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Matt Levine

Lordstown’s Electric-Truck Orders Were Vague

Also meme zombies, ESG investments and stock certificates.

Wouldn’t it be funny if all the electric-vehicle startups went public by merging with special purpose acquisition companies, and they all marketed themselves to investors using ridiculously optimistic financial projections predicting that they’d all make $10 billion of revenue in record time, and retail investors piled in to buy their stocks, and then all those projections came true and a dozen new electric-vehicle companies all became world-changing giants and the people who bought their SPACs all got rich? It would be weird, right? Like right now there is a gigantic successful high-profile electric-vehicle company in Tesla Inc., and there are a bunch of legacy automakers who know how to build cars and who are increasingly focused on building electric cars, and then there are like a dozen companies that have never built anything but have plans to build electric cars or vans or buses or trucks or whatever, and every one of them firmly believes that it will be somewhere between “the next Tesla” and “much bigger than Tesla.” And in 20 years I assume there will be an automotive industry, and it will be largely electrical, and there will be some small number of big competitors in that industry, and some of them will probably be currently existing legacy automakers, and one of them will probably be Tesla, and maybe one or two or … six? … of them will be companies in the recent crop of SPAC-funded electric-vehicle startups. But will Nikola Corp. and Fisker Inc. and Lordstown Motors Corp. and Canoo Inc. and Arrival Ltd. and Faraday & Future Inc. and Lion Electric Co. and Proterra Inc. and the electric-vehicle companies I’m forgetting, not to mention the flying-electric-vehicle companies, all be the next Tesla? Seems implausible. Some of these things are not going to work out.

And that’s fine, that’s life in capitalism; there is demand for electric vehicles and a bunch of people start electric-vehicle companies and some of them will be good at making electric vehicles and prosper and others of them will be bad at making electric vehicles and fail. And they all need lots of money to start making vehicles, so they all go to investors to ask for money, and they all say that they will be the good ones. Ex ante, no one goes to investors and says “there are like 12 electric-vehicle companies, and maybe three of them will work out, and we are not one of those, we are going to take all your money and noodle around for a while and then shrug and give up.” They all say that they will succeed! Because they all plan to succeed! They all say “the total addressable market for electric vehicles is one kajillion dollars and we will get 90% of it.” And if you add up all of their projected market shares you get, you know, 1,000% or whatever. And somebody — almost everybody — is wrong.