If 2020 and 2021 were the years of the SPAC, 2022 will be the year of the rebuke.
Nearly all electric vehicle manufacturers that have found a shortcut to an IPO in the past two years by merging with a special-purpose acquisition company are under investigation by the Securities and Exchange Commission. Most of them came under scrutiny just months after their public market debut for misleading investors with unrealistic forecasts.
In fact, these companies proved so difficult to monitor that the SEC proposed new regulatory rules in March.
Here’s a guide to all the ongoing EV-SPAC combination research. We will keep this introduction updated as situations develop.
Future of Faraday
Faraday Future caught everyone’s attention when it unveiled its flashy concept at CES 2017, but five years later it hasn’t built or delivered a single vehicle. Now it threatens to be delisted from NASDAQ.
The company went public in July 2021 by merging with SPAC Property Solutions Acquisition in a $3.4 billion deal. Shortly thereafter, a report from investment firm J Capital alleged that Faraday had misled investors.
The company closed an internal investigation on April 12 that culminated in the removal of founder and former CEO Yueting Jia as executive officer and the resignation or resignation of others. Meanwhile, the SEC conducted its own investigation and subpoenaed several executives who may have been involved, forcing Faraday to delay filing the paperwork necessary to comply with NASDAQ guidelines.
The SEC’s investigation is still ongoing.
Electric truck company Lordstown Motors, which also has yet to sell a product or earn revenue, is under investigation by both the SEC and the US Justice Department for allegedly misleading investors with a counterfeit book of 100,000 pre-orders for its pickup.
Lordstown went public in October 2020 through a $1.6 billion SPAC merger with DiamondPeak Holdings. Six months later, Hindenburg Research, a New York-based activist short-seller, published a report warning about fake pre-orders, such as the sale of 14,000 trucks worth $735 million to E Squared Energy, a company based in a small Texas residential apartment that does not have a fleet of vehicles.
Both investigations remain open.