Electric-vehicle battery producer Solid Power on Tuesday announced it’s going public by merging with blank-check firm Decarbonization Plus Acquisition Corporation III in a deal valued at $1.2 billion.
The company is expected to have approximately $600 million in cash, including $165 million from investors such as Koch Strategic Platforms, Riverstone Energy Limited, Neuberger Berman funds, and Van Eck Associates Corporation. The capital will be used to fund operations and growth.
Ford Motors and BMW recently participated in the $135 million Series B funding of Solid Power in May. The two companies also expanded partnerships with Solid Power to secure all solid-state batteries for future electric vehicles.
Solid Power produces rechargeable batteries for electric vehicles and mobile power markets. The company claims its production mirrors lithium-ion manufacturing processes while eliminating certain expensive and timely steps.
Upon closing of the transaction, which is expected to be completed in the fourth quarter of 2021, the combined company will trade under the Nasdaq ticker “SLDP.”
Solid Power is expected to have a nine-person board composed of a majority of independent directors and will continue to be led by Solid Power’s existing management team.
SPACs, shell companies seeking to merge with private companies with the intention of taking them public, have exploded in popularity in the last year.
In 2020, a total of 248 SPACs raised $83.3 billion according to SPAC Analytics. But in the sixth month of 2021 alone, data already show 340 SPACs that have raised $106 billion, comprising 61% of initial public offerings.
As Tesla CEO Elon Musk took to the “Saturday Night Live” stage, competing electric vehicle makers saw an opportunity to advertise.
Lucid Motors, Ford, and Volkswagen each advertised their electric vehicles during the NBC broadcast, according to multiple reports. The Verge reported that the commercials all aired within the first half-hour of the show.
Musk during his opening monologue said he’d “reinvented” electric cars. He also poked fun at Toyota’s Prius.
“One reason I’ve always loved ‘SNL’ is because it’s genuinely live. A lot of people don’t realize that,” he said. “We’re actually live right now, which means I could say something truly shocking, like, ‘I drive a Prius.'”
Volkswagen advertised its VW ID.4, while Ford advertised its Mustang Mach-E, according to USA Today.
After Musk’s opening monologue, there was an ad for Lucid Motors’ upcoming Lucid Air, which is expected to travel up to 500 miles without a charge, Fox Business reported.
CNET reported on Friday that Lucid Motors, founded by a former Tesla employee, had posted a tweet about the commercial. The tweet used the hashtag “#Firstto500.”
Electric vehicle startup Lordstown Motors has been paying salespeople to secure pre-orders of its battery-powered truck prototype for at least five years – a practice that is outside the bounds of most startups without a sellable product – a little-noticed lawsuit from 2017 reveals.
In the suit, a former employee accused Workhorse Group, which Lordstown spun out of in 2019, of failing to pay him commissions he earned by logging over 8,000 pre-orders for the Endurance pickup truck now being offered by Lordstown. A recent report by Hindenburg Research noted the suit, but Insider is the first outlet to report its details and its implications both for Lordstown and the host of startups racing to meet growing demand for EVs.
Commissioning pre-orders is not illegal, but it should raise a major red flag for investors, said Gartner analyst Michael Ramsey.
While Lordstown’s practice appears unique in the EV startup world, experts warn that no matter how they’re collected, pre-orders and reservations aren’t great tools for predicting which young automakers will prosper. Because they’re typically non-binding, they don’t necessarily indicate what level of demand a vehicle will generate when it enters production. A startup’s success is better determined by its technology and talent than by a metric that hinges more on interest than intent.
Lordstown’s pre-order list ‘obviously does not indicate real demand’
Even with the electric vehicle market starting to grow, deep-pocketed investors are crucial to any startup. It takes billions of dollars to launch an automaker. The industry’s history is littered with failures, and most of today’s startups will likely flounder before their products hit the market, according to risk consulting firm Guidehouse.
