SPACInsider contributors Anthony Sozzi and Sam Beattie this week compiled their three favorite potential SPAC targets among the micromobility targets. We look at why they are compelling and why each could be a fit for a blank-check merger.
SPAC deals with electric carmakers have been among the surest performers over the past 18 months, but in many large markets people are getting around on two wheels more often than four. In Asia, smaller vehicles are the norm for the average citizen and people in urban North American and European markets are also increasing turning to micromobility rather than public transportation or cars.
SPAC deals targeting smaller electric vehicles (EVs) are also doing rather well relative to the wider SPAC market with e-scooter share company Helbiz (NASDAQ:HLBZ) closing yesterday at $11.43, having closed its combination with GreenVision in August. Switchback II (NYSE:SWBK)’s pending deal with larger player Bird and Poema Global (NASDAQ:PPGH)’s with Taiwanese two-wheeler battery-swapper meanwhile each closed Thursday just under $10.
Lime has raised $947.1 million to date in its efforts to get its shareable e-scooters and mopeds out to the world. So far, it is primarily US and Europe-focused with but is available in select markets in South America, the Middle East, Asia as well as Australia and New Zealand.
It’s go-to-market has also been different from scooter-share platforms like Bird, which began its launch by scattering its scooters around Santa Monica, California. Lime initially went bigger first, at least in terms of vehicle size. It initially offered mopeds for short rents, accumulating a big presence in Seoul, Paris and Los Angeles. It entered New York City in January and has so far dodged most of the safety and regulatory issues that have forced out other competitors.
The capital it has raised has also included a fair amount of strategic funding as well. In May 2020, Uber (NYSE:UBER) invested $170 million in Lime while also giving it ownership of Uber’s micromobility subsidiary Jump. While this provided capital and absorbed a smaller competitor, the biggest boon to Lime from this new partnership now comes in the integrations between the two firms’ apps.
At the time, Uber was laying off staff due to sagging demand amid the pandemic and this was viewed in part as a cost-saving measure as it allowed Uber to transfer a large number of employees to Lime. But the two have continued to deepen collaboration and reportedly in talks for an additional funding round that would value Lime at about $2 billion.
The ability for users to see available Lime scooters on the Uber app and vice versa has proven to be key, and it also reflects the diversifying marketplace where users will look at their options for getting from point A to point B and frequently be open to a variety of ride-sharing options.
These companies all share many of the same rollout challenges, however. Most rely on third-party services to collect, re-distribute and periodically maintain the vehicles that their customers leave scattered throughout the cities they operate in.
Bird, which has been one of the earliest movers in the market, only recently began taking this maintenance work in-house, but found it was key to maintaining margins. It was taking a $9.66 loss on each $10 scooter ride in 2019, but turned that around to a $1.43 profit by the end of 2020.
Dott has always operated with a sustainable economic model in mind and kept this work in-house from the start. This may have stunted its growth by comparison, but it has been EBIT positive in all of the cities it operates in, which is a feat that many of its heavily venture-backed peers cannot claim.
Nonetheless, it operates nine European countries and closed a $85 million funding round in April that will help fund its expansion into e-bikes. Overall, its slower-and-steadier approach may not match the appetites of every SPAC team, but it could make for an attractive attribute for a market that may be growing fatigued with sky-high projections.
But, again, we’ve seen the market really chow down on EV deals that involve companies making and selling the whole vehicle. Even while the e-scooter sharing companies stand to benefit from a growing market, they still have to balance competitive pricing with high operating costs in a way that vehicle manufacturers have less worries about.
For SPACs looking for an entry into next generation of two-wheeled EVs, OLA Electric may be their ticket. The Indian manufacturer of sleek new electric mopeds gained a valuation of about $3 billion following its $200 million venture capital raise in September.
But, while the scooter-sharers wrangle with operating costs, the manufacturers have capex demands to contend with. OLA could surely find a use for more capital and public market-access as it works to debut its first models, particularly if it could beef up consumer financing options.
OLA is definitely going for a luxurious look, but while it could may try to aesthetically position itself as the Lucid Motors (NASDAQ:LCID) of electric mopeds, the moped market requires a less-than-luxury price point. Its inaugural models are currently being reserved for prices ranging from about $1,330 to $1,730, while new Vespas start at about $4,000 and up.
Nonetheless, it sports features that one would expect from upscale car models like keys that automatically unlock from user’s pockets once they walk within a certain proximity of it. It also has cloud-connected smart screen displays for navigation and Bluetooth connections for entertainment and phone calls. The first OLAs are expected to roll off the lot later this month.
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