EV SPACs Warn about Running Out of Cash: The Beginning of the End for the Craziest Stock Bubble Ever

Electric Last Mile said it might only make it “into June.” So far in this cycle, 25 SPACs have warned they might not make it, including 6 EV SPACs.

By Wolf Richter for WOLF STREET.

Electric Last Mile Solutions, an EV startup that went public in June 2021 via merger with a SPAC, disclosed Friday, May 27, afterhours – when everyone was already off for the long Memorial Day Weekend – that it wouldn’t run out of money sometime between July and September, as it had disclosed two months ago, but instead it would run out sometime in June – that its cash wouldn’t even last through June, but only “into June.”

Somehow, the company has to find new investors, like right this moment, or else it’s going to shut down in a few weeks. In its filing with the SEC on Friday, it said:

“The Company expects that, without obtaining additional financing, it has sufficient cash to continue operations into June 2022.

“The Company’s current projections reflect, among other things, increases in professional service fees, employee retention costs and payments to suppliers.

“The Company is actively pursuing potential sources of liquidity and is working to extend its cash runway during this process to the extent possible.”

On May 24, the company disclosed in a filing with the SEC that its quarterly report for Q1 (the 10-Q filing with the SEC) would be delayed further. It said it still hadn’t filed its required annual report (10-K filing) for 2021. It said that on May 18, it had received a delisting notification from the Nasdaq due to noncompliance with the filling requirements.

“The Company’s management is working diligently to complete the Form 10-Q, as well as the Form 10-K, and intends to file as soon as practicable. However, the Company does not expect to file the Form 10-Q within the timeframe specified by Rule 12b-25 for the reasons discussed in the 10-Q Notification,” the company said in the May 24 filing.

Electric Last Mile is under investigation by the SEC. Its auditors threw in the towel in February, and the company has not been able to hire a new auditing firm and has therefore no auditors to audit the financial reports that it hasn’t filed yet. In addition, the company needs to restate some of the quarterly reports that it did file earlier.

In February, CEO James Taylor and Chairman Jason Luo, both co-founders, were forced out, effective on the spot, after an internal probe into share purchases that they’d made just before the company announced that it would go public via merger with a SAPC in December 2020.

For investors, this is like, OK, it was fun while it lasted, but now the money is gone. Before the announcement on Friday evening, shares [ELMS] closed at $0.71, down 94% from the high in June 2021:

I mean, you cannot make this stuff up.

It takes a huge amount of talent to produce a shitshow like this – excuse the technical jargon. But during the biggest bubble ever that is now imploding, anything would go, and the stock jockeys eagerly played along with it because it was so much fun.

This mess would be funny as heck, if it weren’t so serious – serious not because this will likely be the first SPAC of many in this cycle to go to zero, and it’s already nearly there, but serious because it shows all the utter garbage that was sold by Wall Street with huge hype and hoopla, for huge amounts of money, to the public to make Wall Street and some insiders immensely rich.

Electric Last Mile has the unique opportunity to be the first EV SPAC in this cycle to go to zero because its cash-burn machine ran out of cash. No hard feelings, folks, this is just how the game is being played during bubbles, and someone always gets to hold the bag.

Announced out-of-money dates.

EV startup Canoo [GOEV], which went public via merger with a SPAC in December 2020, said in its Q1 earnings report, that it might not have enough cash to continue operating. It said that “there is substantial doubt about the Company’s ability to continue as a going concern.”

The company is now desperately trying to raise cash by selling new shares and by borrowing – shooting for $300 million in equity sales and $300 million in debt sales.

It’s not helpful that the company is currently under an SEC investigation, as it disclosed in an SEC filing, concerning its merger with the SPAC and its “operations, business model, revenues, revenue strategy, customer agreements, earnings and other related topics, along with the recent departures of certain of the Company’s officers.” Class-action lawyers are having a field day with this show.

Numerous executives have left the company, including co-founders, the CEO, the CFO, and the Operations Officer. It still doesn’t have a CFO, but only an “interim CFO.”

Canoo had $105 million of unrestricted cash on its balance sheet at the end of March. Per its guidance, it plans to burn about $200 million in Q2, and it has no revenues. If it is able to raise $600 million pronto, it would extend the runway for another three quarters, through the end of 2022 and maybe into 2023, and then that $600 million would be gone, and there still wouldn’t be any revenues to speak of.

The company doesn’t have anything close to a production-ready product, it had $0 revenues in Q1, while booking a loss of $125 million. The company would need billions of dollars from investors – not a few hundred million – to get to where it’s able to generate enough revenues to cover its operating costs, which will take years, if it can ever sell enough vehicles that it can’t even build yet.

But its shares have collapsed by 84% from their high, to $3.52, and raising these billions of dollars isn’t going to happen by selling collapsed shares.

Lordstown Motors [RIDE], which went public via merger with a SPAC in October 2020, also included the “going concern” warning in its filing with the SEC, and its shareholders have gotten shookalacked, with the stock down 94% from the high in February 2021.

At least 25 SPACs have issued “going concern” warnings.

Electric Last Mile and Canoo are among at least 25 other SPACs that have issued “going concern” warnings so far in this cycle, according to Audit Analytics, cited by the Wall Street Journal. During this cycle, 232 companies went public via mergers with SPACs. And at least 25 of them have issued warnings recently about running out of cash and not being able to make it as a “going concern.”

At least six EV SPACS have issued going concern warnings since 2021. And EV battery makers have joined the group.

They include some of my favorite Imploded Stocks. These SPACs already brutalized their investors, and they are going to brutalize them further. And it’s just the beginning. During the dotcom bust, which took over two years to sort all this out, countless startups ran out of cash and died and their stocks went to zero or they were acquired for nearly nothing.

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  173 comments for “EV SPACs Warn about Running Out of Cash: The Beginning of the End for the Craziest Stock Bubble Ever

  1. Sporkfed says:

    Go on take the money and run…

    • unamused says:

      They got the money, hey, you know they got away
      They headed down south and they’re still running today

      They got the Finance part right.

      Too bad they couldn’t be bothered to come up with an actual business plan. It looks like they just winged it, something you can’t do when you’re playing with hundreds of millions of dollars, unless the plan was never to succeed anyway.

      • kam says:

        Not seen are thousands of legitimate start-ups and actual operating businesses, that got crowded out by this Fed-created money/wealth.
        “Wealth-creation” by Government/Central Banks is de-facto, wealth and job destruction.

        • joedidee says:

          big companies thrive on stealing great idea’s/patents for pennies on fiat $dollar

        • Homer Sipsome says:

          Sad but true. University and government-involved startup promotion and investing have thwir eyes more on social impact than success.

        • NBay says:

          Great ideas? You mean some “American Innovation”. I’m still waiting to find out just WHAT Musk’s “breakthrough tech” was. It’s all off the shelf shit, ALL OF IT….or code yet to be written.

          Financial engineering and PR is all that is “innovated” here…unless Alexa changing your channel, or talking to your refrigerator is “amazing” to you. Or an out of your lane warning while you are screwing with your big dashboard touch screen. All of which you will be told is “what consumers are demanding”

          HORSE SHIT!

          Who wrote the bit of corporate law that allows “SPACS”? Not liz Warren, that’s for sure.

    • Cookdoggie says:

      Goodbye Earl.

  2. gorbachev says:

    Along with SPACS if sovereign debt begins
    to implode watch out. In the meantime hold on to
    your cash. It’s suddenly valuable again.

    • 2banana says:

      Ummm…

      Fiat Cash is, by definition, sovereign debt.

      • cb says:

        Really? What does the USA owe you for your cash?

      • phleep says:

        All kinds of debt instruments have value, depending. In recent months, the US dollar’s purchasing power decline, as noted here, has been nothing like these wild equity shares.

        Hold your gold if you want to. But alongside a store of value and unit of account, I need the money-attribute of medium of exchange, here and now. The rest is a dream, and in the long run we are all dead.

