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Popular electric vehicle SPACs have a lot to prove as some expect the bubble to burst

Key Points
  • Electric vehicle startups such as Nikola are turning to blank check firms, also known as Special Purpose Acquisition Companies, or SPACs, as a way to go public and raise an influx of fast cash.
  • Following Nikola going public in June, at least three other aspiring automakers – none have actually produced a vehicle for sale – have announced similar deals.
  • More than 50 SPAC offerings were completed this year through July raising more than $21.5 billion, up 145% from the same period a year ago, according to Goldman Sachs.
Founder of Nikola, Trevor Milton speaks during presentation of its new full-electric and hydrogen fuel-cell battery trucks in partnership with CNH Industrial, at an event in Turin, Italy December 2, 2019.
Massimo Pinca | Reuters

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Electric vehicle startups such as Nikola are turning to blank check firms, also known as Special Purpose Acquisition Companies, or SPACs, as a way to go public and raise an influx of fast cash to get their vehicles to market.

All the companies have grand ambitions and believe they can create a niche in the market. Some have charismatic executives on social media, taking a note from Tesla CEO Elon Musk's playbook. And a few even have factories under construction. But one thing they all have is a lot to prove amid what some are expecting to be an electric vehicle SPAC bubble on Wall Street.

Following Nikola going public and shares surging in June, at least three other aspiring automakers – none have actually produced a vehicle for sale – have announced similar deals. They include: Fisker, Lordstown Motors and Canoo. Other auto-related companies such as Hyliion, an electrified powertrain trucking company, also have announced similar plans.

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