Show an ad over header. AMP

I am the FIRST

Electric vehicle SPACs lose their luster

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.

American father and son plead guilty to helping former Nissan chair Carlos Ghosn flee Japan

Americans Michael Taylor and Peter Taylor pleaded guilty in a Tokyo court Monday to helping former Nissan chair Carlos Ghosn escape Japan in a box aboard a plane in 2019, per the Wall Street Journal.

The big picture: Ghosn was awaiting trial in Tokyo on financial misconduct charges following his 2018 arrest when he fled to Lebanon. He denies any wrongdoing.

Keep reading... Show less

Reports: Trump DOJ subpoenaed Apple for records of WH counsel Don McGahn

Apple told former Trump administration White House counsel Don McGahn last month that the Department of Justice subpoenaed information about accounts of his in 2018, the New York Times first reported Sunday.

Why it matters: Although it's unclear why the DOJ took the action, such a move against a senior lawyer representing the presidency is highly unusual.

Keep reading... Show less

Pelosi demands Barr and Sessions testify on data subpoenas she says go "beyond Richard Nixon"

House Speaker Nancy Pelosi (D-Calif.) told CNN Sunday that former Attorneys General William Barr and Jeff Sessions should testify before Congress on reports that the Trump-era Department of Justice seized Democrats' and journalists' data records.

Driving the news: DOJ Inspector General Michael Horowitz announced Friday an internal investigation into the matter, and Pelosi expressed disbelief to CNN's Dana Brash at assertions that neither Barr nor Sessions knew of probes into lawmakers.

Keep reading... Show less

Shipping giant CEO says business have to avoid global politics

The CEO of the world's largest container-shipping company cautions that international firms have to be careful of taking political stances.

  • What they're saying: "We cannot run a global business if we start to have views on politics in every single country that we are in," Maersk CEO Søren Skou tells "Axios on HBO."
Keep reading... Show less

Chamber of Commerce CEO Suzanne Clark defends overture to Democrats

U.S. Chamber of Commerce president and CEO Suzanne Clark told me on "Axios on HBO" that the business group was right to endorse vulnerable House Democrats last year, despite the flak that resulted from Republicans.

  • Clark, who took over the top job in March, said those House Democrats "had really helped push business's number one priority, which was the free trade agreement with Canada and Mexico, over the finish line."
  • "All of the Republicans that we work with on tax, on regulation — those people are really, really important to us," she added: "So we have to be willing to have a different coalition on every issue."
Keep reading... Show less

Nuclear watchdog: “Essential” to have deal with Iran

The head of the International Atomic Energy Agency tells "Axios on HBO" that it's "essential" to have a nuclear deal with Iran because otherwise "we are flying blind."

Driving the news: Director-General Rafael Mariano Grossi sat down with "Axios on HBO" at IAEA headquarters in Vienna, ahead of Iran's June 18 presidential election and a June 24 extension on negotiations seeking to restore curtailed surveillance of Iranian nuclear sites and salvage the 2015 deal.

Keep reading... Show less

U.N. ambassador Thomas-Greenfield sees tough Putin summit

Photo: "Axios on HBO"

Ambassador Linda Thomas-Greenfield, U.S. ambassador to the U.N., told me on "Axios on HBO" that President Biden will be candid, frank — and tough — during this week's summit with Russian President Vladimir Putin.

  • "The president will make clear to the Russians that they cannot harbor cyber terrorists and criminals in their country and not be held accountable for it," she added. "And they need to take the responsibility for dealing with this issue."
Keep reading... Show less

Dems’ go-it-alone approach faces big hurdles as left’s frustrations spill over

If a bipartisan group of lawmakers fails to strike a deal on the infrastructure proposal it's negotiating with the White House, ramming through a package using the partisan reconciliation process isn't a guaranteed solution.

Why it matters: Getting 51 Democratic votes would be a long, uphill battle. And moderates within the party are balking at the cost of President Biden's spending — even as progressives openly lament that the "transformational" change they seek is slipping out of reach.

Keep reading... Show less



Get Goodhumans in your inbox

Most Read

More Stories