Wanna buy SPAC-backed electrification and autonomous stocks? They are cheap, but have they hit bottom yet? A new Morning Consult poll shows autonomy has significant trust issues to overcome, and try as we might, we just can’t miss the bus when it comes to electrification.
Wanna buy my (SPAC) stonks?
It’s hard to find many stocks moving up against headwinds of rising inflation, war in Ukraine, and the coming and going — and coming again — of COVID variants.
But the beatdown of electric vehicle and autonomous vehicle stocks, many of which became public through SPAC mergers, has been going on for much longer than the slide of the markets into correction territory. The sell-off began even before Pete Davidson posed the question “Wanna buy my stonks?” to Kate McKinnon on “Saturday Night Live” in January 2021.
In trying to explain the reasons for this last November, a finger of blame pointed at hedge funds, which bought and then redeemed shares in the startup companies just before their business combinations reached the finish line. A legal if unhappy event for the newly public companies.
Large redemptions led some of the companies to begin trading below the typical $10-per-share price of the special purpose acquisition company that backed them. The lower share price allowed investors to get their money back and buy in at a lower price of the newly public company.
SPAC stocks a tough hold
“If you’re a shareholder in a SPAC, if the stock is not above $10, and I still like the company, I would just sell, get my money back at $10 and buy the stock at $9,” one SPAC expert told me to illustrate the process.
Getting investors to hold on was tough without a strong belief that the shares would pop higher when the reverse merger was complete.
Some de-SPACed companies got off to inauspicious starts. Hydrogen trucking spinoff Hyzon Motors fell 20% on its first day of trading last July; electric truck startup Xos Trucks dropped 14.5% on its day one a month later.
On the autonomous side, SPAC-backed startups Embark Trucks and Aurora Innovation both struggled out of the gate after heavy redemptions. Both began trading in double digits below their $10 SPAC price.
SPACs continue under heavy Securities and Exchange Commission scrutiny. New rules likely will force greater transparency akin to traditional initial public offerings than the lighter rules covering the backdoor approach that arguably brought some companies public before they were ready for the hot lights of Wall Street. The number of SPACs has fallen dramatically this year after boffo numbers in 2020 and 2021.
Those that avoided SPAC mergers may be glad they did. Autonomous trucking software developer Plus was moving toward a SPAC when sponsor Hennessy Capital got cold feet and bailed. Plus is now considering a traditional IPO for its U.S. business, according to Bloomberg.
TuSimple Holdings, which leads the race to autonomous trucking commercialization, went public last April via IPO. Shares shot as high as $79 before falling back to between $11 and 12 currently.
Suffice to say, the electric vehicle, infrastructure and autonomous trucking SPACs picture is not pretty.
Share performance of 10 SPAC stocks intraday Thursday
“I think there’s still some tailwind around electrification,” the SPAC expert told me. “I think it’s all a function of how far investors are willing to go out on the risk spectrum.”
The risk for several of the SPACs as they report little to no revenue quarter after quarter is whether they will have enough money to fund their business plans. Nikola, among the earliest of the transportation SPACs, filed a shelf registration last Friday to sell up to $1.2 billion in new shares.
Lordstown Motors last June filed a notice of going concern saying it might be unable to stay in business without new money. That could be forthcoming from a $230 million sale of the 6.2 million-square-foot assembly plant that General Motors practically gave to LMC. It probably needs more money.
Straight outta Dallas
A shakeout is likely over time. Aurora and still-private Kodiak Robotics both announced pilot autonomous trucking runs for major carriers Werner Enterprises and U.S. Xpress on major stretches of U.S. interstates this week.
Both use Dallas as a starting point — Kodiak going east to Atlanta and Aurora heading west to El Paso, Texas. Could they end up together?
Morning Consult is out with a new survey on public attitudes toward autonomous vehicles, which in this case, addresses autonomous cars. But autonomous truck manufacturers should take note. We’ve got trust issues.
Despite continued advancements in autonomous vehicle technology, as of March only 19% of U.S. adults felt they were safer in self-driving cars than in traditional vehicles. Only 12% of U.S. adults have a very favorable opinion of the technology, and only 11% are “very interested” in purchasing a self-driving car in the next 10 years.
Four years ago, 27% felt safer. One out of two respondents said autonomous vehicles are less safe than traditional vehicles.
About 2,200 adults participated in the survey. Generationally, 32% of millennials seem more comfortable with autonomous vehicles compared with 11% of baby boomers and 19% of Gen Z adults.
Only 9% of U.S. adults trust self-driving technology “a lot,” while 43% of boomers don’t trust it at all. Millennials have twice the trust in autonomous vehicles of the total population at 18%. Numbers should improve as more vehicle testing is done and the results are successful.
The trust issue is slightly higher outside the U.S. Consumers in South Korea and China are the most enthusiastic, with 18% and 16%, respectively, saying they’re very interested.
Can’t miss the bus
Try as we might, we cannot ignore that a lot of the meaningful orders for electric vehicles are not for medium- or heavy-duty trucks. They are for buses.
And that makes sense when you think about things like duty cycles. Buses, especially school buses, travel the same routes, so they are predictable. It’s almost like they had a schedule. (Oh, that’s right. They do.) And they can be charged behind the fence at a depot.
Blue Bird Corp. (NASDAQ: BLBD), the leader in electric and low-emission school buses, has received the single largest order of electric school buses from a school district in its history. Modesto City Schools in California purchased 30 zero-emission buses. The order means the school district is halfway to replacing its diesel-powered bus fleet.
On the public transit side, Proterra received a $26.5 million contract from Pace Suburban Bus in the Chicago suburb of Arlington Heights for 20 Proterra ZX5 Max electric transit buses. The deal includes more than 13 megawatt hours of battery storage energy and two Proterra megawatt-scale fleet chargers. The first buses are expected to be delivered in 2023.
That’s it for this week. Thanks for reading. Click here to get Truck Tech delivered via email on Fridays.
The FREIGHTWAVES TOP 500 For-Hire Carriers list includes Werner Enterprises (No. 10) and U.S. Xpress (No. 13).