
Clean energy supply chain
For years, you had to be a venture capitalist to buy a piece of a clean energy company, with a few notable exceptions. Now Wall Street’s SPAC frenzy has given dozens of energy-related startups a fast track to public markets, allowing anyone to invest.
This process keeps us news writers busy, so I’m going to catch you up on three storylines developing right now. But don’t worry, there will certainly be more SPAC stories to come.
Electric bus manufacturer Proterra began trading on the Nasdaq Tuesday under the ticker name PTRA.
The transaction handed the company some $640 million, which it can use to keep improving its technology and scale manufacturing capacity to meet surging demand.
I first wrote about this company back in 2016, when key questions around the electrification of buses still needed to be answered. Can the batteries last long enough to be useful? Are charging schedules compatible with the needs of the fleet?
Today, electric buses have a compelling case on the lifetime cost of ownership because they’re cheaper to run and maintain than diesel. And financing packages can deal with any upfront price premium relative to diesel.
Proterra claims 600 vehicles on the road, 20 million service miles driven and more than 130 customers.
Solid Power, which is building a next-gen solid-state battery operation in Colorado, decided yesterday to go public via a SPAC, Jeff reports. The deal is expected to bring in $600 million to commercialize its technology and will value the company at $1.2 billion.
Solid Power (slated to trade as SLDP) competes in the race to get to market with batteries that are significantly safer and better performing than what’s available today. Untold riches await the companies that unlock greater driving range for electric vehicles, or achieve faster charging times, or make battery fires a thing of the past.
It takes a lot of money to pull that off, however. I covered Solid Power’s $135 million funding round just last month.
Futuristic batteries are notoriously hard to evaluate from the outside. But Solid Power already has a small-scale manufacturing line, and CEO Doug Campbell told me he has a clear pathway to shipping vehicle batteries by mid-decade. BMW, an investor in the company, is expecting to test the batteries on its cars “well before 2025.”
The inevitable flipside of democratizing access to stock in startups is that some people will invest in risky or dubious businesses. Some of them may even be clean energy businesses.
That’s top of mind this week after revelations at Lordstown Motors (ticker symbol: RIDE), which said it would revive an abandoned GM factory in Ohio to produce electric trucks. The CEO and CFO resigned this week after an internal investigation, and regulators are pursuing an investigation of their own.
Most damningly, it appears that even after raising $675 million from its splashy SPAC move, Lordstown is already running out of cash before it begins full-scale production.
One of the odd things about how this played out is that much of the controversy stems from claims Lordstown made about preorders that turned out to be nonbinding commitments.
I find that an odd controversy because you should always take an early-stage company’s claims about customer pipeline with a boulder-sized grain of salt.
How can you bank on a sale that hasn’t happened yet of a product that doesn’t exist?
The cleantech VC world is rife with exactly those sorts of claims. But when you go to public markets, even through the more permissive SPAC process, the SEC gets more particular about your relationship to truth.
There are a few easy questions investors can ask themselves to head off this sort of embarrassment:
Insofar as a business makes money by creating a product and selling it, affirmative answers to those three questions are preferable.
Proterra can say yes to all three.
Solid-state batteries may merit more benefit of the doubt on the production and sale of products because commercialization is still a few years away. But battery startups often have early products in adjacent markets, as well as partnerships with EV manufacturers that serve as precursors to full-scale production.
Sometimes success really is just around the corner, but if a company lacks a tangible basis for success, it’s better to have an overwhelmingly good story.
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Julian Spector is senior reporter at Canary Media.
Clean energy supply chain