      • cb says:

        There is a contingent pushing this meme as it’s good for clicks and long circular articles, but they take no questions. It might ring true with their contorted narrative, but it is far from proven.

        What demand do you have on the USA, the Treasury, or even the FED for your dollar?

        You can satisfy debts you owe with the dollar, but tell me what the USA, Treasury or the FED is bound and obligated to provide you with in exchange for your dollar.

      • Wolf Richter says:

        2banana,

        “Fiat Cash is, by definition, sovereign debt.”

        It’s not. The paper dollar is a Federal Reserve Note that pays no interest, has no maturity date, and doesn’t obligate the US government to ever pay it off. Banks get it from the Fed in exchange for Treasury securities or other collateral. You get it from the bank in exchange for a debit to your deposit account (lowering your account balance). The process can be reversed if you choose to give that paper dollar back to the bank, and it will credit your deposit account, etc.

        • 2banana says:

          Technically, you are correct.

          The “Federal Reserve” is a private corporation, is not Federal and had no reserves.

          In reality, the Federal Reserve now funds the government to the tune of trillions of dollars a year, none of our elected officials dare oppose it, the entire budget is now based on their whims and has only one product.

          DEBT.

        • cb says:

          @ Wolf –

          you are too kind. I will go a step farther in outing the mis-information.

          and state in it’s simplest form ….. Cash is not debt.
          (and the purveyors of such just cloud the waters)

          Dollars are currently owned by people that have never had a banking account.

        • Wolf Richter says:

          For everyone who holds paper dollars, they’re an ASSET. Period. For the Fed they’re a liability and are accounted for as a liability on its balance sheet under the name of “Currency in Circulation.”

          I have no idea why people keep getting tangled up in their own underwear over this.

        • cb says:

          Thank you Wolf.

          Now let’s go a step farther.

          You are the only expert I know who states that Bank Reserves are cash (dollars). I choose your position as the most logical, in spite of so many who claim reserves are not cash(dollars).

          A lot of “Big Brains” make the claim that “since issued Federal Reserve Notes are issued as liabilities, they are therefore debt.” I say BS.

          What position do you take on an individuals digital dollars deposited at the bank in a checking account.

          Thanks.

        • Wolf Richter says:

          You misunderstand. And so your assertions are wrong. A debt is someone else’s asset. My debt that I owe you is YOUR asset. There is no way around this. So now re-read what you wrote and in your mind sort it out that way. It will provide you with all the answers.

      • SomethingStinks says:

        Enough with the hyperbole. If you hate it that much, throw it out the window. The go to the market and sing them a song and see how many eggs they give you.

    • fajensen says:

      What a world, eh?

      I am so old that I remember when sovereign debts were quite regularly defaulted on, every 5 year or so, someone, somewhere, blew up. There was not much to be done other than eat it, ’cause, “sovereign”. Mortgages were the safest bonds back then, because one could always collect the property.

      Then a bunch of clowns dragged up as Economics Experts got religion and made sovereign debts a Sacred Artifact, that must be preserved at all costs. Sovereign defaults more or less stopped, since the 1990’s or thereabout.

      The very same clowns further embedded their stupidity into Basel I – III (because that’s what high-functioning morons do, they set up rules and processes, casting their rank stupidity in bets-practice whitepapers and IT-concrete) so sovereign debt is now as good as Cash for bank reserves, Basel III was made *after* the Greeks demonstrated why this is not so. Again, A Moron will always double down rather than admitting being wrong.

      So, yeah, there might be a problem.

      On the other hand, the problem will be both big and serious enough that The Rules of The Moron will soon enough go out of the window and The World as such will wobble a bit, then find a new equilibrium around some different stupidity. Money is all illusions anyway.

  3. 2banana says:

    I am still kinda hoping that the SPAC of Rumble can make it (CF Acquisition VI)

    Why?

    Any competition to Big Tech is welcome.

    • phleep says:

      You are welcome to be the beta test (crash test dummy) for this aspiration. That’s the beauty of capitalism.

  4. 2banana says:

    Oh come on, it is kinda funny to all that saw these companies as the scams they were.

    “This mess would be funny as heck, if it weren’t so serious – serious not because this will likely be the first SPAC of many in this cycle to go to zero, and it’s already nearly there, but serious because it shows all the utter garbage that was sold by Wall Street with huge hype and hoopla, for huge amounts of money, to the public to make Wall Street and some insiders immensely rich.”

  5. 2banana says:

    Isn’t that against the law or something?

    I thought Tesla proved that.

    “Electric Last Mile has the unique opportunity to be the first EV SPAC in this cycle to go to zero because its cash-burn machine ran out of cash.”

  6. Not Sure says:

    I saw the term “business model” and immediately chuckled to myself. The business model never involved actually building any vehicles. The strategy is simple:

    -Burn a little investor cash on some digitally rendered nonsense, or maybe roll a powerless dummy “prototype” down a hill for a nifty video if you’re particularly crafty.
    -Burn a little more investor cash on a claim that you’re building a factory. Maybe cobble together a lease or get through the early stages of purchasing a building.
    -Grab a huge chunk of investor cash in a highly questionable manner via SPAC and run before the charade collapses.

    What truly stunned me is that several big players like GM managed to get so publicly duped by some of these frauds. FOMO sure can run deep.

    • unamused says:

      “What truly stunned me is that several big players like GM managed to get so publicly duped by some of these frauds.”

      It’s stunning every time it happens, but it’s not uncommon. I have my favorites, like the six bil Quaker Oats paid for Snapple – a virtual company. Also the bils Electronic Data Systems paid for a tech company in India, which mostly existed only on paper. Then there’s the nine bil SoftBank blew on WeWork. Wowsers.

      You couldn’t flush that much cash down the toilet without bringing down the metro sewage system. One wonders how hard they have to squeeze the general population to come up with so many billions to waste.

      • Sit23 says:

        It has been said many times before, but it seems I have to repeat it. it is not the fault of retail investors that these people raise gazillions in funding with nobody supervising their spending of it. It is the fault of fund managers who get paid commissions from these people to lend them money, or buy shares off them at inflated prices. Once they have banked their commission cheques, the Gold In Sacks, and their fellow trough snufflers of this world are on to the next one. Rinse and repeat, I think it is.

        • Hans Brink says:

          That’s right Sit23, why are the fund managers not doing their due diligence. That’s what they supposedly are taking their cut for. Makes you wonder “Who do you trust”

        • Wolf Richter says:

          No link to all the others. You can look them up. Lucid is down 69% from high.

        • Ian says:

          And in turn the fault of the regulators. They are not even asleep at the wheel, they appear to have left the building, probably down at the exchange getting in on these deals and getting out before the schmucks they are supposed to be protecting. No wonder the younger generations are turning against capitalism and think socialism is the answer.

        • joe2 says:

          Correct. YOM (your own money) and OPM (other peoples money) are 2 completely different animals.

        • 728huey says:

          They’ve supposed to be supervising their spending, but the pc’s and angel investors are only going to hang on long enough to get those companies to the IPO or SPAC where they cash out their profits and leave retail investors holding the bag when it goes bust.

        • fajensen says:

          It’s an Unregulated Market* after all, and, in an Unregulated Market looting and fraud will always be more “Efficient” than the hassle of producing something in return for the money.

          *) Sure, we have regulators and all manner of dull reporting and duller processes, but, they are all very busy doing nothing at all. I think Bush Senior was the last presidential period where a fraud went to jail.

      • cb says:

        People might be more judicious with their money if:

        1. The FED didn’t make is wasting asset by the continuously digitizing new dollars.

        2. The GOV didn’t subsidize the casino via the 401K’s and other plans.

        3. Scammers like Goldman Sucks weren’t favored via funneling regulations (401K’s, etc.), limited liability and government bailouts with the full power of the GOV and FED.

        The current “rule of law” is well designed to keep the commoners on the rat-wheel, and masters running the circus.

