Shareholders Lose Out as Smaller Publicly-Listed US EV Companies Financially Falter
Posted on 08/07/2023
Many EV makers know that batteries are a significant part of the costs. For them to make affordable EVs and for prices to stabilize, battery cost has to go down, there is no other way.
Burlingame, California-based Proterra Inc. manufactures heavy-duty electric vehicle components like electric vehicle chargers and batteries. The money-burning company filed for bankruptcy protection on Monday. Proterra listed assets and liabilities of at least US$ 500 million each in a Chapter 11 petition in Delaware. The filing gives Proterra protection from creditors. Through the end of 2022, most of the company’s revenue came from selling electric buses. Proterra, like many other U.S. EV companies when public via blank-check companies or SPACs during a low-interest rate environment. Fisker went public in 2021 via SPAC through a merger with ArcLight Clean Transition Corp. This included a US$ 415 million PIPE Investments anchored by Daimler Trucks as well as Franklin Templeton, Chamath Palihapitiya, Fidelity Management & Research Company LLC, and funds and accounts managed by BlackRock. The transaction at the time represented an enterprise value of US$ 1.6 billion for Proterra.
Based on SEC data, the large U.S. asset managers, mostly through passive vehicles, are the largest shareholders in Proterra. Some of the major shareholders of Proterra include Franklin Resources, Inc. (Franklin Templeton), Vanguard Group Inc., Blackrock Inc., Tao Pro LLC, Cowen Investment Management, LLC, and Generation Investment Management LLP.
Exiting CEO and Fraud Conviction of Founder – Nikola
In early August 2023, Nikola said its CEO Michael Lohscheller will step down effective immediately due to a “family health matter.” Nikola’s current board chair, former General Motors vice chairman Steve Girsky, will take over as CEO. Nikola’s founder Trevor Milton was convicted of fraud in the U.S. in 2022. He was accused of boasting about nonexistent technology to inflate the stock price of Nikola. Milton will be sentenced on January 27, 2024. He faced up to 25 years in prison if convicted on all four counts.
“Trevor Milton lied to Nikola’s investors — over and over and over again. That’s fraud, plain and simple,” said Damien Williams, the U.S. Attorney for the Southern District of New York. The Manhattan DOJ office had alleged that Trevor Milton lied about “nearly all aspects of the business” he founded in 2014 during his time leading the company.
Fisker
Electric vehicle maker Fisker Inc. reported earnings results for the second quarter ended June 30, 2023. California-based Fisker had a net loss was US$ 85.48 million compared to US$ 105.98 million a year ago. Revenue was just US$ 825,000. On July 10, 2023, Fisker entered into a Securities Purchase Agreement with Wilmington Savings Fund Society FSB Incorporated (owned by WSFS Financial Corporation) pursuant to which Fisker agreed to sell, and the investor agreed to purchase, US$ 340,000,000 in aggregate principal amount of 0% senior unsecured convertible notes due 2025 in a registered direct offering. The Notes have an original issue discount of approximately 12% resulting in gross proceeds to Fisker of US$ 300,000,000. The Notes bear interest at the rate of 0% per annum; however, the interest rate of the Notes will automatically increase to 18% per annum upon the occurrence and continuance of an event of default. TD Cowen served as exclusive financial advisor to Fisker and Orrick, Herrington & Sutcliffe LLP served as legal counsel to Fisker.
Keywords: Nikola Corporation, Nikola Motor.
