Battery startups recharge the SPAC market
- Alan Neuhauser, author of Axios Pro: Climate Deals
Illustration: Aïda Amer/Axios
The past month has seen three SPAC mergers by battery storage startups: Amprius, Gogoro and, this morning, Dragonfly Energy.
Why it matters: While investor interest in SPACs has cooled, they remain hot in at least one sector.
Driving the news: Dragonfly Energy, which is producing "deep cycle" lithium-ion batteries, announced a SPAC agreement with Chardan NexTech Acquisition 2 (Nasdaq: CNTQ).
Yes, but: The valuations, at least for Dragonfly and Amprius, are relatively modest.
- Dragonfly's SPAC values the combined company at about $500 million, while Amprius comes in at at roughly $939 million.
- By comparison, SPACs in 2021 were regularly fetching multi-billion-dollar valuations and beating out traditional IPOs.
What they're saying: "The question becomes, as much as batteries are important and critical, how many battery companies can the ecosystem support?" Girish Nadkarni, the recently retired head of TotalEnergies Ventures, tells Axios.
- "When Atlanta was booming, every hotel company went there. So there were 25-30 hotels built there, each predicting 15%-20% market share. Mathematically, that doesn't work, so you knew one or more of those hotels wouldn't survive," Nadkarni continues.
The bottom line: Between EVs and the firming up of renewables, we know the demand for batteries won't be subsiding anytime soon.