    • Cem says:

      Rivian will be one of the few who escape this fairly well beat up but functioning. Unlike virtually all other EV startups they actually have vehicles being delivered. Saw one on the road the other day and it looked like a pretty polished product. I’ve seen two Lucids and they actually looked alright but still kind of “prototypee” it was in the rich people part of town so probably a C level driving one home over the weekend.

      Tesla went through the same thing and is here to stay.

      Now, every other one of these scams? Won’t even be able to remember their ticker in 18mo.

      • Mike R says:

        “Tesla is here to stay.” Says who ?

        Musk is clearly in the process of buying himself a new gig.

      • SI t23 says:

        If I have a dollar”s worth of Tesla shares, when do I get my 3-5% return for the last few years?

      • unamused says:

        “Rivian will be one of the few who escape this fairly well beat up but functioning.”

        Rivian is unlikely to ‘escape’ the class action suit against it for securities fraud, even if it’s officers, like all corporate criminals, are above the law.

        What else ya got?

        • Jay says:

          And they won’t be able to beat all of the entrenched truck makers who are bringing EV’s to market in the next 12 months. If priced competitively, most people will go with a known quantity like Ford, GM, Toyota, etc. There’s an 80% chance Rivian will be gone in 24-36 months or possibly even sooner.

        • El Katz says:

          Automotive News reports that there was a fire at the Rivian plant in Illinois and it is “under investigation”.

          Could it have been “lightning”?

      • Digger Dave says:

        I usually got pooped on for saying this, but there are too many workers getting paid way too much in this economy. It’s not just the 1%ers. Doesn’t matter the industry. There’s no a dearth of service and trade workers. At least we’re waking up to trade shortages, because when no one will fix your toilet, you notice. Prime example – I’ve never seen so many 20 somethings able to afford $100,000-200,000 camper vans. Guess I came off age in the wrong era – actually worked 3 years in an office early on. And still ate less than $5 lunches, roomed with way too many people and drove beaters. I switched to the trades because they were just as lucrative in my state and because we could still afford to live there. Well, what I do has kept float with inflation, but I run my own operation now and I’m as frugal as can be – fixing my own cars, renovation on the house myself, doing my own taxes on the free forms, etc. My point is that our youthful class should be struggling and learning work ethic. The financial office I worked was a place where many of us had second jobs. We need to get back to these fundamentals and get the air out of the entire white collar marketplace. Until then there will be too much money chasing too many bad ideas.

        • Brent says:

          I live on Vancouver Island, BC. We have a proliferation of lifted high end pickups, trailers and fifth wheels, expensive crossover SUV’s, Teslas, large ocean fishing boats (burning 4-8 gallons/hr). People are buying up Electric Mountain bikes for 10k. These are almost all HELOC purchases and not earned money. We also have a shortage of trades.

        • Swamp Creature says:

          Most corporate and government white collar jobs in the US are useless and could and should be eliminated. When I was in the government I estimated 75% of the government jobs and 85% of the contractor jobs were a complete waste of taxpayer’s money. A failure of the last few administrations was there was no effort to reduce the bloated federal beaurocracy and cut federal spending and they wonder why we have this runaway inflation.

        • Tom S. says:

          Not sure what you’re talking about w regards to the youth. They’ve been priced out of housing and are finding other ways to live in a world where manufacturing and working class salaries don’t pay the middle class bills.

        • fajensen says:

          Old people wanting young people to suffer through the same shit as they did is about as ancient as the Romans and the “Good old Times” are about as dead too.

          They should do like the Romans: Carve their whining in rock and maybe 2000 years later people will be amused by it.

      • Harrold says:

        I think Rivian’s plan is to be acquired.

      • Cookdoggie says:

        I believe Tesla will sell out to another automaker at some point, one that knows the nuts and bolts of building quality cars (admittedly, a small number of choices left). Musk will be Musk, get bored and move on to some other dream.

  7. Augustus Frost says:

    It’s not just SPAV. It’s not just crypto or NFT. It’s not just “tech” “disruptors”.

    It’s all the major asset classes: (US) stocks, real estate, and especially debt.

    This is the greatest asset, credit, and debt mania in the history of human civilization. Nothing else even comes close. It’s lasted for well over 20 years and is the same mania which covered the dot.com bust and housing bubble 1 pre-GFC.

    The British South Sea Bubble, Dutch tulips, French Mississippi River Scheme, US “Roaring 20’s”, and Japan’s Bubble economy don’t even come close. All of those bubbles and manias were localized, more limited, and of much shorter duration.

    The US stock market is the last equity market in a full blown mania (all the major averages) but stock markets worldwide are still overvalued and far from cheap, the real estate bubble is widespread, and the debt mania has infected the entire planet.

    The long-term fundamentals are also absolutely awful. Fake “growth”, QE, ZIRP/NIRP, and fake financial stability.

    • Wisoot says:

      Debt mania = corrupt leaders

    • unamused says:

      “It’s all the major asset classes: (US) stocks, real estate, and especially debt.”

      The financialization of the last 40 years has enabled Wall St. to amp up the scams. One wonders how the Real Economy manages to keep functioning, despite the craters everywhere you look, except as something to be bled by the parasites.

      Goldman Squid, for example, has listed pretty much everything the firm does as a target of an ongoing investigation. In the looting and bribery scandal known as 1MDB in October 2020 it admitted to the charges and had to pay over $2.9 billion. Just a cost of doing business, which is evidently racketeering.

      • Sams says:

        Any economy can sustain and provide excess for a certain amount of non-productive free riders. Be it in the form of taxation or rentier activity.

        If to many free riders, rentiers or others, maintenance and investment will suffer and over time the base of the economy will grind down and the economy shrink.

        Depending on the circumstances the economy may crash or just grind to halt. What we now see could be an economy going down due to being burdened with to many free riders.

      • cb says:

        “The financialization of the last 40 years”

        all emanating from the prolific creation of funny money by the FED/Banker/WallStreet/GOV cabal

        when workers compete with counterfeiter’s, workers generally lose

        Many, early adopters, have won ,,,,,, but overall and in the long run

        Goldman gets to drink your milk shake(s)

        • cb says:

          and the culture is bastardized

          I’ve known many a common American puffed up with pride about their kid’s working for the FED or Goldman

          rather than feeling a tinge of shame

          that’s the way it goes it USofA

      • Augustus Frost says:

        My observation is that Goldman Sachs and Wall Street generally totally went off the rails once they lost the market discipline imposed by the partnership structure which I recall occurred in 1999.

        I don’t remember when they became an LLP, so it might have started then.

        There has also been a culture change for the worse, but partnerships with unlimited liability never would have done what these firms do now and recently.

        • cb says:

          True. Clinton was pleased with his role in this. Bush was no better, nor Gingrich and company. All sycophants for the financial complex. Killers of Glass Steagal. Rewarders of gamblers at taxpayer expense.

          Why moderate this away?

    • cb says:

      and the biggest mania of all, the root of all the other manias, has been the money “printing” mania

  8. Cas127 says:

    Look, feel free to slam the investment banks that literally floated these turds (why no specific bank names?) but it does take a “unique” kind of “investor” to clamber on board a SPAC, which comes closest to the South Sea bubble era ideal (“…a venture…and no one to know what it is.”)

    My guess is that much/most of the buyside money was from managed accounts of the absolute worst sort (maybe even some actionable payola buried in there somewhere) whose ultimate beneficial owners were asleep/dead at the switch (maybe literally – trusts for people in comas or legacies).

    There have simply been too many financial scandals publicized too widely over the last 20 years for this to simply come down to “investment banker hype” – how many (with substantial money) are there left to effectively lie to?

    I think the more interesting part of the scam isn’t that the sell-side is capable of being scum (what else is new?) but the exact mechanics of how the buyside (frequently under fiduciary obligations) gets suborned.

    And clues might be buried in the SPAC documents (were sellside/buyside in separate – but affiliated – entities?).

    • Augustus Frost says:

      SPAV are worse than the South Sea Bubble example.

