Back in September, we reported on how the electric vehicle industry is set to change and we’re slowly seeing new competitors arrive on the scene. This week, General Motors is unveiling their EV version of the Hummer and now another EV company, Fisker Inc., is going to list on the NYSE via a special purpose acquisition company (SPAC).
A merger with Spartan Energy Acquisition Corp. (SPAQ) is enabling Fisker to come to the public market and is expected to trade the symbol FSR on 29 October, pending approval from the SPAQ shareholders.
The main advantage of a SPAC for private companies going public is it’s saving on time and expenses. However, there’s a disadvantage for potential investors because there is less scrutiny of the company’s business and financials. So, it’s going to be interesting to watch Fisker’s reception as we see a demand for electric vehicle stocks. Most of the top performers in 2020 have been EV companies and suppliers to the EV industry.
Today, there are approximately 1.4 million electric vehicles active on the roads and it’s predicted that by 2030, there will be 19 million electric cars, and this growth is going to create opportunities for electric car companies and investors alike.
If we take technology companies as an example and compare newer upstarts to legacy companies, there’s a trend that newbies can outdo their more established counterparts. Google beat long-standing Microsoft in the quest for the best Search Engine, and Facebook beat Google in Social Media, and all these companies had the financial and technological resources to stay ahead in their game.
However, it can be a bit of a stretch to compare cars and software. Tesla has already and continues to carve out a large portion of the EV market while asserting their position as a cult brand. Clearly, this won’t stop rival EVs from getting some of the action.
Fisker’s listing will raise funds to start development of the all-electric Fisker Ocean SUV and get it into production in 2022. In fact, Fisker has three products in currently in development, the Fisker Ocean SUV, the Fisker EMotion, an electric sedan with 400 miles of range, and the Fisker Orbit, an autonomous, all-electric shuttle.
We all know the astronomical gains in Tesla’s stock ever since it went public and investors are looking for the newest, hottest EV stock. But Tesla’s has had time on its side being the sole manufacturer of luxury electric vehicles, allowing it to establish the brand and gain market share.
It remains to be seen if Fisker is going to be a reliable and trusted brand and whether the new EV producer can execute their vision. It hasn’t been an easy road for Tesla boss, Elon Musk, even with all his resources and skills, Tesla’s success was not guaranteed at the start. And Musk and his company have had a bumpy road.
We’ve seen how important market trust is – just take a look at Nikola Motors. Their stocks plunged almost 80% after it was revealed that a lot of the company’s technology designs were exaggerated. Fisker has raised a few eyebrows, firstly with CEO, Henri Fisker's wife being the CFO, their vagueness with investors on issues surrounding costs related to production and the Department of Energy cut off Fisker taxpayer-subsidized loans.
It’s not sounding like a good start but perhaps Fisker is learning from current EV company strategies and taking notes on what not to do. It’s going to be a high risk for investors, but if the company can pull it off, it will bring high reward.