Will Joe Biden’s Electric Vehicle plan shock the SPAC markets?
This week I’ll be breaking down President-Elect Joe Biden’s new SPAC $JOE
– just kidding –
He does however have a killer plan to boost Electric Vehicle adoption (and because of that – the many SPACs involved). In Part 1 of this newsletter we’ll be digging into the Vehicles – finding out what’s up with Elon Musk and the new Arrivals. Will the Electric SPACs thrive in 2021 or will Elon continue to dominate?
Let’s find out 👇👇
They call it… The Electric City?
It’s well known by now that Joe Biden grew up in Scranton – he loves the place so much he launched his Presidential campaign from there. Founded In 1866, it was the largest of the former anthracite coal mining communities in Pennsylvania. It became a major industrial city (home of Dunder Mifflin Paper Company), a center of mining and railroads, and attracted thousands of new immigrants. The city’s nickname “Electric City” began when electric lights were introduced in 1880 by the Dickson Manufacturing Company; it was among the earliest cities in the US to have this luxury.
Horse-drawn street railways had been transforming American cities since their introduction in the 1830s, by providing a fast and affordable alternative to walking. But they also had their problems. The animals had to be fed and stabled, the distance and speed at which they could pull cars was limited, and their manure littered the streets and were breeding grounds for diseases. Not an ideal situation for attracting new people to live in your growing city.
In the early 1880s, several inventors, including Thomas Edison, conducted experiments with electric railways. But it was in Scranton that Charles Van Depoele developed the first system powerful and practical enough to run the first commercial street cars. On November 29, 1886, ice and snow covered the streets of Scranton. This did not, however, prevent engineers of the newly formed Scranton Suburban Electric Railway from beginning trial runs of their innovative electric “street cars”, America’s first Electric Vehicle.
The President-Elect, drawing on his experience living in an electric-first city, will make a new $300 billion investment in research and development (R&D) and breakthrough technologies from the electric vehicle industry such as vehicles, battaries, and autonomous driving, to lightweight materials to 5G.
Biden’s first order of business will be to settle the matter of those emissions limits. He has promised to go beyond even the standards set by President Barack Obama, which called for a yearly increase in average fleet fuel economy of 4.7%. Reaching that target alone would mean that by 2026, one of every four light-duty passenger vehicles sold in the U.S. would be electric.
Biden has said China was set to dramatically outpace the United States in EV production. But the United States, he said after the Nov. 3 election, could “own” the market with the right green policies. He has promised to build 550,000 EV charging stations and create over 1 million jobs by investing in clean energy research.
A long-time EV proponent and former governor of the state of Michigan from 2003 through 2011, Ms. Granholm secured US$1.35 billion in federal funding for makers of EV’s and EV batteries as part of the nearly US$800 billion stimulus passed by the US Congress in 2009. She is also a Board member of Proterra, an electric bus manufacturer (*ahem* and possible SPAC).
As President-elect Joe Biden’s expected energy secretary, Granholm now faces a bigger task: making good on his campaign promise to help the United States compete with China on electric vehicles as part of a $2 trillion plan to fight climate change.
With the *enormous* amount of money that’s going to be distributed under this plan – let’s look at some of the contenders for that cash.
Tesla rose in prominence on a promise to shake up the automotive and clean-energy industries. Some analysts see Tesla’s inclusion in the S&P 500 as a bellwether, a turn toward a future mobilized by clean energy-fueled electric and autonomous vehicles. It’s $650B+ market cap speaks for itself. It will be a giant beneficiary of Biden’s plan on both the Energy and Vehicle sides.
Arrival ($CIIC / $ARVL)
In addition to $1.2 billion in confirmed orders from customers such as UPS, the company offers a grand strategy beyond most of their peers.
Arrival focuses on commercial customers, which offer potential for large contracts. While that’s not unique, the company goes further by configuring their entire business— development, production and go-to-market— around customization.
Their “microfactories” leverage robotics and automation to achieve greater customization and do so physically closer to demand. Via material choices and modular design, Arrival optimizes its product platforms for distributed manufacturing. The company explains, “Designing vehicles for Microfactory assembly is core to our product development process.”