      That was one occurrence and though 5,000 GBP was a fortune at the time, it’s a lot less than the cumulative “value” of all the SPAV.

    • Not Sure says:

      At a certain point, can you really slam the outfits that floated these turds though? I mean, most of these “companies” were so transparent in their fraud and hopeless business models, that it’s hard not to blame the “investors” in their blindness and greed.

      My schadenfreude is spiking off the charts. Watching a little guy get crushed because he was the victim of an elaborate and well orchestrated scam is tragic. Watching the same little guy get crushed over and over again because he repeatedly allowed his greed to overcome a wall of red flags multiple times by the same unsophisticated get-rich-quick schemes. That’s just entertainment as far as I’m concerned, regardless of whether we’re talking about individual investors or managed accounts & funds. The folks loosing their shirts on these types of trades are the ones that have partaken in them repeatedly. Fool them once, shame on you. Fool them two, three, four or more times… Now that’s just hilarious!

      Next up, have some popcorn ready for the crypto crowd finale.

      • Iona says:

        Thought you were talking about tether at first. Complete scam and everyone knows it.

      • cb says:

        Not Sure said: ” I mean, most of these “companies” were so transparent in their fraud and hopeless business models,”
        ———————————–
        Regulation Backfire ……………………….

        The Joke SEC requires prospectuses for public companies

        all kinds of wording about risk is required

        the result: the lengthy prospectuses read like phonebooks, with continuous boilerplate disclosures and risk admonishments covering every conceivable and inconceivable risk imaginable

        in short, a prospectus even for good companies would convince investors the company was hopeless

        so, the prospectus is seen as boilerplate, and it becomes assumed things could not be as bad as laid out —— things are worded in a way to fulfill regulatory requirements

        The bad ventures get to hide among the good ventures

        part of the WallStreet/SEC scam …………………

        • 91B20 1stCav (AUS) says:

          cb- concealment is usually the reason when a unit pops smoke…

          may we all find a better day.

        • cb says:

          @ 91B29 1stCav (AUS) –

          I am thinking through and trying to understand what you’ve said.

          Should I start reading prospectuses again? Are you saying the usual reason for company failure (in this case SPACs) is for a reason not outlined in the prospectus? A reason concealed?

        • 91B20 1stCav (AUS) says:

          cb-apologies for a now-obscure past-wartime reference.

          “…Prospectus is boilerplate…things are worded in a way to fulfill regulatory requirements…the bad ventures get to hide among the good ventures…”.

          Precisely-‘smoke’, in other words (or word salad), to conceal maneuver. You can send scouts into the smoke (read and try to correctly parse the word salad without your eyes crossing)
          attempting to see what going on (even in the best of conditions time consuming, perilous, and lacking accuracy). or don’t, and practically guaranty the likelihood, as you very aptly put it, of falling prey to a ‘ WallSt/SEC scam’.

          Not likely to change without the SEC and its reporting requirements being reformed and better funded/staffed/written, but it’s what we have (fortunately, there’s still folks like Wolf who provide ‘smokeless’ knowledge for our perusal and use…).

          Reform to an ideal of Smith’s ‘well-regulated’ market is something we could always work towards, but human nature being what it is, it will be a long, hard slog…

          (a wordy response, cb, to say i agreed with your analysis).

          may we all find a better day.

        • cb says:

          @ 91B20 1stCav (AUS) –

          Thanks for the clarification. When you write, I pay attention.

        • 91B20 1stCav (AUS) says:

          cb, you are too kind, sir.

          may we all find a better day.

    • joe2 says:

      Unless I’m mistaken, the law requiring fiduciary responsibility for retirement management firms was not passed. So, any trust is on your own dime: e.g., carnival barkers, TV promoters, Nigerian princes, financial management firms.

      When my uncle who lived a loner in a remote cabin died, the woman from a big national financial firm managing his portfolio claimed to be his beneficiary. She was unaware of the relatives and of course lost. But be careful out there.

    • cb says:

      @ Cas127 –

      There have been too many bailouts –
      bailouts tend to alter temperance and judgement –
      when you punish the prudent and reward the profligate –
      adaptation takes place –
      and prudence is lost

    • Shandy says:

      Very well said.

  9. Dan Romig says:

    From 17 December, 2020 via ‘Indiana Economic Development Corp.’:

    “Electric Last Mile, Inc., an EV company focused on commercial and delivery fleet vehicles, announced intentions today to establish operations and launch production at the former AM general commercial plant in Mishawaka.

    The facility is expected to support the production and assembly of ELMS’ electric Urban Delivery vehicle, with capacity to manufacture up to 100,000 vehicles annually. The company plans to launch production by the third quarter of 2021.”

    Sweet Mother of Peal Jam!

    They had “intentions and plans to establish operations.” Golly gee, isn’t that nice?

    Of course, it was kind of the IEDC to offer up this fine company $10 million in tax credits and $2.8 million in conditional tax credits from the ‘Hoosier Business Investment tax credit program.’

    Nope, you can’t make this shit up any better than these highly esteemed business organizations already do.

    I got news for them. It rained today in the Twin Cities. So, I rode my made in Burnsville, Minnesota OTSO gravel bike. Why? Because it is a real product.

    Do any of these companies have a real product? Just wondering …

  10. Anthony A. says:

    Am I to believe that only in America these kinds of scams are going on? And so many of them? I guess no one is “watching the store”, so to say.

    • Augustus Frost says:

      It’s a lot worse in the US.

      Not sure what you mean by “watching the store” as differences in regulation sure don’t explain it.

      No one can protect the population from itself when it’s composed of a disproportionate percentage of gamblers masquerading as supposed “investors”.

      • phleep says:

        I appreciate this recognition: when the suckers line up (in a free society) and are throwing money at something, somebody will go and stand in the money stream to catch it. It is not a flaw of the system, which any mature person knows cannot (and we do not allow it to) police every little information flaw. But it tees up the complaining by commenters!

        Things underpriced will be captured and arbitraged, whicsked away to a swifter and more fit species’ DNA. It is nature, pre-human. Eugene Fama neatly captured this in his econ studies: “Fama’s piranhas” will show up and eat any free protein quickly. And nature features deception to capture value. It isn’t some recent politician’s screwup.

        Also, as in nature, most individuals die off quickly. As do most all individual enterprises and ventures. We have survivorship bias because we see only the winners, soon after the losers vanish. Most business startups fail. We have an especially big die-off now because there was an unnaturally rich mix of free dollars and credit out there. It would be like throwing huge sacks of pigeon feed at the birds: a die-off is inevitable once the supply returns to its mean. We get to watch them devour each other, meanwhile.

        • phleep says:

          And this shows how “good intentions” lead to chaos. Risk (and sometimes severe turbulence, chaos) will have its way, it will pool where it is unseen, and surface. It is, again, nature.

        • phleep says:

          Squirrels are doing it in my neighborhood. Overpopulating. Next they will get aggressive and violent. Reverend Malthus was right.

    • Mark says:

      “I guess no one is “watching the store”, so to say”

      I don’t know about that – Our Republicrat and Demopublican multi-millionaire rulers in Congress have done fabulously well with insider trading, etc.

      They’re watching . And they could care less.

  11. Brent says:

    =Imploded stocks=
    =The Beginning of the End=

    “And He saith unto them, Why are Ye fearful, O Ye of Little Faith ?” 😁

    That is precisely why stock market AS A WHOLE will explode higher tomorrow.And next week.And next month.And next year…

    Implosion Detonation:
    A spherical shell of high-explosive material is made up of fitting pieces called “lenses” to focus the explosion inward which are wired with detonators to set them off simultaneously. This creates enough force to increase the density of the sphere of plutonium to the point where it is super-critical. KABOOM !

    Supernova:
    A star which has reached the end of its life, collapsed, then explodes in a brilliant burst of light. Supernovae can briefly outshine entire galaxies and radiate more energy than our Sun will in its entire lifetime.

