Why Are So Many SPAC Targets EV Companies?

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points form the article:- Why Are So Many SPAC Targets EV
Companies?- Electric-truck maker Nikola Motor Co. went public
through a SPAC merger in summer 2020, and was one of a few
high-profile SPAC transactions that helped make blank-check
company mergers en vogue (DraftKings and Virgin Galactic were the
other two).- Revenue projections vs. actual revenue- The way that
they’re able to go public through a SPAC is the SPAC process
allows them to use revenue projections out into the future to
entice investor demand. Whereas, if you do it through the IPO
process, the SEC doesn’t allow you to do that.”- Electric air
taxi startup Lilium Air Mobility (not exactly a vehicle, but also
in the electric transit space) also announced plans to go public
through a SPAC this week, and rival Joby Aviation said in
February that it would go public through a blank-check merger as
well. Neither has a product on the market.- Electric vehicle
companies are also in a capital-intensive business, so they need
money to grow.- The companies likely wouldn’t have to give up as
much equity or dilute existing shareholders as much as they would
if they got a cash infusion from a VC firm.- Tesla’s stock
performance over the past year indicates we might be at the point
where electrification can be mainstream- EV brings together two
huge markets that have been historically separate —transportation
fuel and electricity — to create a giant market.- Even if an EV
company isn’t considering a SPAC, it’s hard to not consider one
when its competitors are bolstering their balance sheets via such
deals.- A series of public policy moves have made it so that EV
is the future.


 


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