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Newsletter: 3 clean energy SPAC stories you should know about

Wall Street's SPAC frenzy has given dozens of energy-related startups a fast track to public markets.

Julian Spector
Julian Spector
3 min read
Newsletter: 3 clean energy SPAC stories you should know about

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.

Proterra hits the market

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.

  • It also licenses its electric drivetrain to other manufacturers for use on delivery trucks and school buses.
  • Proterra builds its buses in the U.S., at factories in California and South Carolina. That makes for a tie-in with the Biden administration's domestic manufacturing push.

Solid Power decides to SPAC

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.

  • But battery competitor QuantumScape finished a SPAC in December that raised $1 billion.
  • You cannot allow a SPAC cash gap.

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."

Lordstown Motors makes SPACs look bad

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:

  • Does this company already have a factory to produce its product?
  • Does this company have any track record of producing its product?
  • Does this company have a history of selling its product?

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

Julian reports on the rise of clean energy. He worked at Greentech Media for nearly five years, and before that he reported for CityLab at The Atlantic.