By on December 6, 2021

Lucid Group Inc. has been subpoenaed by the U.S. Securities and Exchange Commission (SEC) which is on the prowl for any documentation relating to its merging with a special purpose acquisition company (SPAC). Known colloquially as “blank-check firms,” these organizations literally exist to be combined with existing companies as a way to pump the stock and spur investments.

But they’ve gotten a lot of negative attention following a glut of EV startups garnering impressively high valuations based on little more than a business proposal. Those seeking an example need look no further than Nikola Corp, which was outed as having grossly overpromised on its technological capabilities and production acumen after raking it in on the stock market. As a result, financial regulators have become increasingly skeptical of SPACs and want to make sure everything going on with Lucid is above board. 

According to Reuters, news of the SEC’s involvement has already dampened investments. Shares in Lucid fell 8 percent in midday trading on Monday. While currently in the midst of a rebound, it’s looking dubious that they’ll be able to close on a high note.

“The investigation appears to concern the business combination between the Company (Churchill Capital Corp. IV) and Atieva Inc and certain projections and statements,” the company said via a regulatory filing from December 3rd.

From Reuters:

The deal, which was completed earlier this year, was with veteran dealmaker Michael Klein’s blank-check acquisition firm.

It was one of the biggest in a string of deals with Special Purpose Acquisition Companies (SPACs) that included EV makers such as Nikola Corp and Fisker Inc.

Market listing via SPAC route has become popular among EV makers that have a vision but no prototype in an already capital intensive industry.

“The problem is a lot of these companies that have taken this approach are not far enough along to really be considered a viable company,” said Sam Abuelsamid, an auto analyst at Guidehouse Insights.

Suggesting some of these companies aren’t far along enough to become viable is a massive understatement. However, we would be lying if we claimed the existing regulatory structure and overwhelming might of legacy manufacturers didn’t make it exceptionally difficult for new automotive startups to do anything other than shrivel up and die. All of these EV firms want to be the next Tesla because it actually survived long enough to mature into a real automaker (carbon credit sales notwithstanding) with a valuation that is high enough to embarrass industrial supergiants.

But too many of these EV startups have ended up being little more than tech-focused Ponzi schemes, whether or not that was the intention. To be honest, Lucid does seem to be in a much better position than other SPAC-back startups. Its founder, Peter Rawlinson, was Tesla’s former head of engineering and it’s already managed to produce functional prototypes where other startups never got past the concept phase. However, it’s still taking on sizable financial forfeitures — racking up $705 million in net losses in 2020, with another $3.18 billion vanishing during the first half of 2021.

Currently, Lucid is estimating “at least” $1.07 billion in revenue by the fifth anniversary of the Churchill IPO. The company is targeting 20,000 vehicles in 2022 and 50,000 in 2023. Meanwhile, the very pricy Lucid Air Dream Edition ($169,000 USD) has been certified by the EPA as being able to go 520 miles on a single charge, making it the longest-range EV currently in existence.

That doesn’t mean that Lucid will be safe from becoming another Nikola or Lordstown Motors — both of which went public through the use of a SPAC only to see share prices crater after scathing reports about them were released by Hindenburg Research. But it doesn’t preclude Lucid from underperforming either, especially considering its massively high valuation. Presumably, the SEC plans on looking into the pro-forma equity value of $24 billion resulting from the Churchill Capital (IV) merger. Though it may also take interest in previous rounds of funding made on behalf of state-owned Chinese businesses, like LeEco and BAIC Motor, or anyone else it deems as potentially suspect.

[Images: Lucid]

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22 Comments on “Securities and Exchange Commission Checking in on Lucid Motors...”


  • avatar
    Syke

    Some of these things are starting to sound like the automobile industry, 120 years ago.

  • avatar
    Lie2me

    Meh, Elon Musk manipulates Tesla stock prices with just a tweet, nothing ever happens to him

  • avatar
    ToolGuy

    Why does the government hate progress?

    • 0 avatar
      conundrum

      The Secirities and Exchange Commissionshould investigate the damn pop-up videos on TTAC.

      NO I DO NOT WANT A GODDAM TOYOTA PICKUP TRUCK. NOT NOW NOT EVER. NOR a TOYOTA SUPRA WHICH WAS THE LAST SCAM THIS SITE FOISTED OFF ON ITS READERS. SCREW TOYOTA AND ITS AD AGENCY.

    • 0 avatar
      TimK

      Perhaps the current administration loves unions more than progress. Progress doesn’t funnel money to the right places.

      • 0 avatar
        Art Vandelay

        “Perhaps the current administration loves unions more than progress. Progress doesn’t funnel money to the right places.”

        Winner Winner Chicken Dinner

        • 0 avatar
          FreedMike

          The problem isn’t unions – it’s the ability of unions to buy off politicians. Meanwhile, if we were talking about Republicans, the buyoffs would be coming from folks like Big Oil.

