LONDON – British electric vehicle maker Arrival started trading on the Nasdaq on Thursday following a merger with a US blank check company.
The company on Wednesday completed its combination with CIIG Merger Corp, a Special Purpose Acquisition Company (SPAC) founded by former Marvel CEO Peter Cuneo. It's worth roughly $ 13 billion now, down from a valuation of $ 5.4 billion in November.
The company's shares fell 15% Thursday morning, hitting a low of about $ 18 before reducing losses. It did when other high-growth tech names also fell on a sharp decline in US equity markets.
SPACs have become a hot investment vehicle on Wall Street, attracting several high-growth technology firms that want to list their stocks without going through the traditional IPO.
The capital raised by blank check companies in 2021 has already exceeded total issuance for all of last year, according to SPAC Research, and some investors feared the market could be in a bubble.
"We have exactly the same thing as any public company," Avinash Rugoobur, president of Arrival, told CNBC on Wednesday in a pre-listing interview.
Rugoobur said the deal was "vision alignment" with Arrival's SPAC sponsor. The $ 660 million the company brought in in gross revenue would help build more factories and start production.
Arrival isn't the first company to go public through a SPAC merger. Nikola and Canoo went public last year using the same funding method.
Not another Tesla clone
The competition in the field of electric vehicles (EV) has intensified in recent years. Start-ups like Lucid Motors in the USA and Nio in China want to take on Elon Musk's Tesla.
But Arrival says it's different from other players. That's because the company is focusing on the commercial electric vehicle sector rather than trying to sell them to consumers. Products include electric vans and buses, not cars.
"We're finding a lot of demand in the commercial segment," Mike Ableson, CEO of Arrival's North American auto business, told CNBC. "Fleet operators have their own emissions reduction goals and are literally asking for more EV products."
Another thing that sets Arrival apart from other big EV companies like Tesla is that it designs its own batteries and other components in-house rather than relying on third-party suppliers. In the meantime, Arrival plans to build its vehicles from so-called "micro-factories", which are much smaller than traditional car manufacturing facilities and can be packed into existing warehouses.
Last week Arrival announced it was building a second microfactory in Charlotte, North Carolina, which will house its US headquarters. The company, which has not yet started production of its vehicles, plans to assemble its vans there for a fleet order from UPS from the second half of 2022.
In February, Arrival signed a partnership with First Bus, a FirstGroup unit, to test zero-emission buses on UK roads.
Arguably one of Arrival's main competitors is Rivian, an Amazon-backed company that makes electric vehicles. Arrival signed a trade agreement with United Parcel Service last year for the delivery of 10,000 electric vehicles. Amazon ordered 100,000 electric vehicles from Rivian in 2019 to run the company's fleet entirely on renewable energy.