To attract capital, many fledgling automakers use pre-order figures as a proxy for the demand their future vehicles will command. Tesla in particular has a long history of doing this. The problem is that these orders represent a consumer’s interest in actually buying the vehicle once it reaches the market – not their commitment to do so.
The fact that Lordstown paid commissions for bringing in these orders further undermines the figures’ credibility, Ramsey said. “It obviously does not indicate real demand,” he told Insider.
Lordstown Motors has been commissioning pre-orders for years
The idea for Lordstown Motors originated at Workhorse Group. In 2019, Workhorse CEO Steve Burns left the startup. He bought the patent for its electric pickup, along with thousands of pre-orders for it, and made it the basis for a new company, Lordstown.
Today, Lordstown boasts more than 100,000 pre-orders for the pickup. That’s impressive when compared to those for similar EV startups like Lucid Motors and Fisker, which have about 8,000 and 14,000 pre-orders, respectively.
The 2017 lawsuit was filed against Workhorse by its former director of fleet sales, Jeffrey Esfeld. When he was hired in 2016, Esfeld said, he was tasked with securing up to 10,000 pre-orders per year. In just over a year, he logged more than 8,000 pre-orders, according to the court document. That number alone would account for over 8% of Lordstown’s current pre-orders to date. A Lordstown spokesperson would not confirm whether signatures gathered by Workhorse Group in 2016 are part of that total. (Esfeld declined a request for comment from Insider.)
Esfeld received a commission of roughly $30 per vehicle for each signed pre-order, according to the suit, on top of his $100,000 base salary. He would also receive a commission of 0.14% of the vehicle’s sale price for pre-orders that officially became sales. He was one of several employees that worked specifically on obtaining pre-orders for the truck.
During his time at the company, Esfeld was paid commissions for 3,050 vehicle pre-orders, from companies including Duke Energy and American Electric Power. (The case also notes Esfeld had been working to win over Amazon, which ultimately agreed to buy 100,000 electric delivery vans from Lordstown rival Rivian.) But, he alleged, after laying him off in 2017, Workhorse failed to pay him $440,707 he had earned in commissions, representing about 5,000 pre-orders, including from Ryder, one of Lordstown’s biggest pre-order signees to date. (He ultimately won the suit, and Workhorse paid him an agreed upon amount of $87,000 in damages and $32,245.02 in attorneys’ fees and costs.)
The practice continued at Lordstown. In 2020, the startup hired consulting group Climb2Glory to commission orders, according to Hindenburg Research. On a page that was deleted after the short-seller’s report was released, Climb2Glory referenced how it helped Lordstown generate pre-orders.
Workhorse Group, Lordstown Motors, and Climb2Glory did not respond to requests for comment from Insider.
A questionable spin on a questionable practice
The Workhorse and Lordstown policy of paying commissions for pre-orders appears rare. “This is the first time I’ve heard of a start-up in that space doing anything like that,” Pitchbook analyst Asad Hussain told Insider. Comparable electric car startups, including Rivian, Lucid Motors, Fisker, and Nikola, do not pay commissions for pre-orders or contract workers to secure them, Insider found.
In recent automotive history, Elon Musk set the standard of using pre-orders to preview sales figures. “Tesla’s reservations taught the industry that this is a way to develop credibility with investors,” Ramsey said. But while it once charged $50,000 to pre-order a Roadster, it now asks a mere $100 from someone who wants a Cybertruck. That’s comparable to (usually refundable) reservation fees charged by the likes of Fisker ($250) and Lucid Motors ($300).
That lesson isn’t necessarily a good one, Ramsey said. “Investors need to think long and hard about the viability of the pre-orders that any of these startups are touting.”
Hussain told Insider that investors need to focus more on technology and execution, rather than “propaganda.” He thinks the Wall Street trend of using special-purpose acquisition companies to go public has put a lot of companies, like Lordstown Motors, in a position they’re not mature enough for yet.