XL Fleet ($XL)
XL Fleet turns standard work trucks into hybrid and plug-in hybrid electric versions of those vehicles by supplying electrified drivetrain systems to a network of a dozen or so “upfitters,” which are in charge of the second stage of manufacturing of commercial fleets. CEO Kazarinoff said that the upfitters the company works with has about 100 locations in North America.
Asset-light Manufacturing, Design, Memes, and Sustainability is the play for Henrik Fisker. Drawing a comparison with the way Apple Inc. outsources phone production to Foxconn Technology Group, Fisker plans to subcontract manufacturing of its first model, the eco-friendly ‘Ocean’ SUV to Canadian auto-parts supplier Magna International Inc.
Legacy Automotive Companies
BMW, Ford, GM, Toyota, etc. have all gave it their worst effort for the last 10+ years. Will they keep humming along like nothing’s happening? At least it seems they’re finally taking EV seriously. (Well – maybe not Toyota)
The New Rides on the Block
Lordstown Motors ($RIDE)
Lordstown is focusing on the commercial market for electric trucks. That niche could pay off for investors over the long-term.
Not only does Lordstown use a plant previously utilized by General Motors, but GM has invested in Lordstown. The relationship may seem unusual, but it will help Lordstown as it looks to develop its electric pickups.
The company is already racking up orders for the Endurance. According to Lordstown:
“Lordstown Motors has received approximately 50,000 non-binding production reservations from commercial fleets for its Lordstown Endurance all-electric pickup truck, with an average order size of approximately 500 vehicles per fleet.”
Update: Lordstown has updated numbers – they have approx. 80,000 reservations.
Canoo takes an “inside-out” approach to EV design. It starts with a skateboard chassis, which stores the battery pack, electric motors and other electronics that make the vehicle move.
The skateboard’s size and weight are reduced with the use of fewer parts. That ultimately provides more interior cabin space. Drive-by-wire allows the steering system to be located in several positions. That allows flexibility in design of the body, or top hat, on the chassis. Canoo’s target market is lower- and medium-priced electric cars, minibuses and commercial vehicles. Its concept vehicle resembles a Volkswagen Microbus.
Lion Electric ($NGA / $LEV)
Lion is already producing all-electric medium and heavy-duty urban trucks and buses at a 2,500-vehicle-per-year manufacturing facility. Some 300 vehicles are on the road today and the company has plans to deliver 650 trucks and buses in 2021. It even landed a contract with Amazon to supply the e-commerce giant with 10 electric trucks (possibly more) for its “middle mile” operations.
Hyliion has a more diverse approach, and plans to offer multiple fuel options for its semi-trucks, including a hybrid compressed natural gas (CNG) solution, a hybrid diesel solution, and hydrogen fuel cell options when a hydrogen fueling network develops. They’ve been in a slump recently – but what differentiates Hyliion from other electric vehicle contenders is the company’s proprietary intelligent electric powertrain. Impressively, Hyliion’s powertrains use machine-learning algorithms to optimize their emissions performance and efficiency.
Electric Last Mile ($FIII / $ELMS)
ELMS’ commercial electric vehicles will offer efficient last mile solutions for commercial fleet providers. The company’s electric Urban Delivery vehicle is expected to provide 170 cubic feet of cargo space, 150 miles of range capacity, and advanced onboard and wireless data capabilities to optimize fleet planning and tracking. Once launched, the vehicle is expected to be the only Class 1 EV in the U.S.
The Auburn Hills, MI-based company plans to invest more than $300 million in the 675,500-square-foot former AM General facility in Mishawaka. The facility is expected to support the production and assembly of ELMS’ electric Urban Delivery vehicle, with the capacity to manufacture up to 100,000 vehicles annually. The company plans to launch production by the third quarter of 2021.
Nikola, after a turbulent year, deserves a look… at the trash can.
In conclusion, I think that each of these companies has a little something different to offer the market, and with a few hundred billion floating around who’s to say that most of them can’t be successful? Just as long as they don’t have a truck rolling down a hill.
Other than the clear winner Tesla, my personal favorites are Arrival and XL.
Next Week – We’ll cover the manufacturing partners and LiDAR supplier SPACs. Subscribe below to receive our free weekly newsletter directly in your inbox 👇
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Here’s the most unusual volume & movement Whale saw in these SPACs last week.
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