Lordstown Motors, the one-year-old Ohio electric automaker that revealed a pickup truck prototype in June, has reached a deal to merge with special-purpose acquisition company DiamondPeak Holdings Corp., with a market value of $1.6 billion.
The agreement marks the latest company — and electric automaker — to become a publicly traded company through a merger agreement with a SPAC, or blank-check company. Electric automakers Nikola Motor and Fisker Inc. have also become public companies through a SPAC over the past two months. Shift Technologies, an online used car marketplace and sensor company Velodyne Lidar, also went public via a SPAC, sidestepping the traditional IPO path.
In this latest SPAC, the combined company will remain on the Nasdaq under a new ticker symbol, RIDE. DiamondPeak Holdings Corp. was listed on the exchange under the ticker DPHC.
The company said it was able to raise $500 million in private investment in public equity, or PIPE, including a $75 million investment by General Motors. Other institutional investors that joined include Fidelity Management & Research Company, Wellington Management Company, Federated Hermes Kaufmann Small Cap Fund and funds and accounts managed by BlackRock.
The transaction is expected to close in the fourth quarter of 2020. The new combined company’s board will include Steve Burns, the founder and CEO of Lordstown, and David Hamamoto, chairman and CEO of DiamondPeak.
SPACs have been around for decades and have gone by different names, including “blind pools” and “clean shell companies” and “blank-check companies.” A SPAC is a corporation that has no defined business plan or purpose other than to raise money from public markets to acquire a private company. The SPAC has seen a resurgence in 2020, particularly in the second and now third quarters.
Lordstown has an interesting history for such a young company. Lordstown Motors is an offshoot of Burns’ other company, Workhorse Group, a battery-electric transportation technology company that is also a publicly traded company. Workhorse is a small company that was founded in 1998 and has struggled financially at various points. Its offshoot, Lordstown Motors, revealed a prototype of an electric pickup truck called Endurance that is aimed at contractors and other buyers in the commercial market.
The plan is to produce 20,000 of these electric commercial trucks annually, starting in the second half of 2021, at the former GM Assembly Plant in Lordstown, Ohio. Lordstown Motors acquired in November the 6.2 million-square-foot factory from GM.
The combined company plans to use about $675 million of gross proceeds from the SPAC transaction to fund production of the Endurance. Since the truck’s unveiling, the company has secured pre-orders valued at $1.4 billion (or about 27,000 total pre-orders), according to Burns.
Electric vehicle startup Fisker Inc. said Wednesday it has raised $50 million, much needed capital that will go toward funding the next phase of engineering work on the company’s all-electric luxury SUV.
The startup is aiming to launch the Fisker Ocean SUV in 2022.
The Series C funding round was led by Moore Strategic Ventures LLC, the private investment vehicle of Louis M. Bacon, the billionaire hedge fund manager.
“Since we first showed the car at CES earlier this year, reaction from customers and investors has been extremely positive,” Fisker Inc. Chairman and CEO Henrik Fisker said in a statement. “We are radically challenging the conventional industry thinking around developing and selling cars and this capital will allow us to execute our planned timeline to start producing vehicles in 2022.”
The company is also beefing up its executive lineup to help push the project along. Fisker said it has hired Burkhard Huhnke as its CTO. Huhnke was the former vice president of e-mobility for Volkswagen America and vice president of automotive at chipmaker Synopses.
As CTO, Huhnke will spread his time between the company’s R&D work in Los Angeles and its new Fisker Innovation Lab in Silicon Valley.
Building a car company isn’t easy. Just ask Fisker. The well-known automotive designer, who was behind the Aston Martin V8 Vantage, Aston Martin DB9 and BMW Z8 among others, launched a startup called Fisker Automotive that aimed to produce a luxury plug-in hybrid electric vehicles. The flagship vehicle, the Fisker Karma, debuted at the 2008 North American International Auto Show, and first deliveries were in 2011. But the company ran into numerous challenges and production was suspended in November 2012 and ended in bankruptcy a year later.
China’s Wanxiang Group purchased what was left of Fisker in 2014 and launched a new company called Karma Automotive . On a side note: Karma, which has had its own financial struggles, also announced Wednesday it had raised $100 million.
This time around, Fisker is focused on an SUV. The Fisker Ocean, which was officially revealed in January at CES 2020, starts at $37,499 before applying any federal income tax credit or state incentives.
Karma Automotive has raised a $100 million lifeline from outside investors, as reported by Bloomberg, with the struggling electric vehicle maker’s fortunes likely buoyed by the current market optimism on other EV companies including Tesla. Karma is the reincarnated version of Fisker Automotive, which previously faced bankruptcy before being acquired by Wanxiang Group in 2014.
Karma Automotive has made more progress than Fisker ever did, including actually delivering around 500 of its inaugural Revero electric sport sedan in 2019. The company will be continuing to sell the Revero, which retails staring at around $140,000, and will also be looking to add a high horsepower GTE version, as well as a supercar for an even higher-tier customer.
The automaker also says that it’s in discussions with a partner for a commercial delivery truck, which it intends to develop in prototype form by year’s end. There are a number of different companies pursuing delivery vans for use by courier companies including UPS and FedEx, and the increase in e-commerce spending does present an opportunity for multiple players to succeed in this category, even as there is a rush on in terms of entrants.
Karma will also seek to leverage and extend the benefits of its fresh investment by shopping around its EV platform to other automakers and OEMs, the company says, and also will eventually expand beyond pure EVs to hybrid fuel vehicles. In short, it sounds like Karma is willing to try just about everything and anything to chart a path towards profitability, but time will tell if that’s intelligent opportunism, or scattershot desperation.