    Arthur Clarke, Ray Bradbury, Isaac Asimow, Carl Sagan, George Gamov only wrote pop sci & sci-fi. But Jerome Powell and his pals made it happen – right there, right now. It is absolutely amazing.

    • Wolf Richter says:

      In the summer of 2000, the Nasdaq had a 35% bear-market rally, as part of the process of imploding 78%. The bear market rally pulled in more investors and then wiped them out. So yes, there will be bear market rallies.

      • Brent says:

        Current 14 years long bull market is a sight to behold, fundamentals be damned…

        Hats off to St Jerome .

        Probably in 1968 young Jerome watched how Fugs tried to levitate Pentagon w/o much success and promised to do better 😀

        • Robert says:

          Can you believe that when Abbie Hoffman announced his plan to “levitate” the Pentagon, at the time of the Vietnam War protests, the Justice Department actually issued an injunction against his doing so? When the government becomes absurd like this, while at the same time turns a blind eye to actual palpable financial misdeeds- such as the SEC’s providing no oversight over Tether, it is a recipe for the sort of mayhem like the Haymarket Massacre or other so-called mindless acts of violence like looting of stores.

        • Wolf Richter says:

          Tether needs to just blow up when it finally gets that run on the coin, and then folks will be done with it and don’t have to worry about regulation anymore and can just get back into the labor force and get a day job.

      • Harry Houndstooth says:

        Beautiful, pure, unadulterated wisdom dispensed daily. Tolerant of dissent, intolerant of untruths. What astonishes me is Wolf’s broad financial acumen tied to the depth of his understanding of the vehicle market. His documentation of the destruction of speculative investments at the top of the biggest bubble in our lifetime is worth the price of admission, leaving no reasonable doubt that the averages are headed lower no matter how high they rally.

        Oh, wait a minute… it’s free.

        It is Wolf’s conviction to the truth, not to his agenda or aggrandizement, that makes us, the recipients of his wisdom, in his debt.

  12. Wisoot says:

    SPAC – a special acqisition company. Thanks Wolf for demonstrating just how special they really are were.

  13. Ervin Gazy says:

    In todays world of Google all that a person has to do is type some questions and almost everything can be answered. Asking reasonable questions about EV,s and their future doesn’t seem all that difficult. The WSJ has a current editorial named “A canary in the pebble mine” it just reinforced the fact that in the developed world getting the resources and the power for the glorious EV world will be a daunting job indeed.

    • Wolf Richter says:

      Ervin Gazy,

      “getting the resources and the power for the glorious EV world will be a daunting job indeed.”

      Getting the resources to build and fuel ICE vehicles has been a daunting job for 120 years, and wars have been fought over it, and lots of people have died because of it. So good luck creating anything worse than that by switching to EVs.

  14. The Real Tony says:

    Any wind power stocks? They always end up at zero.

  15. Depth Charge says:

    This sounds great for stocks. Their recent meteoric rise should be boosted on such news. I see crypto is back to surging for absolutely no reason whatsoever. The collapse hasn’t even begun.

    • historicus says:

      Biden to meet with Jay Powell ….

      an ESG summit

      • Wolf Richter says:

        Nonsense. It’s an effort by the While House to shuffle 100% of the responsibility for inflation to the Fed, and thereby shuffle 100% of the blame to the Fed, including the blame from what will happen to the economy and asset prices as the Fed cracks down on inflation. I think Powell understands what his new job is that Biden gave him: crack down on inflation and take the blame for it. “The Fed did it…”

        • Depth Charge says:

          It would be funny if the White House tried to pin inflation 100% on the FED, even if people actually fell for it. But the FED is not entirely to blame – CONgress had just as big of a hand in it. Politicians are the scourge of our society.

          The bottom line is that there is just way too much money sloshing around, and speculators are still massively cashed up. That’s why BTFD is still alive and well, and everything remains at nosebleed levels save for some SPACs, “disruptors,” “meme stocks,” etc. which have taken an amputation.

          Until the FED gets real about crashing the economy, inflation will not be going away. Yes, we need a massive CRASH. Attempting to engineer “soft landings” where all asset prices remain at nosebleed levels but inflation miraculously subsides is akin to believing in The Great Pumpkin. It’s delusional.

        • Kenny Logouts says:

          They’ve been doing this in the UK too.

          Gov blaming BofE.

          BofE now blaming Gov for bailing out people on their home energy bills.

          They can all blame covid and Putin though.
          So useful that these two patsies came along at the end of this cycle, which wasn’t going to end smoothly in any case.

        • Robert says:

          The Fed is monetizing the national debt, but it is not as if they were assuming any risk in doing so. The banks that own the privately owned Fed are taking a cut of every dollar of deficit spending and it is equally as likely that the New York Fed’s trading desk, one of, if not the largest in the country, has placed its own bets with inside knowledge of interest rate changes. The business model is that it is not stealing candy from a baby if you ask him first.(and at all costs, keep the American public in an infantile state)

      • SoCalBeachDude says:

        Those 2 can have a good laugh about the transitory ‘inflation.’

    • phleep says:

      I think the crypto fans were the most intensely neurally wired to spring back into optimism at the first suggestion of upturns. Their nerves (and reserves) have not been stress-tested, reality-tested enough yet. Passionate beliefs die hard.

    • Jay says:

      Exactly, but I am going to keep my eye on Quantum Scape ($13.11) and Solid Power ($8.95). They look well positioned to come out on the other side with valuable tech. Would love to pick them up for ~ $7 & $5, respectively.

  16. HR01 says:

    SPAC = Scammers prowling, absconding cash

    3D printing versions (MKFG, DM and VLD) also headed for the graveyard. All launched with no clue on just how crowded the industry had become. Severely under-capitalized to boot. Scores of 3D printing firms (both hardware and software) had sprung up across the globe in the past eight years, courtesy of an endless supply of cheap fiat. Competition fierce, operating margins challenging. These newbies were doomed from the start.

    DM even duped Ford Motor out of $65 MM. Ford has since filed its intent to dump its entire stake.

  17. Beardawg says:

    25 of 232 SPACs, about 10%. Compared to standard IPOs, doesn’t sound that bad overall. Those that Wolf highlighted are pretty agregious, but after last week’s resurgence, the markets may well have wrung out the worst of the worst ?

    • Wolf Richter says:

      More than double the rate of IPOs at this point. And all kinds of garbage was sold as IPOs too, and I have discussed some of them, and they’re going to implode too. It just wasn’t the topic of this article.

    • cb says:

      You raise an interesting point. Wonder what a $100,000 “contribution”, equally allocated to those 232 SPACs would be worth right now?

      10 years from now?

      perhaps the topic of some future dissertation ………….

      • cb says:

        @ Beardawg

        and Wolf

      • Beardawg says:

        CB

        I agree. Though many of those SPAC-directed investments have not found their basement (yet), If an Investor was in on Day 1 and feathered every SPAC investment in 2020 to 2021, you’d be beating the S&P right now. 10 years from now?

        • Wolf Richter says:

          Those SPACs were sold to the public at $10 a share at the SPAC’s IPO before any acquisition. Any SPAC trading below $10 a share lost the public money, and only insiders made money on those deals by selling to the public.

    • Augustus Frost says:

      “but after last week’s resurgence, the markets may well have wrung out the worst of the worst ?”

      Not even close.

      You’re obviously not familiar with market history and don’t understand how the current market environment is the most distorted and overvalued in the history of humanity.

      The major averages aren’t even back to the pre=pandemic peak. There has been no decline of substance.

      • Swamp Creature says:

        Today Biden will be meeting with Jerome Powell to map out a strategy to combat runaway inflation, which is hurting his poll numbers in advance of the November mid- terms. Don’t look for anything constructive to come out of this meeting. The only thing I see happening is each one blaming the other
        for the mess that they both created.

        • Wolf Richter says:

          What will come out of the meeting is that this inflation is the Fed’s job to deal with, and the Fed will get the blame for this inflation, and for the damage that the Fed’s crackdown on inflation will cause, and I’m sure Biden explained to Powell at the outset that this was deal in order for Powell to get reappointed.