“The ability for early stage startups to go to market, even without revenue, creates a double-edged sword,” Hussain told Insider. “It allows everyday people to gain access to disruptive technologies like electric cars, but it also puts new companies and investors in a precarious position – how can they prove there will be demand for their product, without revenue? That’s where pre-orders can get tricky.”
For Lordstown, reliance on pre-orders has put it in the crosshairs of notorious short-seller Hindenburg Research. Just last fall, the same group released a damning report on Nikola that caused the company’s stock to plummet and its CEO Trevor Milton to step down. Currently, Lordstown is under investigation by the Securities and Exchange Commission for its pre-order practices. Its stock is trading at around $9, down from a high of $30 in February.
“A lot of these companies tout non-binding pre-orders or reservations,” Hussain said. “But, if you’re actually paying for them [the pre-orders] it does bring up some questions and it is not characteristic of the space.”
“The key question mark for many of these startups is: Can you actually get your factories up and running? Can you actually manufacture those vehicles?”
For months, investors bought the stock on rumors of a deal, sending the share price surging, only to sell off sharply once news broke that the Michael Klein-backed SPAC would merge with the luxury EV maker.
The Newark, California-based Lucid Motors combined with Churchill Capital Corp. IV at a transaction equity value of $11.75 billion and a pro-forma equity value of $24 billion.
The transaction included a cash contribution from CCIV of $2.1 billion, and a PIPE investment of $2.5 billion, as well as a lock-up provision that “binds holders well beyond closing.”
Shares of the SPAC Churchill Capital Corp. IV originally soared roughly 600% after a Jan. 11 report from Bloomberg said the company was in talks to take the EV maker public.
Investors flocked to the blank-check firm amid a run on electric vehicles stocks, which are set to benefit from a “Biden Administration and Blue Senate green tidal wave,” according to analyst Dan Ives of Wedbush Securities.
With prices starting at $77,400 ($69,900 after the US federal tax credits) Lucid is setting its sights on the luxury end of the elecric car market. The company is starting sales with its luxury models including the Air Dream Edition.
Electric-vehicle maker Lucid confirmed it would go public via the special-purpose acquisition company run by financier Michael Klein with a pro-forma equity value of $24 billion.
The deal will generate about $4.4 billion in cash for 14-year-old Lucid, which plans to use the funds to expand its manufacturing facility in Arizona. The facility has a production capacity of 365,000 units per year at scale.
Churchill’s latest stock performance is a reversal from previous sessions when reports on the deal sparked consecutive rallies.
Lucid’s deal with Churchill, which is expected to close in the second quarter of this year, marks one of the highest-profile SPAC arrangements in the EV space after a wave of interest in electric-vehicle startups and automotive tech suppliers. That may have been sparked by a rally in Tesla’s shares over the past 12 months. Peter Rawlinson, the company’s CEO and CTO, is known for his work as chief engineer at Tesla for the Model S. He joined Lucid in 2013.
“I see the SPAC as just a tool, another lever to pull on, where we can accelerate our trajectory,” Rawlinson told Bloomberg in an interview. “This is a technology race. Tesla gets this. It’s why they are so valuable and Lucid also has the technology.”
The SPAC merger represents the largest capital boost since Saudi Arabia’s sovereign wealth fund injected an investment worth more than $1 billion in 2018. The deal was led by the Public Investment Fund as well as BlackRock, Fidelity Management & Research, Franklin Templeton, Neuberger Berman, Wellington Management, and Winslow Capital Management.
Shares in Churchill fell as much as 35% in pre-market trading to $37.34 per share, after closing at $57.37 per share on Monday.
Rumors about a potential merger between the so-called blank-check special purpose acquisition company (SPAC) Churchill Capital IV and Lucid have been in the works for over a month now.
If the deal goes through, it will use $2 billion in cash raised by Churchill Capital IV’s IPO, as well as an investment of between $1 billion and $1.5 billion from institutional investors to support the transaction.
