Deal of the week
The past few weeks (ok, more like months) there has been a growing sense of … what’s the word? Ah, yes, “desperation” among some companies running low on capital. This hunt for cash is ramping up, particularly for the EV SPACs, which have high costs and in many cases no revenue yet.
Arrival, which went public in 2021 via a merger with a special purpose acquisition company, posted preliminary fourth-quarter and full-year earnings reports this past week. The big message I got from the report was that the company was burning through cash and is hoping to secure more soon. Arrival plans to hold a business update March 13 so the company can “potentially finalize a transaction which, if consummated, would provide additional liquidity and further extend its runway.”
Then there is Faraday Future, which also reported earnings. This company, which somehow has managed to survive, said it is ready to start production of its FF 91 Futurist EV at the end of the month. That is, if it receives the remaining funds expected from investors and if suppliers are able to meet its requirements. And company execs indicated plans to raise another $50 million.
CEO Xuefeng Chen said during the company’s earnings call that he was confident the funds would be received. However, its fundraising days are not over. The company’s CFO indicated that Faraday Future is looking to raise at least another $50 million.
And then there is Rivian, which is not a SPAC but it is a publicly traded company that is spending lots and lots of money to ramp production of its R1T and R1S vehicles as well as its commercial van. The company said in a filing that it plans to raise $1.3 billion in cash via a sale of convertible notes. Now Rivian is certainly not in the same company as Arrival or Faraday Future. The company ended the year with $11.6 billion in cash and cash equivalents, which gives Rivian a runway of about two years at its current cash burn rate.
There is one other way to preserve cash. And that’s to cut costs. GM CEO and Chair Mary Barra is aiming to do exactly that.
In a letter to employees, Barra wrote that as part of the company’s plan to reduce structural costs by $2 billion over the next two years it was making buyout offers to 58,000 of its salaried “white collar” workers in the United States. This is a voluntary program. Let’s see how many take the offer.
A few other deals that got my attention …
ClearFlame Engine Technologies, a company that has developed a way for diesel engines to run renewable fuel, raised $30 million in Series B round led by Mercuria Energy Group. Existing investor Breakthrough Energy Ventures as well as new backers Rio Tinto and WIND Ventures, the strategic venture arm of Copec also participated.
Envisics, a U.K. startup that designs holographic in-car technology that projects navigation, safety alerts and other data on the inside of the windscreen, raised $50 million in funding from a number of strategic backers that includes Hyundai Mobis, InMotion Ventures (the investment arm of Jaguar Land Rover) and Stellantis.
Ghost Autonomy, the Silicon Valley based automated driving startup, raised about $45.3 million, according to a regulatory filing.
Itselectric, a Brooklyn-based EV curbside charging startup, raised $2.2 million in a pre-seed round led by Brooklyn Bridge Ventures. The Helm, XFactor, Graham & Walker, Clean Energy Venture Group and Pericles also participated.
Volta Trucks, the Swedish EV truck maker, is in advanced discussions to raise as much as 250 million euros ($263.58 million), Reuters reported.
Zero Nox, off-highway vehicle electrification company, plans to go public via merger with special purpose acquisition company The Growth for Good Acquisition Corporation. Upon closing, ZeroNox’s common stock is expected to trade on the NASDAQ under the ticker symbol “ZNOX”.