          Powell is not up for reelection, and he’s going to have to do the dirty work and get all the blame, while the White House will wash its hands off this inflation, that’s what will come out of this meeting.

        • Swamp Creature says:

          Yep, I think Wolf hit the nail on the head. The Fed will get the blame and the White House will have plausible deniability. Powell will be reappointed. It’s a deal made in heaven.

      • Beardawg says:

        AF

        I hear what you are saying, but if there was significant $$$ in the stocks that dropped 50% or more already – that may be lion’s share of the drop. I don’t know what the market share would be for the imploders, but if it is north of 15%, we may see the major indexes settle down s bit.

  18. Beula Toxoplasma says:

    Peloton has come up with a new pedal car service that combines the utility of a public toilet wth the convenience of self driving while crapping. It has a golf cart roof with solar panels to fire the electronics and usb ports so you can charge your smartBrain and contribute to carbon remediation by composting your poops on the way to the club.

    The car utilizes rotational force to compress and excrete round rabbit sized pellets that go back into the environment and help rebuild the substrate in the bioshpere, which is a big problem. The pellets are completely harmless and edible.

    The consumer model Flintston Model A utilizes advanced micropoop procesorss and can be charged at home with your home toilet.

    Look for one tomorrow on a sidewalk near you! Just use the app to unlock the vehicle and you to can ride on poop and save the world.

    • Ro says:

      This is hilarious!

    • elysianfield says:

      BT,
      Any chance to invest in this product…get in on the ground floor?

      Count me in.

    • Dan Romig says:

      OK, in the real world, the commercial free coverage on streaming services of the major tours, like the Tour de France, actually have a few shots of the riders in the peloton rolling along the road and relieving themselves. The video editors are not always paying close enough attention to change the camera feeds in the proper time.

      Note to the spectators: it’s sometimes better to stand on the side of the road with the wind at your back rather than the other side.

      Yes, I rode in the North American peloton for seven years, and sometimes, you have to go.

      The women racers do not have the same option eh?

    • Implicit says:

      My understanding is that the quality of the poop is directly related to miles/hr fuel consumption. Why just the other day I saw a guy pulled over with a broken down pooper, diarrhea everywhere! Can’t even disgust it.

    • Implicit says:

      I’d like to see them race. “And they are off.
      It is cabbage by a head. Oh wait, here comes toilet paper wiping-up the rear!”

  19. MF says:

    Live by PR. Die by PR.

    Maybe they can hire a certain Aquaman starlet to get them back on their scammy tracks? I hear her calendar was suddenly cleared recently.

  20. Don't let it bring you down says:

    Fingers crossed that the trash EV companies don’t bring down the legitimate ones like Proterra. As a former executive employee, I cringed when Proterra decided to SPAC instead of going direct IPO and just hope they don’t pay the price for it.

  21. The Bob who cried Wolf says:

    Let’s hope that DeLorean doesn’t fail with their new Alpha5. Maybe someone needs to introduce a flux capacitor startup IPO. It could be funded with cocaine.

    • phleep says:

      Reportedly (per Autocar) the first 88 DeLorean alpha5 cars will not be street legal, and will come with NFTs. I call that uselessness cubed, value subtracted. Superciliousness triumphant.

      Thorstein Veblen, coiner of the phrase “conspicuous waste,” is laughing from the grave.

      • The Bob who cried Wolf says:

        This stands to reason as they’ll be time machines. Maybe Powell should buy one and preemptively fix this mess.

  22. George W says:

    Amazon is looking to sub-lease 10 Million Square ft. of warehouse space.

    That number sounds large but it is only around 5% of Amazon’s total capacity in the US. Amazon over built, demand has diminished and they are ramping down. The States noted, where this is to occur, are in bad demographic regions like NY, NJ etc. Southern Cal was also listed, though I am not sure why.

    Amazon’s newish warehouse at 5600 West in SLC, seemed impressive at first, but the build out around it has been even more impressive.

    Fedex and a whole host of companies, I have never heard of, have built massive distribution hubs around this same area, many larger than Amazon’s warehouse.

    It makes some sense to build out large distribution centers in growing demographic areas such as Utah but from what I have read this is build out is not unique too Utah and is happening around the country.

    The problem that I see, is that the vast majority of the new warehouses being built are just distribution hubs. No manufacturing of any kind is being added.

    Spac’s are just the tip of the iceberg.

    • Augustus Frost says:

      What you are describing is another result of artificial demand from fake “growth” and ultra-loose credit standards and absurdly cheap financing.

      More mispricing of risk on steroids.

    • ru82 says:

      I was reading about a small city in Kansas built a big warehouse to lease to Amazon. Amazon was there for several years but then wanted a better location. The owner took out a big loan to build the warehouse but when Amazon left, the loan was not yet paid off.

      Amazon ended the lease the owner of the warehouse filed for bankruptcy. LOL
      ————————————————————-
      The giant former Amazon warehouse in Coffeyville did not sell at auction on Wednesday. The building, part of the bankruptcy proceedings of its previous owner, did not receive a bid over the required minimum of $11.4 million, Trisha Purdon, assistant city manager in Coffeyville, said Thursday. McCurdy Auction handled the auction. The 877,288-square-foot building on 105 acres is a modern warehouse with 25-foot-high ceilings in an industrial park north of Coffeyville. When the closing was announced in September 2014, Amazon had more than 600 employees plus hundreds of seasonal contractors. It was the city’s largest employer.

      • Kenny Logouts says:

        North Haverbrook?

        It sounds like Amazon leaves a trail behind it like the monorail did in The Simpsons.

  23. Olivier says:

    These are all post-merger SPACs, right? I.e., the entity that is going bust is not so much the SPAC itself as the “real” company that merged with it.

    • Mel says:

      But SPAC is a great cover story for a scam. I collect investors ‘ money with a pitch that is not an obvious loser. Then later, when the investment money is all there, I drop it into something that is almost obviously a loser, making whatever I can out of it on the way. The angry investors might try to get their money back, but by that time I have a head start.
      Mel Brooks wrote an MBA textbook with The Producers

      • phleep says:

        The issuers could bypass the IPO requirement of a prospectus for a long time, while scooping up money. In its place, they could offer wild jazzy marketing projections of a glorious future. All this was no accident. Think what kind of promoter would show up in such a space.

        I wonder, once it shakes out, how the losses compare to, say, the 1980s Savings & Loan scandals in their last ugly, grifter incarnation.

        • Augustus Frost says:

          SPAV are worse but it’s only a difference of degree with the hundreds of “tech” companies and “disruptors” profiled on this site whose “business models” are complete garbage.

          Even after crashing, all of these companies should be worth a fraction of current value or zero and it’s coming.

          There is still a long way to fall.

  24. Ryan says:

    Is there a link to see the other SPAC mergers that are doing bad as there were only 3 detailed out of the 25.

    I wonder how Lucid is doing…

  25. Cold in the Midwest says:

    A demographic profile of SPAC investors would be interesting. What consistencies would be in the profile, if any?

    I’m thinking 1) predominantly aged 20 – 40, 2) as an extension of #1, were not active investors during the dot com boom and do not observe the clear similarities, 3) Fascinated by business concepts claimed to be disrupters of the current model (Carvana comes to mind.)

    P.T. Barnum would observe this situation with humor.

    • Augustus Frost says:

      “P.T. Barnum would observe this situation with humor.”

      So would H.L. Mencken.

  26. David Hall says:

    The price of lithium used in EV batteries is up 4.5X in the past 12 months.

    • Ervin Gazy says:

      And thought I was the only person that noticed. Price does matter.

    • Wolf Richter says:

      David Hall,

      Looks like it peaked in March and then started to decline. Commodities spikes like this don’t last.

      The prior lithium spike that started in 2015 unwound almost completely in 2017-2018.

      The price has to drop 83% to unwind the ENTIRE “4.5X” spike. It has accomplished the first portion of that move.