          We’re pointing our fingers in the wrong direction – we SHOULD be pointing them at the laws that enable interest groups to get into the pockets of politicians.

      • 0 avatar
        Bike

        No unions left.

    • 0 avatar
      MitchConner

      Tool Guy (great username by the way — as it fits), Nikola already conceded they fraudulently represented themselves to investors. Lordstown’s preorder numbers have been exposed as a total load which cost its CEO his job. In both cases investors got stuffed when the truth came out.

      Instead of sniveling “why does the government hate progress” like a snot nosed kid with a finger up his nose because your whittle feewings for ewectric cars got hurt — you should be happy the SEC is actually getting off its butt and doing something for once something instead of being asleep at the switch and letting Wall Street wreck the economy as it did during the housing bust while we all paid to bail the crooks out.

      The last thing this country needs is a bunch of hucksters creating SPACs to suck billions out of retail investors with garbage IPOs then leaving them holding the bag a few months later when the shorts decide to publicize what they knew all along. Bad enough the Chinese pollute our markets with their craptastic offerings that make the stuff Jordan Belfort sold look blue chip in comparison. Even Jim Cramer was telling people to load on Didi for Pete’s sake.

      I find it hard to believe Lucid has done anything wrong with all the money they previously raised — but people can do colossally stupid things when billions are at stake — so it doesn’t hurt for the SEC to ask for more data to back up claims made in their offering. And, no, I wouldn’t touch that stock with a 10 foot pole.

    • 0 avatar
      28-Cars-Later

      Define “progress”.

      • 0 avatar
        ToolGuy

        Here’s a good example of progress:

        https://www.hindustantimes.com/world-news/researchers-develop-covid-killing-steel-say-can-destroy-99-8-of-virus-101638879755022.html

  • avatar

    Startups are always risky proposition. If you want to get rich you have to take risk. Кто не рискует тот не пьёт шампанского.

    Regarding the Government, their goal is to push all us into unions, welfare or/and UBI, so they can control us so we do not become domestic terrorists, and to establish status quo – “стабильность” as Putin used to say.

  • avatar
    pmirp1

    Lucid air majority share holder is Saudi Arabia. They sold majority stake in the company for over 1.3 billion dollars in funding.

    So now, they are controlled by Saudi Arabia. And those Saudi Shieks want return on investment.

    Any entity can make a few cars. Mass production is tough. I recall Fisker in the last go around when after great recession free money was handed out to Greenies. A week ago I saw one in Atlanta. Beautiful. Do you know which company’s technology was behind the engine and drivetrain of a Fisker? Do you all recall Solyndra? Branden is at it again. Its all about shovel ready projects. Yeaahhhh right. The only shovel ready project was the border wall which Branden put a stop to.

    Tesla is the truth. Everyone of these other ones have to prove themselves over time. If you are investing in them, good luck. You may have great returns, just understand you are in there with Saudis and Blackrocks of the world. Those entities have mega staying power and can afford losses. You my friend, may not be able to.

    • 0 avatar
      FreedMike

      ” Do you know which company’s technology was behind the engine and drivetrain of a Fisker? Do you all recall Solyndra?”

      No, the engine was GM sourced, and the batteries were from a company called A123 Systems. Solyndra didn’t make electric motors.

      I suppose you’re making a brave, principled, conservative (whatever that is these days) stand against the government sending tax money to private companies. Ironically enough, you used a personal computer and the Internet – both the direct result of the government sending tax money to private companies – to make the argument.

  • avatar
    SCE to AUX

    “Market listing via SPAC route has become popular among EV makers that have a vision but no prototype…”

    “Its founder, Peter Rawlinson, was Tesla’s former head of engineering and it’s already managed to produce functional prototypes”

    Did you forget the article you wrote about Lucid actually entering production?
    https://www.thetruthaboutcars.com/2021/09/lucid-motors-becomes-an-automaker/

    Customers have been receiving cars since the end of October.

  • avatar
    stuki

    Those who can, build cars and sell them profitably.

    Leaving it to only those who can’t, to wallow in the ghetto of “investments”, “acquisitions” and other zero-talent-required makework serving no other purpose than facilitating central banks’ redistribution from competents who can, to the above utter incompetents. Who can’t. Anything at all; aside from living off of government facilitated theft and redistribution.

  • avatar
    dukeisduke

    At least Lucid is actually producing vehicles. Nikola is a scam, like Twentieth Century Motors. Is the founder of Nikola related to “Elizabeth Carmichael”?

  • avatar
    SoCalMikester

    the SEC should investigate high value companies that make nothing. not too sure the saudis would even miss their investment if it went bad. at least i dont THINK they would go all khashogi on them

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