When the merger is complete the combined entity will be valued at roughly $15 billion, according to unnamed sources at Bloomberg.
Churchill Capital IV’s stock has skyrocketed more than 425% since reports first came out of talks between the Michael Klein-backed SPAC and Lucid Motors last month.
Investors are excited about the prospects of Newark-based Lucid Motors. Lucid is a real competitor to Tesla, and its new all-electric vehicle, the Lucid Air has been praised by critics.
The company’s flagship model, the Air Dream Edition, is set to launch in the second half of 2021 and boasts a Tesla-like performance with a new focus on luxury.
Lucid is backed by Saudi Arabia’s sovereign wealth fund, also known as the Public Investment Fund or PIF, which acquired a 67% stake in the EV maker for about $1.3 billion in 2018.
Bloomberg reported earlier this month that Lucid was in talks to build an EV manufacturing facility near the Red Sea city of Jeddah as a result of its Saudi Arabian backing.
If the Lucid merger with Churchill Capital Corp IV does go through, it will continue a year of monumental growth for SPACs. SPACs have overshadowed traditional IPOs in 2021, accounting for 63% of the nearly $77 billion raised on U.S. exchanges, according to data from Bloomberg.
Even Churchill Capital Corp IV is just one of seven SPACs backed by former Citigroup man Michael Klein. Just last week Klein raised $1.6 billion for his sixth and seventh SPACs.
Churchill Capital Corp IV traded up 17%, at $62.03, at 9:38 a.m. ET in New York.
The Michael Klein-backed SPAC is reportedly in talks with investors to raise between $1 and $1.5 billion for the transaction by selling shares in a PIPE. These funds would be an additional boost to the $2 billion Churchill Capital IV raised from its IPO in July.
According to Reuters, Lucid and Michael Klein have agreed on key terms of the deal, which could be announced as early as this month.
Churchill Capital IV declined to comment on the deal, and Lucid Motors did not immediately respond to Reuters’ request for comment. Both companies did not immediately respond to Insider’s request for comment.
If the deal goes through, it would be yet another successful SPAC merger for the former Citigroup executive Michael Klein who raised another $1.6 billion for his sixth and seventh SPACs on Monday.
Rumors of a potential deal between the Michael Klein SPAC Churchill Capital IV and Lucid started back on Jan. 11 when Bloomberg first reported the two companies were in talks for a potential merger.
Subsequently, shares of Churchill Capital have jumped more than 300% as investors continue to target any news in the red hot EV market.
Lucid Motors was founded in 2007 as a battery company called Atieva by former Tesla executive Bernard Tse and entrepreneur Sam Weng.
Since then, the company has transitioned to a full-fledged EV manufacturer that focuses on luxury offerings. Lucid’s first EV, the Lucid Air, will take aim at the Tesla Model S with its base price of $77,400, a 517 miles of range, and a 9.9-second quarter-mile time.
Lucid also boasts a Casa Grande, Arizona factory that will eventually produce 400,000 vehicles annually, according to the company.
Churchill’s move to merge with Lucid Motors follows a long line of new EV entrants to the public markets over the past few years.
From Chinese EV manufacturer Nio to the Ohio-based Lordstown Motors, EV makers are booming, and SPACs are often their method of choice for entering public markets. More than 130 companies have now gone public via a SPAC merger or buyout in 2021 in what some are calling a SPAC boom.
While some of these SPAC entries have paid off for investors, others haven’t been as fruitful.
Lucid rivals Nikola and Fisker both went public via mergers with SPACs in 2020, and while Fisker has posted strong gains, much of Nikola’s gains have been erased as EV entrants are facing increasing competition.
Still, shares of CCIV responded positively to the news, trading up 32.44%, at $52.95, as of 3:56PM ET on Tuesday.
Churchill Capital IV’s (CCIV) stock rallied as much as 13% Friday amid new signs the company is seeking to acquire EV maker Lucid Motors from an investing consortium led by VC firm Venrock Associates.