      Last time the Lithium spike unwound, it dropped over 70%.

      Lumber has now dropped 60% from its peak in May 2021. Crazy commodities spikes list this don’t last. But that doesn’t mean the prices go back to where they used to be. That goes for steel, plastics, aluminum, platinum, and all the other materials that go into ICE vehicles, and spiked in a crazy manner, and many of which have since dropped.

  27. polistra says:

    If buzzwords were cars, beggars would ride.

    • Wolf Richter says:

      Japanese automakers have come out with $15,000 EV versions of their Kei cars. Kei cars are minivans, pickups, and cars that are used to get around locally. The ICE versions have 600cc engines. They come with much lower taxes and great fuel economy, but arer not legal to drive on the expressways. The new EV versions will be more powerful, but still only need a small battery. The ICE versions of the Kei cars are everywhere in Japan. So these EV models are going to be hot.

      GM’s China joint venture builds a $5,000 EV, which I think is now the bestseller in China.

      It’s only that in the US, everyone is going high-end because that’s where the money is, or at least was.

      • Not Sure says:

        It doesn’t seem like small and inexpensive short-range EVs could really be a thing here in U.S.

        EVs pose a nasty physics problem… As you add size and weight to a vehicle design, you have to add more battery capacity to give the vehicle a practical range, which in turn adds more weight to the vehicle, which loops back to the need for more battery capacity, which adds more weight and so on. It’s why large electric passenger airplanes using current battery technology are physically impossible. And realistically, we probably won’t see electric semi trucks move beyond green/ESG marketing gimmicks on short-haul duty.

        Americans like big vehicles and our safety regulations make small lightweight EV deathtraps a tough proposition to build and sell here. It think EVs sold here are aimed at the luxury market because they sort of have to be. They have to be big enough to meet crash standards and offer enough range, utility, and space to entice American buyers. As such, they have to have fairly large batteries. Since batteries are where an EV’s cost is concentrated, those batteries present a price floor.

        I remember Tesla trying to sell a stripped-down base model 3 for $35k a few years back before today’s bout of inflation, and even then, they couldn’t seem to make a profit on it at that price point. So it never became the entry-level EV juggernaut that it was marketed to be. It was the $50k-60k+ model 3 aimed at the Mercedes/BMW/Lexus crowd that worked out well for Tesla.

        • Wolf Richter says:

          Agree with you on Americans liking big vehicles. That has always been the case.

          In terms of your physics, you’re in no-man’s land. EVs use a lot LESS energy than an ICE vehicle to get around because electric motors are vastly more efficient (something like 90% efficient) than ICE (between 0% efficient at idle and a max of something like 35% efficient at steady easy cruising speed). The ICE turns between 65% and 100% of the gasoline it burns into waste heat that is radiated off via the cooling systems, through the engine block, and through the exhaust system. The ICE braking system creates large amounts of waste heat, dissipated via big disc brakes that get very hot. But EVs have regenerative braking systems where the EV’s motors charge up the battery when braking. A 300hp electric motor has up to 300hp of braking power. That’s a lot of braking and charging! With an EV you use your actual disc brakes very little. Most of the braking is done by charging your battery. Slowing down a 4,000 pound vehicle from 75 miles to 0 miles, or going downhill at a steady speed, creates a lot of energy much of which the EV recaptures.

        • Nunya says:

          Regarding the “loop back” statement, think of it a different way. From a structural engineering point of view, taller buildings required heavier structural members. Buildings reached a “limit” due to the available technology at the time. But……us humans are pretty resourceful, so we made structural members lighter (batteries weigh less as we figure out different materials and battery technology) AND stronger (more energy per pound/longer lasting), which in turn reduces dead load (weight of structural support members/batteries) and increased building height (vehicle range).

          Engineering is amazing, and it’s all around you. The engineering behind EVs and battery cell technologies is advancing at exponential speed.

        • Not Sure says:

          My physics are right out of a textbook. EV efficiency is excellent, but the energy density of a lithium battery is dismal compared to fossil fuels. Go from 10 gallons to 20 gallons of gas and you’ve doubled your energy storage and range while only adding about 60 pounds. Double the battery size on a model 3 and it will gain about a thousand pounds, so you won’t get anywhere near double the range. Diminishing returns.

          Small passenger cars are in an EV sweet spot for size. As your EV gets bigger, the efficiency advantage is overcome by the weight of additional battery capacity at low relative energy density. This is why EVs don’t make good long-range tow vehicles, and it’s THE limiting factor in designing an effective long-haul electric semi-truck. It is why an electric airliner is currently impossible. Between our appetite for larger vehicles and the weight needed to meet U.S. safety and equipment requirements, it is also a major factor in our lack of affordable EVs.

          EVs absolutely have their advantages, but they have their disadvantages too. So many of these EV startups painted an impossibly rosy picture that they weren’t going to be able to deliver on… They couldn’t defy physics just like they couldn’t defy the laws of economics, which is why many/most will go to $0.

        • Wolf Richter says:

          Now you changed the topic from small Japanese Kei cars for local transportation to Teslas driving across the US, and doubling the Tesla’s range to do what, drive 600 miles on one charge?

          What kind of crap argument is this? Why do you want to “double” the range of a small vehicle for local transportation? The range is 111 miles (180 km). Why do you want to go 222 miles on one charge in a Kei car? Where are you going to go to in Japan on one charge in a small vehicle designed for local transportation? This is just a braindead argument to show that EVs don’t work.

          The Kei cars are powered by a small 20 kWh battery, feeding a tiny electric motor that generates 63 hp and 144 lb-ft of torque. They perform much better than the Kei cars with ICE motors.

          Tesla’s Model 3 batteries range from 50-83 kWh, and are 2.5x to 4x bigger than the Kei car battery, and have nothing to do with Kei cars. Your argument that EVs don’t work because doubling the range would require a bigger battery is total garbage. This discussion is about small EVs in Japan and not luxury cruisers in the US driving across the US. And you don’t need to put a Tesla battery into these Kei cars, and then you don’t need to double the size of that Tesla battery in the Kei cars. Your argument is just freaking nuts.

        • Dan Romig says:

          Well, I am a motor head with a physics degree.

          Both points made on this topic are true. But right now, the high-end EV machines such as the BMW 4 series and the 7 series’ i7 are considerably heavier than their ICE counterparts.

          Formula 1 has the best of both worlds IMO, but what does the marketplace want? The Ferrari SF90 Stradale has this combo, but it is out of reach on price.

          I would love a fast BMW 2 series sized EV with a range of 100 km for what I use my M4 for on a regular basis, but would other people want the same thing? It certainly could be produced by the folks in Bavaria. I think it should be. We’ll see???

          Force = Mass x Acceleration. Everything else follows.

          (17.9 kNm is a nice amount of force)

        • Wolf Richter says:

          Dan Romig,

          BMW totally dropped the ball on EVs. They figured their ICE tech would always be superior to EVs. And then Tesla ate their lunch, big time. Most of Tesla’s market share came from BMW and MB (luxury and near-luxury sports sedans and SUVs). A couple of years ago, BMW acknowledged it, and they cleaned house, and got rid of some top guys (including the CEO?), and changed tack and got religion, but now they still don’t have a real blank-sheet EV. They have their ICE models with after-thought EV power-train options. They’re heavy and terrible. BMW’s blank-sheet EV platform (“Neue Klasse platform”) won’t be ready and in production until after 2025! Maybe! BMW has fallen years behind. Don’t use BMWs as examples for EVs. They’re failures. Compare the base Tesla Model 3 to BMW’s base 3-Series ICE, to get a comparison in terms of EV v. ICE weight and performance.

        • Dan Romig says:

          Torque is good for acceleration. The new EV BMW i4 M50 has 795 Newton meters of it.

          My ICE M4 has 550 Nm.

        • Dan Romig says:

          Wolf,

          Thank you & will do!

