Another company in the electric vehicle industry is going public by merging with a so-called SPAC, or special purpose acquisition company. This time, it’s EVgo, one of the leading providers of electric vehicle charging stations in the US.
The deal is expected to bring in $575 million for EVgo. When it closes, EVgo will become a publicly-traded company on the New York Stock Exchange.
In something of a poetic twist, the investment fund that’s merging with EVgo to take it public is one started by climate investor David Crane. Crane was once the CEO of energy company NRG, which helped start EVgo a decade ago. Roughly $230 million of the proceeds will come from Crane’s SPAC (called Climate Change Crisis Real Impact I Acquisition Corporation). The other $400 million is coming from a new, concurrent round funding organized by Crane’s SPAC that includes institutional investors like BlackRock and Pacific Investment Management Company (PIMCO).
There has been a mad rush of SPAC mergers in the electric vehicle space across the last seven months as investors looked to capitalize on the momentum created by Tesla’s skyrocketing valuation. EVgo joins the likes of Canoo, Fisker Inc., Lordstown Motors, Nikola, Arrival, Hyliion, and competitor ChargePoint in going public via the SPAC route. It certainly won’t be the last, either, as startups like Lucid Motors and even Faraday Future are in talks to do the same.
“What is so heartening to me,” Cathy Zoi, EVgo’s CEO, told The Verge in an interview, “[is] the market now has an appetite to support businesses that do what EVgo does.”
EVgo currently operates more than 800 DC fast charging stations across 34 states in the US. Last year it announced a partnership with General Motors that is supposed to triple that number, while also building out the ability to charge at faster rates comparable to those offered by Tesla’s Supercharger and Volkswagen’s Electrify America networks. It has also partnered with Uber and Lyft to supply chargers for electrified ride-hailing vehicles.
Going public won’t change those expansion goals, according to Zoi. “This capital enables us to execute on a business plan and we can continue to do what we do, which is build and operate convenient, reliable fast charging across America as the market moves more quickly to electrify cars,” she said. Zoi also said she believes EVgo can carve out a big position in the commercial space, as more companies — including, most recently, GM — focus on electrifying trucks and vans.
The recent boom in SPAC mergers has been so formidable that some companies are going public despite having any shot at near-term profitability. And while much of the attention may wind up focused on the consumer-facing companies, Crane told The Verge in an interview that his team was “wildly successful” in convincing the investors like PIMCO and BlackRock of EVgo’s advantage: making technology that other automakers — big and small — rely on.
“I don’t think we came across a single investor that expressed even an iota of doubt about the market here. Where the fault line seems to be developing for investors is a lot of them are far more attracted to what Cathy does — which is, as long as [companies make new] plug-in vehicles, Cathy wins,” he said. “There are [investors] that are a little leery about betting on individual automakers.”
“Everyone would like to duplicate a Tesla valuation, but they realize that there isn’t going to be [a lot of those],” Crane added. “So a company like EVgo that serves the whole sector is attractive to everyone.”
One downside of SPAC mergers is that, since it’s technically an acquisition, the company being acquired faces looser regulatory scrutiny than if they had gone the traditional IPO route. It’s hard to say what kind of problems that can cause just yet, as most of these deals closed recently. But it became an issue with Nikola last year when accusations of fraud started flying.
Zoi said the difference with EVgo is that it has a product out in the world. “Whether you’re a giant institutional investor or whether you are a person who’s just managing his or her own money, you can actually go and check out an EVgo station, and say this is reliable, convenient,” she said.
Crane, meanwhile, emphasized the months-long process that led to acquiring EVgo in the first place.
“We were very thorough in our due diligence. And we we asked a lot of questions. We talked to a lot of people. We did a lot of research, he said. “I think people look at myself and my partners and (his SPAC) and say, yeah, you know, we believe that they kicked the tires and there aren’t going to be unhappy surprises here.”
Correction: Crane’s SPAC is providing $230 million for EVgo. A previous version of this story misstated that figure. We regret the error.