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EV SPACs teeter at cliff's edge

Jun 1, 2022
Electric Last Mile Solutions stock price
Data: Yahoo Finance; Chart: Simran Parwani/Axios

Electric vehicle makers that went public via SPAC are facing a financing crunch after a market rout tanked share prices of the most embattled companies.

Why it matters: The heady days of the SPAC surge are over, and EV makers — and their investors — are getting left in the dust.

Driving the news: Electric Last Mile Solutions quietly amended its outlook via an SEC filing on Friday to update its financial guidance.

  • It now expects to run out of money at the end of June if it does not obtain additional financing.
  • It previously disclosed that it expected to run out of funding between July and September, according to an earlier filing.
  • Its stock was just $0.60 at close Tuesday, an all-time low. Its original SPAC agreement valued the company at $1.4 billion in December 2020.

Context: EV maker Canoo, another SPAC cautionary tale, told investors in May there was "substantial doubt" about the company's ability to continue as a "going concern."

  • Lordstown Motors, one of the first EV companies to go public via SPAC, also issued a going concern warning to investors on its most recent earnings call.
  • Others former SPAC-ers like Nikola have faced setbacks such as lawsuits and executive departures in addition to tanking share prices as challenges mount against the industry as a whole.

Between the lines: SPACs were a risky bet that appealed to capital-intensive businesses like EV makers because of the expedited process, minimal disclosures and sometimes meager diligence processes.

  • EV entrepreneurs and investors are painfully reminded that the house always wins.
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