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Electric vehicle start-ups that went public through SPAC deals over the past year are trying to prove their worth to Wall Street as investors grow increasingly skeptical of their future and securities regulators scrutinize their books.

Canoo and Lordstown Motors recently held in-person investor days to tout their technology and new products following executive shake-ups, inquires by the Securities and Exchange Commission and significant declines in shares.

Others have launched advertising or marketing campaigns to attract potential buyers as Wall Street closely watches vehicle reservations, an indicator of future sales. Lucid, which has announced a SPAC deal but is yet to go public, began a national television campaign in December, while Fisker CEO Henrik Fisker uses social media to generate buzz and tout his company. The well-known automotive designer even launched a new line of Fisker clothing that includes $30 T-shirts and nearly $100 sweatshirts.


The companies are among a growing group of EV start-ups to go public or announce plans to do so with SPACs, or special purpose acquisition companies. Others have included Nikola, Arrival, Faraday Future, Electric Last Mile and a host of other auto- and tech-related companies.

Despite the hype, none of the companies have produced a saleable vehicle and some such as Fisker and Canoo remain more than a year out from even producing their first vehicle.

Most deals were initially celebrated by investors, sending shares through the roof and making some founders millionaires, if not billionaires, overnight. But the tides have turned against many of the companies after crackdowns this year by the SEC, including investigations, warnings to investors and potential changes to accounting guidelines.

“Do I think like there’s going to be a correction? Absolutely. The public market figures things out,” said The companies are cooperating with the SEC inquiries, which has investments in auto companies Wejo and AEye that have announced SPAC deals. “I think we’re already seeing it right now that the appetite for very early stage is decreasing.”

The CNBC SPAC 50 Index, which tracks the 50 largest U.S.-based pre-merger blank-check deals by market cap, has slumped by about 4% year to date. Post-merger SPACs are faring much worse — the CNBC SPAC Post Deal Index, which is comprised of the largest SPACs that have come to market and announced a target acquisition, has fallen by nearly 10% so far this year.

SEC involvement
A SPAC is a blank-check company, used as an alternative to an initial public offering, because it raises funds to buy something but doesn’t have any operations of its own. SPACs are publicly traded companies that don’t have any real assets other than cash. They are formed as investment vehicles with the sole purpose of raising funds and then finding and merging with a privately held company. It’s a faster way to take a company public than a traditional IPO but some have run into trouble.

At least three SPAC-backed automotive companies – Nikola, Lordstown Motors and Canoo – have received inquiries from the SEC. Each has ousted the founders and CEOs of the companies. The companies have said they are cooperating with the SEC inquiries.


Others that announced deals such as Lucid and Faraday Future have missed their targeted closing dates in the second quarter, a potential red flag amid a cooling SPAC market and increased scrutiny of SPACs by the SEC.

“I’m glad we’re not starting a SPAC today,” James Taylor, co-founder and CEO of Electric Last Mile Solutions said Monday on CNBC’s “Squawk Box.” “No question, there’s been some challenges in a few of the SPACs.”

Electric Last Mile agreed to go public through a reverse merger with blank-check company Forum Merger III Corp. in December that valued the EV company at $1.4 billion. It started trading on the Nasdaq on Monday.

The company also missed its original closing date in the first quarter, which Taylor attributed to the SEC review and new accounting guidance for SPACs to treat warrants as liabilities instead of equity on their balance sheet.

The SEC is devoting significant resources to addressing emerging issues in SPACs, new ideas and recommendations around SPACs and how to appropriately protect retail investors, SEC Chairman Gary Gensler said last month.

The slowdown in the SPAC market has been dramatic since the SEC’s increased involvement. According to SPAC Research, 46 companies went public via SPAC deals from April through mid-June. That compares with an average of about 100 per month during the first quarter of the year.

“There’s been a bit more realism or practicality applied lately, which always seems to happen after the company goes public,” Morningstar analyst David Whiston told CNBC. “You’ve had the initial hype but now you’ve got the reality of, you need to execute.”

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Electric vehicle SPACs try to prove their worth to Wall Street as shares fall