      • Not Sure says:

        Whoa there Wolf… I suspect my point has been misunderstood, and I sincerely hope it has not been taken as some sort of attack. I am not by any means anti-EV. I think they’re cool. I was just laying out why I believe EVs are typically aimed at the luxury end of the U.S. market.

        Put as simply as possible: Micro cars don’t sell well here due to both American tastes and safety regs. Bigger EVs require bigger batteries. The battery is an expensive component of an EV that doesn’t scale linearly with the size of the vehicle. So to sell a bigger EV with a bigger battery at a profit, car makers must target a luxury price point. We can’t just scale up a kei car or Chinese micro EV for American roads and expect the price to scale linearly. That’s all I’m getting at. The scalability problem is well known and it governs the cost of any EV. I used the Tesla 3 as a well-known example to illustrate that scalability problem.

        I’ll leave it at that as I really enjoy this site, and I surely don’t want to wear out my welcome!

        • Implicit says:

          The switch to all composites for strength and lightness is/will make a huge impact.
          Carbon composite matrixes can be made with 2x the strength with less than half the weight depending on requirements.
          In addition it is easy to vary the lay-ups to add strength where needed without the cost of huge tooling costs.

    • VintageVNvet says:

      nice try polistra,,, how some ever, the quote to keep in mind is”
      “If wishes were horses, every beggar would ride.”

      mom, R.I.P. was kind enough to remind me of this very very apt concept,,, for eva

  28. breamrod says:

    last mile is on it’s last leg! Grifters are gonna grift. It still amazes me how gullible and greedy people can be.

  29. Crush the Peasants! says:

    Liquidity sponges drying up fast.

  30. SoCalBeachDude says:

    Ben Bernanke says that transitory ‘inflation’ will only last a few years.

  31. SpencerG says:

    I am glad to see that the SEC is on top of things… protecting the American investing public and everything.

  32. Swamp Creature says:

    This is similar to the scam I almost experienced in Hawaii when I was on active duty in the military there. Some dude knocked on my door in Honolulu to sell me some land on the Big IsIand. He said “you can’t get hurt” buying Hawaii Real Estate. Later that year I visited the Big Island. The lot he was trying to sell me was bare jagged rock jutting out into the ocean which resulted from a recent volcanic eruption. Totally useless Real Estate. I wonder who the suckers were that bought those lots.

    • Wisdom Seeker says:

      What, you turned down a chance to buy oceanfront property on the Big Island? But that’s one of the few places in the world where actually “they are making more land”! And that’s the “hottest” real estate out there (literally!).

      Can one get rights to any new real estate that sprouts out from your existing real estate? Think of the growth potential – and compare it to all that oceanfront property in California which is so much more likely to slide into the sea!

      I suppose the downside risk on the Big Island is that your oceanfront rock might get overrun by another lave flow. That’d be a double whammy because in addition to losing all the improvements, your “oceanfront” property could become “inland” property in short order, losing all the “oceanfront” premium pricing power…

      • The Colorado Kid says:

        Maybe, but you’d have twice the amount of land, even if it was measured vertically.

    • DR DOOM says:

      A hedge fund with free Fed money may have securitized that volcanic cliff and sold it in parsed out portions in “back room” brokerages to pension funds in the West. That cliff you almost bought and a lot more may be a taxpayer liability at the Fed. That Con Man that tried to sell you the cliff may have been reminded that “The US is a nation of laws” and got muscled out by the hedge funds that have the FBI on speed dial through their Congressional and Executive Mouthpiece(s). Do not F$&k with the Empire when the Empire is running a scam is what the Con Man may have learned and you had already learned your lesson because you were not the sucker. This was a happy ending for you. The Con Man is proabaly in Congress.

  33. DR DOOM says:

    Apparently SPAC’s are a legal and useful tool to fleece fools or investors that do not care about risk. I say we need more of them to sop up then liquidate with a poof the Fiat Butt Wipe that was pumped into them. For the record I covet my Fiat Butt Wipe. I do not hear the “cash is trash” mantra much any more from the pie holes on Cable.

  34. Franz Beckenbauer says:

    By the way:

    The Fed is bankrupt.

    • Wolf Richter says:

      Franz Beckenbauer,

      I’ve already shot down this BS yesterday, but you didn’t read it apparently, because you never read anything except clickbait headlines, apparently. So here it is again:

      This loss is disclosed on the Fed’s weekly balance sheet, EVERY WEEK, and I have reported on it forever, and most recently a month ago — see link and chart below. Some kiddo Reuters reporter finally woke up and reported on what I have been reporting on forever. I have no idea why these people at Reuters are making such a fuss about this. Clickbait?

      https://wolfstreet.com/2022/04/21/peak-balance-sheet-feds-assets-dip-to-5-weeks-ago-level-end-of-qe-end-of-an-era/

      These are the unamortized premiums that the Fed paid over face value. The Fed is amortizing them in a straight line to zero by maturity date. That’s why the balance is now declining. By the time a particular bond matures, and runs off the balance sheet, this loss (unamortized premium) will be zero for that bond, and there will not be a loss at that time. In other words, the Fed is taking the losses of this amortization on a constant basis while its earning a vast amount in interest income. And that’s how that should be done. There is nothing funny or secret about this.

      But it seems people don’t read my Fed articles attentively enough, and then when Reuters (picked up by Yahoo) starts circulating clickbait about it, it’s suddenly all the rage:

  35. BobNotBill says:

    I’m not congratulating myself. Just happy to have learned my lesson via Global Crossing and Enron. It was an expensive lesson.

  36. Xaver says:

    I have almost 300 deSPACs in my watchlist. On average they are down 45% at the moment, many had a merger less than 12 months ago. I think most will see $ 1,-.

    SPACs should be reserved for wealthy investors. I guess there would be buyers too.

  37. CreditGB says:

    This is like your friends telling you that your boat might somehow spring a leak, so you hop aboard a passing ship called the Titanic.

  38. Jpollard says:

    The entire premise of SPACS and zombie stocks is
    to be able to raise more money than they cash burn . It is a newest version of a Ponzi scheme .

  39. Wisdom Seeker says:

    Alternate Headline: “EV companies losing their ability to keep charging”

  40. ru82 says:

    Cryptos have been around for 12 years and their still have not found a good use case that can be deployed that is considered innovative. In the world of technology, that is ages.

    Most of the promises have not been fulfilled. What is taking so long?

    The Smartphone in 10 years had 80% adoption
    The internet in 10 years had 70% adoption
    The VCR in 10 years had 70% adoption

    U.S. crypto adoption rate after 12 years is barely above 10%. Globally it is 19%.

    Anyway…..blockchain will eventually have a use but I am not so sure crypto’s will.

    • ru82 says:

      I should take that statement back. It was an innovative way to sell illegal things like drugs and launder money via the internet. The adoption rate with criminals was very high.

      • fajensen says:

        Only for stupid people: Your “ID” goes on the blockchain forever and someone with resources can certainly unwind all the transactions and trace them back to all the buyers.

        Now, every 2-3 years, those resources double, and in only a few years into the future Everyone can unwind all ones blockchain transactions and get out the dirt that one so stupidly created a permanent digital recording of!!

        Pro’s use cash. Or they use those rechargeable payment cards. Even ones personal credit card is safer to use for criminal stuff than crypto is, after all those cards, they get stolen all the time!

  41. sunny129 says:

    Tomorrow will be the first DAY of beginning QT!
    Liquidity will taken off, of the mkt!
    No precedent for this unwinding event!

    The mkts front ran last week hoping for a planned
    pause’ supposedly in September!?
    PSCE of 6.3 is perceived as the inflation peak and then ‘Happy days are again, right?
    Investors are betting that Mr. Powell will chicken out after the 3rd, 50 basis rate hike! Experts indicate there is STILL a Fed’s put but at a lower (?) level! Whole last week BAD news was turned into positive, as GOOD news! The way re-bounces every day indicates, HOPIUM is very strong!

  42. SocalJimObjects says:

    The moment that guy Chamath stopped pushing SPACs, people should have known that it’s over.

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