorandum of understanding" is non-binding, but it sets aggressive targets, and provides a template for working together on emissions from industries that often operate across state lines.

The big picture: "While trucks and buses only account for 4 percent of vehicles on the road, they are responsible for nearly 25 percent of total transportation sector greenhouse gas emissions," the announcement states.

  • It also notes that medium- and heavy-duty vehicles account for lots of smog-forming and particulate pollution, which disproportionately affects poor people and communities of color.

How it works: The MOU sets a goal of having electric models account for all medium- and heavy-duty vehicle sales in their states by 2050, and a nearer-term goal of 30% by 2030.

  • The states involved include California, New Jersey, New York, Colorado, Pennsylvania and North Carolina.

What's next: The agreement calls for creating a joint plan within six months that includes suggestions for...

  • Incentives states can adopt.
  • Plans to have public transit and other government agencies increase deployment.
  • Infrastructure strategies.
  • Plans to work with private fleet managers.
5. Petro-notes: Earnings and write-downs

Gazprom: "Russia’s Gazprom swung to a hefty first-quarter loss as low oil prices and a weaker rouble took their toll on earnings, though its shares remained bolster by a dividend pledge from the energy giant." (Reuters)

Woodside: "Australian energy giant Woodside Petroleum has wiped billions of dollars off the value of its assets and reset price forecasts for the years ahead, giving the strongest indication yet of the severity and longer-term impact of coronavirus across the nation's oil and gas sector." (Sydney Morning Herald)

Ben GemanAmy Harder