According to a Bloomberg terminal news update, CCIV began talks with Venrock Associates and a group of Lucid investors on Thursday, but the financial terms of the potential deal haven’t yet been disclosed.
Venrock Associates is one of the oldest investors in Lucid. The VC firm first bought into the company back in 2009 in a $7 million Series B financing round when Lucid was still a small battery manufacturer called Atieva.
Now Venrock is looking to turn that relatively small investment into a much larger gain by selling its holdings to Michael Klein’s SPAC Churchill Capital IV.
Rumors of a potential Lucid Motors sale or merger with CCIV have been circulating for some time.
On Jan 11, Bloomberg first reported Lucid Motors was in talks to go public via a merger with the special purpose acquisition company. The news caused a 50% rise in CCIV’s share price in just two days. Since then, the stock has appreciated over 240% as investors continue to value the SPAC as if a deal with Lucid is in the works.
Now investors may be getting what they’re looking for, as the most recent news is yet another sign that CCIV and Lucid will eventually merge.
Lucid Motors first gained attention in the media with the release of its luxury EV, the Lucid Air. Even the base model of the electric vehicle will offer a range of 406 miles and a 0-60 of 2.5 seconds. The company says it will start at $69,900 with the incorporation of federal tax credits as well.
Lucid also earned headlines recently after opening a production facility in Casa Grande, Arizona, where it plans on eventually manufacturing 400,000 vehicles per year.
Although for now, there will be limited production of the company’s flagship model, the Air Dream Edition, which starts at $169,000 and will offer 1,080 horsepower and a range of 517 miles.
Lucid plans on producing its first saleable cars out of the Casa Grande factory this spring.
Churchill Capital IV traded up about 13%, at $35.60 per share, as of 9:56AM E.T. on Friday.
The news of Michael Klein’s SPAC potentially merging with EV manufacturer Lucid to take the company public caused shares of the blank-check company to jump some 167% in under three weeks.
Still, Churchill Capital IV has refused to either confirm or deny the reports.
“We do not generally comment on rumors and speculation and will not comment as to whether the Company is or is not pursuing a specific business opportunity other than saying, as noted, we are always evaluating a number of potential business combinations,” the company wrote in a statement on January 19.
Despite the lack of certainty around the merger, hopes of a Lucid acquisition are pushing Churchill Capital Corp IV’s stock higher. And with The Financial Times reporting the EV manufacturer is in talks with the Public Investment Fund of Saudi Arabia to build an electric vehicle factory near the Red Sea city of Jeddah, shares of Churchill are on fire yet again.
The Financial Times spoke with the Saudi fund’s governor, Yasir Al-Rumayyan, who confirmed reports out of Bloomberg earlier this month that said Lucid was thinking of making a new factory in the kingdom.
The move by Lucid seems to be a logical step given the company’s history with the Saudia Arabian fund.
Back in 2018, a cash-strapped Lucid took in a reported $1.3 billion from the Saudis to keep operations running, an investment that was conditional on Lucid developing a production factory in Saudi Arabia, per Bloomberg.
Churchill Capital Corp IV is operated by veteran Wall Street dealmaker Michael Klein, and is the fourth of seven ‘blank-check’ companies which Klein has been using to take partner companies public.
In this case, the partner firm is Lucid Motors, a relatively well-established EV manufacturer based out of Newark, California, and which targets the luxury end of the car market. The deal could potentially value Lucid at $15 billion, according to Bloomberg.
Starting at $77,400 ,the Air features a 9.9 second quarter-mile and fast-charging that captures 300 miles of new EV range in just 20 minutes.
Shares of Churchill Capital Corp IV are trading close to $15 after hovering around the $10 mark for months. The SPAC was the third most traded name among Fidelity customers as of Tuesday morning, behind EV makers Nio and Tesla, according to data from Fidelity.