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Canoo, Lordstown Motors to Fisker, Electric Vehicle Startups Run Low on Cash After SPAC Deals

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Several electric-vehicle startups that went public by merging with special purpose acquisition companies, or SPACs, the last two years made some nervy disclosures this week.Canoo, the buzzy electric-van outfit that drew interest from Apple’s car team back in 2020, issued a going concern warning that there’s substantial doubt as to whether it has enough cash to keep operating for another year.Lordstown Motors completed the sale of its electric pickup plant to Foxconn only after multiple delays and an admission it didn’t have enough money to refund the iPhone assembler if the deal fell through.And Fisker, which is six months away from delivering its debut electric sport utility vehicle, reiterated belief that it has sufficient cash for at least the next year with the caveat that it may need more due to changed business conditions.All of this has understandably given investors pause in an equity market where the tide is clearly going out.

The tech-heavy S&P 500 Index is down 18% this year, and some post-SPAC EV stocks have fallen much further. The rout doesn’t bode well for the near-term ability for companies with little or no revenue to raise more money and get their vehicles to market.An environment of rising interest rates and less-friendly capital markets is particularly problematic for EV companies because of how much money they were always going to need to make it in the long run.

Consider this comparison, courtesy of Jefferies: Tesla has raised $23.5 billion — and generated almost that much in gross earnings — to get where it is today.

Excluding outlier Lucid, the 11 EV companies that went public via SPAC since 2020 combined have raised roughly $7.5 billion.Tesla is, of course, not the only well-resourced competition

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