This SPAC Could Be The Next Tesla

Churchill Capital IV (NYSE:CCIV.U) (NYSE: CCIV) started off the week like most special-purpose acquisition companies (SPACs) that have yet to announce a target company to merge with: Trading around $10 per share. As a reminder, SPACs are just piles of money sitting in a trust account and the vast majority of them are priced so that the net asset value (NAV) of each share is $10. But then Bloomberg dropped a bombshell: Churchill Capital IV is in talks to merge with Lucid Motors, which many investors have called the next Tesla (NASDAQ:TSLA).

Here’s what SPAC-ulative investors need to know.

Lucid is on the cusp of starting deliveries

Lucid is one of the most prominent electric vehicle (EV) start-ups. Unlike many EV-related companies that have gone public and skyrocketed in recent months, sparking valuation concerns and talk of an EV bubble, Lucid is relatively more mature. Many of the more bubbly EV start-ups have seen their shares soar, even if they are development-stage companies with little to no revenue. In contrast, Lucid completed construction of its $700 million Arizona factory last month and is preparing to ramp production.

The manufacturing facility has initial capacity to produce and deliver 30,000 vehicles this year before expanding production to 400,000 vehicles annually in the years ahead. Deliveries of the flagship Lucid Air sedan are set to begin this spring, with the company borrowing a page out of Tesla’s book and initially selling the most expensive ($169,000) trim before introducing successively more affordable models. Lucid is also already working on an SUV called the Gravity.

I interviewed Peter Rawlinson a few years back ahead of the company’s Series D funding round. Rawlinson was CTO at the time but has since been promoted to CEO. Famously, Rawlinson was chief engineer of Tesla’s Model S program before leaving that company nearly a decade ago.

Lucid has also been poaching ex-Tesla employees at many levels throughout the company. Lucid hired Tesla’s former manufacturing exec, Peter Hochholdinger, in 2019. Tesla had hired Hochholdinger, an automotive production veteran who led Audi’s A4 program for years and spent 24 years at the German automaker, back in 2016. While Tesla struggled with the Model 3 ramp under the executive’s watch, many investors have long speculated that CEO Elon Musk did not give Hochholdinger sufficient autonomy to leverage his experience to do what he does best.

It seems that even Musk is at least a little concerned about the competition. When Lucid announced last fall that the standard price of the Air would be $69,900 (after federal tax credit), the eccentric billionaire cut the price of the Model S to undercut the Air, while characteristically including some of his favorite juvenile references.

Leave a Comment