It's Raining IPOs in the EV Market: What You Should Know

Electric vehicles (EV) are the future of the automobile industry. Climate change concerns, stricter emission rules, favorable government regulations and improvement in the EV infrastructure on the back of superior technologies are fueling the demand for green vehicles. So far, 2020 has been an amazing year for EVs. EV makers including Tesla TSLA, NIO Inc. NIO and Workhorse Group WKHS have recorded a meteoric rise in their share price on a year-to-date basis. With EV trends getting hotter day by day, it seems that investors are worried about missing out on betting big on the same.

Lately, IPO filings by green vehicle makers have been on the rise to capitalize on the EV frenzy. Enterprises are seeing this as an opportunistic time to raise public funding, with investors hunting for new stocks. Let’s take a look at the EV companies that have gone public this year or are planning to make their market debut.

Nikola NKLA: Hydrogen truck maker Nikola got listed on Nasdaq after a reverse merger with VectoIQ on Jun 3. Since then, the stock price has risen more than 60%. Such is the euphoria surrounding EVs that Nikola — which does not have much to show for itself in terms of salable product and is not even making any revenues — briefly crossed Ford’s F market cap last month. By 2024, Nikola targets to generate revenues of $3.22 billion by selling 7,000 BEV trucks and 5,000 FCEV trucks. It should be noted that by 2027, Nikola anticipates production of 30,000 fuel cell electric vehicle trucks. While Nikola’s hydrogen truck and fuel plans are truly ambitious, it is indeed likely to face tough competition from other auto biggies. Nikola currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hyliion: EV truck company Hyliion announced IPO plans in June. The company will make its debut much in the same manner as Nikola. Hyliion will hit the market by merging with Tortoise Acquisition Corp., a special purpose acquisition company. Just like Nikola, Tortoise-Hyliion merger talks have drawn much attention from the market ahead of the deal completion, as is evident from Tortoise’s share price. Upon closure of the deal, which is expected by the end of third-quarter 2020, the combined entity will be named Hyliion Holdings Corp. and be listed on the NYSE under the new ticker symbol “HYLN.” Per the company’s presentation, Hyliion expects to generate sales of $344 million in 2022 and more than $2 billion in 2024. The company projects EBITDA of $8 million in 2022, which will rise to $602 million by 2024.

Li Auto: China-based EV startup Lixiang Automotive Inc. aka. Li Auto filed for IPO last Friday and intends to list its shares on Nasdaq under the symbol “LI”. This would make the firm the second China-based EV maker to be listed on the U.S. stock market after NIO. Founded in 2015, Li Auto was formerly known as CHJ Automotive. Volume production of the firm’s sole offering, Li ONE, began in November 2019. Li ONE is a six-seat, extended-range electric SUV with Level 2 autonomous driving features. LI Auto is equipped with next-gen extended range electric vehicle technology. Li Auto’s EVs — which depend on both batteries and gasoline — are powered by its battery pack and range extension system. The company delivered more than 10,000 vehicles as of Jun 30. In first-quarter 2020, Li Auto generated revenues of RMB 851.7 million, with a gross margin of around 8%. Nonetheless, the company is bleeding cash and is likely to face a solid competition as the EV space is getting crowded with each passing day.

Fisker: EV maker Fisker plans to go public via a merger with Spartan Energy Acquisition, an affiliate of Apollo Global Management. The merger deal, announced on Monday, valued Fisker at $2.9 billion and is expected to close in the fourth quarter. The deal will help Fisker fund the engineering of an electric SUV called Fisker Ocean, which is expected to hit the roads by 2022. A prototype of the vehicle will begin durability testing by 2020-end. The Ocean SUV has a range of 250-300 miles on a single recharge. Fisker is in talks with Volkswagen VWAGY to power its SUV using the German auto giant’s MEB platform. If the deal works out, it will allow Fisker to slash costs and reduce manufacturing time for its debut model, the Ocean sport utility vehicle. Fisker Emotion — a luxury sedan that grabbed limelight at the Consumer Electronics Show in 2018, is waiting in the wings and the firm has not decided upon its launch date yet.

Last Words

Green vehicles are definitely striking the right chords with investors. Those that hit the gas on placing bets on EV stocks lately have enjoyed huge gains. There is an enormous amount of money being injected into markets by investors who fear missing out on EV stocks’ crazy rally. Companies like Hyliin, Li Auto and Fisker are seeing this as an opportunity to offer their shares to the public and raise a healthy amount of money at rich valuations.

While there is a lot of hot air pumping up in the EV industry currently, many stocks do appear over-inflated. Nonetheless, the prospects of green vehicles are bright and the e-mobility industry is expected to witness massive growth in the coming years. Amid rising climate concerns, investors are intrigued by automakers that look for solutions to lower global carbon emissions for providing a cleaner energy future. Automakers are also fast changing their gears to electric as they are realizing the strong potential of green vehicles. In the coming years, the race for EV supremacy will only get fiercer.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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