Electric car company Karma Automotive could go public via a blank-check deal, joining Nikola (NKLA), Hyliion and Fisker in the race to become the next Tesla (TSLA) stock.
The luxury electric-vehicle maker told dot.LA Monday that it’s in talks with investment banks to go public.
Investors seeking to capitalize on the Tesla stock and electric-car frenzy have fueled the growth of new electric vehicle stocks. Governments and automakers are also setting massive goals for, and making huge investments in, emissionless technology.
“We want to take advantage of the fact that the market is red hot right now, so we want to be fast,” said Mikael Elley, Karma’s chief of staff.
Karma Automotive could go public through a merger with a “blank check” or special purpose acquisition company (SPAC). Or it may debut through an initial public offering in the U.S. or Hong Kong over the next six months, Elley said.
Deals with blank check or SPAC companies are sometimes seen as a faster and more efficient way for startups to debut, but can be riskier for investors.
Nikola debuted June 4 after merging with VectoIQ. Fisker plans to go public via a merger with Spartan Energy. Hyliion agreed to merge with Tortoise Acquisition (SHLL) and will trade under the ticker “HYLN.”
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Tesla Stock, Electric Car Stocks
Tesla stock shed 4.1% to close at 1476.49 in Tuesday’s stock market trading. Nikola stock lost 1.4%. Tortoise Acquisition stock dipped 0.5%. Chinese EV maker Nio (NIO) rallied 5%. Fellow Chinese electric-car maker Li Auto (LI) is about to go public with an IPO later this week.
A SPAC or blank check company is a shell entity with no commercial operations, formed just to raise capital for buying an existing business.
In 2007, Fisker Inc. CEO Henrik Fisker started Fisker Automotive. The company eventually filed for bankruptcy and was bought by Chinese auto parts supplier Wanxiang Group, which renamed it as Karma.
Wanxiang pumped about $2 billion into the struggling EV startup and has now agreed to set down the path for a Karma IPO. Karma witnessed an executive shake-up and mass layoffs earlier this year.
Meanwhile, Henrik Fisker, who retained the rights to the Fisker name, created Fisker Inc. in 2016 and plans to sell a luxury electric SUV called Ocean in 2022.
Karma hasn’t said how much it is hoping to raise but it has ambitious plans to raise its current production level by at least 10 times. It’s also developing delivery vans and selling an electric vehicle platform to manufacturers.
Unlike most among the current crop of EV startups, Karma is already producing electric vehicles. Last year, it produced 550 of the Revero GT, which starts around $135,000.
Find Aparna Narayanan on Twitter at @IBD_ANarayanan.
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