The universe of listed companies among electric vehicle (EV) manufacturers and related businesses has expanded dramatically in the last year, thanks in large part to SPACs as path to the public markets. While retail investors have played a large role in the market for EV stocks, institutional investors are likely to have a greater presence as more of the SPAC mergers close. Looking further ahead, it is likely that technological advancement rather than government support will be the key driver of the proliferation of EVs.
That’s according to Mark Saraiva, Managing Director and Head of the Transportation Group at Cowen Inc., who joined IPO Edge’s November 16 event: Acceleration of Electrification: California’s 2035 Ban and the Future of EVs, Energy Technology and Regulation. Mr. Saraiva spoke at the event with The California Governor’s Office of Business and Economic Development, CEOs and senior executives from Blink Charging Co., QuantumScape, XL Fleet, Canoo, Lordstown Motors and Romeo Power, along with Vinson & Elkins LLP and Nasdaq. Please click below to see highlights from Mr. Saraiva featuring data from Sentieo or here to watch the full event replay.
Mr. Saraiva, who has advised numerous EV companies including Nikola Corporation, Fisker Inc., and Workhorse Group, Inc. pointed out that many of the EV companies going public via SPAC mergers haven’t yet closed, which explains why retail investors have played an outsized role in trading. “They’ve been announced but we are still waiting them to close,” he said. “Once that happens, there will be research analysts picking up coverage and institutions doing more work on those companies. You’ll start to see more institutional investors coming into those companies meaning the stock prices are less dictated by retail investors.”
He also said that SPACs offer institutional investors a chance to do more careful analysis if they pursue an investment through a PIPE, which has become a very common way to raise additional capital. “Institutional investors are able to spend more time doing diligence on the companies and getting comfortable with the investment,” he said. “Whereas in a traditional IPO that timeline is truncated, in these SPAC transactions they can get up to a month of time to make that decision and do more diligence.”
Turning to the impact of government regulation, Mr. Saraiva said it was a consideration companies discuss but not the most important one. “Clients in this space clearly recognize that a Biden administration should be more friendly to the industry but I don’t think most are counting on that as being the driver that will propel the industry,” he said.”Things like advancements in technology and strong, innovative business models – that’s going to be the main driver in terms of the proliferation of EVs.”
He added that lithium ion battery technology has progressed in the last decade to a point where wider acceptance is inevitable. “The cost has gone down 90% with respect to kilowatt hour, ” he said. “That’s what is going to driving the industry forward and making EVs a viable option. It’s not going to be short term subsidies or other things driven by the government.”
To hear more from Mr. Saraiva and the other event speakers listed below, watch the full two-hour replay here.
- Tyson Eckerle, Deputy Director, Zero Emission Vehicle Market Development, California Governor’s Office of Business and Economic Development
- Steve Burns, Founder, Chairman and CEO, Lordstown Motors Corp. (NASDAQ: RIDE)
- Michael Farkas, Founder Executive Chairman and CEO, Blink Charging (NASDAQ: BLNK)
- Lionel Selwood, Jr., CEO, Romeo Power (Merging with RMG Acquisition Corp., NYSE: RMG)
- Tod Hynes, Founder and Chief Strategy Officer, XL Fleet (Merging with Pivotal Investment Corp. II, NYSE: PIC)
- Jagdeep Singh, Founder and CEO, QuantumScape (Merging with Kensington Capital Acquisition Corp., NYSE: KCAC)
- Paul Balciunas, CFO, Canoo (Merging with Hennessy Capital Acquisition Corp. IV, NASDAQ: HCAC)
- Jack Cassel, Vice President, Listings & Capital Markets, Nasdaq
- Mark Saraiva, Managing Director and Head of Transportation Group, Cowen Inc.
- Ramey Layne, Partner, Capital Markets and Mergers & Acquisitions, Vinson & Elkins
- Hope King, Multimedia Editor, IPO Edge
- Jarrett Banks, Editor-at-Large, IPO Edge
- John Jannarone, Editor-in-Chief, IPO Edge
John Jannarone, Editor-in-Chief