Here's a financial columnist's opinion on how the 'next Tesla' companies are progressing. To summarize, there's a lot of smoke & mirrors.
The author is solid. He used to put together deals like the present EV startup investments. I'm subscribed to his daily articles like this one. [His experience includes]" ...investment banker at Goldman Sachs, a mergers and acquisitions lawyer, and a clerk for the U.S. Court of Appeals."
"every one of them firmly believes that it will be between “the next Tesla” and “much bigger than Tesla.” ...and maybe one or two will be companies in the recent crop of SPAC-funded electric-vehicle startups. But will Nikola Corp. and Fisker Inc. and Lordstown Motors Corp. and Canoo Inc. and Arrival Ltd. and Faraday & Future Inc. and Lion Electric Co. and Proterra Inc. ...
all be the next Tesla? Seems implausible. Some of these things are not going to work out.
"they all need lots of money to start making vehicles, so they all go to investors to ask for money ...
"It is one thing to say “we hope to sell a zillion electric trucks in 2030”; it’s another thing to say “we already have trucks rolling off the assembly line” when you don’t, as Nikola Corp. more or less did. That is the sort of, uh, let’s say fraud-adjacent behavior
"Lordstown Motors Corp. was so excited about making and selling electric trucks that it went around telling people it had already sold a bunch of them. But in fact it had not,
oops:
Lordstown Motors Corp. shares took their biggest one-day drop ever after its two top executives stepped down ...a board investigation concluded it had made misstatements about its vehicle preorders. The probe cited instances when the startup inaccurately claimed preorders came from commercial fleets, instead of from third-party management companies or “influencers” that didn’t plan to purchase trucks directly.
It also found that some of the preorders were placed by ostensible buyers unlikely to have the resources to complete the orders or whose commitments were “too vague or infirm to be appropriately included in the total number of preorders disclosed.”
"...The stock closed down 18.8% yesterday.
He goes on to look at EV startups from an investment perspective:
"The story of electric-vehicle startups is closely tied to the story of special purpose acquisition companies, and every time an electric-vehicle company does something disappointing it is natural to conclude that SPACs are bad. Here is
DealBook today:
SPACs allow companies to go public earlier than traditional I.P.O.s, in large part because they can rely on projections to tell a story they probably couldn’t by strictly relying on past numbers. ... can be dangerous for investors, by allowing start-up execs to spin stories about the demand for, say, electric flying taxis,
The S.E.C. could have helped with some of the issues at play here. The commission has said it’s looking at how SPACs treat their projections. If projections weren’t allowed, or if rules forced executives to make more judicious promises, perhaps a company like Lordstown would not have made it into the public market so soon via a SPAC.
In summary - he says big investment banks can afford to gamble, investing in several startups, and perhaps one of the investments will have spectacular results, while an individual investing in a single startup is facing steep odds.
