I Don't Like What Volvo's Electric Wing Is Up To

Polestar is staying on trend looking for money using a SPAC, and I have my concerns

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Polestar’s hybrid, the One. The 1? I forget. It looks like a new Volvo P1800, but don’t call it a Volvo.
Polestar’s hybrid, the One. The 1? I forget. It looks like a new Volvo P1800, but don’t call it a Volvo.
Photo: Getty Images (Getty Images)

If there’s one big grift in the world of electric car startups, it’s using a SPAC to hide information usually disclosed when you go public. I had hoped Polestar, the EV offshoot of Volvo, would be different. All that and more in The Morning Shift for September 27, 2021.

1st Gear: Polestar Is Different From The Usual EV Startups, But ...

... Using a SPAC to go public has been one of the calling cards of shady EV startups. As Defector put it in “The SPAC Gold Rush Is The Financial Bubble At Its Giddiest,” SPACs let companies skip on disclosures, as was the case in the recent failure that is Nikola:

Last March, the Nikola Corporation announced that it was going public. Nikola is in the electric truck business, although it’s more accurate to say that it is in the business of convincing investors that it might someday manufacture electric trucks at scale. Nikola hit the market in June, not through an initial public offering but by way of a merger with VectoIQ, which is a special purpose acquisition company, or SPAC. VectoIQ’s only assets were a stock listing and some cash on hand; it existed merely to enable investment in and the public trading of Nikola stock, all without the onerous disclosures and prospectuses required for a traditional IPO.

Nikola founder Trevor Milton’s grandiose proclamations about the promise of hydrogen vehicles came on the heels of a huge leap in Tesla stock prices, and retail investors got in early and helped triple the price of a share to just south of $80. Last September, the company announced a $2 billion deal with General Motors, whose former vice chairman founded VectoIQ. The future looked like a big green line, advancing northeast on the graph.

This was a dream outcome for the people who formed the shell company that bought Nikola. Success stories like this one are part of why SPACs have never been more popular as vehicles for high-level investors. 


That all seems not great!

If I were running an EV startup I would not want to be doing anything that Nikola did, but I’m not running an EV startup! Polestar, meanwhile, is, and it’s hoppin’ on the SPAC train, as the Financial Times reports:

Polestar, a premium Swedish electric vehicle company spun off from Volvo Cars and backed by actor Leonardo DiCaprio, has agreed to go public through a special purpose acquisition company at a $20bn valuation.

The Gothenburg-based company will combine with Gores Guggenheim, a Spac backed by billionaire private equity investor Alec Gores and Guggenheim Capital. The deal would rank Polestar, which was founded four years ago by Volvo Cars and its Chinese owner Geely, as one of the most valuable electric vehicle companies to list through a Spac.

Polestar will receive $800m raised by Gores Guggenheim earlier this year as well as $250m of cash from a private investment in public equity transaction, a fundraising that often accompanies Spac deals. The transaction values Polestar at three times its projected revenues for 2023. 


Polestar should be relishing this moment while it can, as the Feds start to look into the shitshow that is the SPAC landscape.

If they can dodge a bunch of regulatory safeguards by going public with a SPAC, can I really be all that mad at Polestar? It’s a for-profit company, and it’s duty-bound to use every trick in the book to boost that profit. Still, something feels off here. Polestar is just a branch of a pretty straightforward established car company. It doesn’t seem like it should be doing the same kinds of tricks you see from fly-by-night startups.


2nd Gear: Let’s Check In On Evergrande

Speaking of EV startups, how is Evergrande doing, the Chinese offshoot of a real estate empire in freefall? Not great, as the Financial Times reports:

Shares in Evergrande’s electric vehicle unit tumbled in Hong Kong after it scrapped plans for a secondary listing on Shanghai’s Star Market, as bondholders remained in limbo after the indebted Chinese property developer missed a crucial payment last week.

The pulled listing is the latest hit to a unit that once had a higher stock market valuation than Ford and comes as a liquidity crisis at Evergrande has roiled global markets and spurred fears among international investors that they will not be repaid if the company defaults.

The developer failed to make an $83.5m coupon payment due on Friday for one of its dollar bonds and has a 30-day grace period before officially triggering a default. As of Monday morning, the developer had not provided any new information to international investors, according to a bondholder. 


As ever, making cars is hard. Well, starting a car company is maybe not that hard, but actually following through is a bit of a hurdle.

3rd Gear: The Greens Get Record Win In Germany

A lot of news today coming out of the Federal election in Germany is that the Greens didn’t win as big as expected, but the party did win more seats than ever before, as the New York Times reports:

Armin Laschet, the candidate of Ms. Merkel’s Christian Democrats, was long seen as the front-runner until a series of blunders compounded by his own unpopularity eroded his party’s lead. Olaf Scholz, the Social Democratic candidate, was counted out altogether before his steady persona led his party to a spectacular 10-point comeback. And the Greens, who briefly led the polls early on, fell short of expectations but recorded their best result ever.


The Greens support an alternate universe version of Germany, one that actually pivots away from its most prestigious export, gas-burning cars. There may be a lot of power in Green hands thanks to Germany’s parliamentary coalition system of government, so we could see some interesting acceleration in getting ICE cars off the roads. A fun one to watch.

4th Gear: Virginia Just Saved Billions Boosting Trains Not Highways

This is a fun one from one of the few places in America where a lot of trips make sense to do by train rather than car. A new rail initiative in Virginia to help ferry people to DC and up to New York is significantly, significantly cheaper than widening the big interstate meant to do the same job.


Traveling by car is much more convenient that traveling by train here on the East Coast, if you drive only between the hours of 2 AM and 5 AM, avoiding all traffic.


5th Gear: NYC Taxi Workers Alliance On Day Nine Of City Hall Protest

The taxi workers still aren’t getting fair treatment by the city and state governments here in New York, with big money going to predatory debtors instead. We are on day nine of protests at City Hall. We stand with the Taxi Workers Alliance!


Reverse: First Model T Built

Via The Henry Ford:

This is the Ford Motor Company record of the very first Model T which was assembled on September 27, 1908 at the Piquette plant in Detroit. The production card lists it as Model 2090, car #1. It had 4 cylinders, 2 levers (the second for reverse) and 2 foot pedals. 1,000 of these early T’s were produced.


Neutral: How Are Your Projects?

I decided to overhaul the SunTour Alpha 5000 rear derailleur on the ‘87 Fuji Sundance I hauled out of a neighborhood trash, and I’m somewhat convinced that while releasing the main pivot spring, a little retaining plate flew off my porch into a bush. Wish me luck in finding it.