Electric hypercar maker Mate Rimac says SPAC funding could damage industry

FRANKFURT – A surge within the utilization of special purpose acquisition companies (SPAC) for raising money for electric vehicle startups could harm the long-term prospects of the industry, Mate Rimac, founder of electric hypercar maker Rimac, said on Thursday.

Managers of SPAC information mill not held to the same degree of liability about potential growth prospects as managers who raise cash with an dpo (IPO) on equity markets, spurring concerns a good investor bubble.

“You will get so much money now for companies that don't have an item. Personally I'm scared a little bit,” Rimac told the Financial Times Future of the Car summit on Thursday.

“Whenever we go public, I want to show the numbers, to visit public on reality, and not on hype,” Rimac said.

“Hopefully these SPACs will be successful. A lot of them won’t. I hope it won’t hurt the industry an excessive amount of.”

SPACs, also referred to as “blank-check companies,” are businesses by having an established track record of filings in the United States Filing (SEC) which are then accustomed to buy up promising companies in high-growth sectors. 

Wall Street has used SPACs to sidestep the IPO process, with their shorter preparation time and fewer legal hurdles making it easier to tap the investor optimism towards electric vehicles that helped Tesla reach a $554 billion valuation.

Companies including Faraday Future, Canoo, Nikola, Fisker and Lordstown Motors used the strategies to acquire funding.

“We were profitable this past year, and that we desire to be profitable this season as well,” Rimac said, adding that he developed his company, that was founded in Croatia in '09 and now employs 900 people, by focussing on profitability instead of growth.

“For any startup, we have built up steam the hard way,” he told the FT’s internet based conference, adding that sometimes he feels like he is really missing out by not pursuing the SPAC path.

Rimac had a difficult time raising profit 2011 after electric car maker Fisker went bankrupt and with Tesla yet to establish itself like a high growth company.

Rimac was thus instructed to raise money if you take on development contracts for other carmakers. Today Porsche, Kia and Hyundai are shareholders and Rimac makes electric powertrains for supercars built by Aston Martin, Koenigsegg and others.

“We started with hypercars and we're now working with more mainstream vehicles,” Rimac said. “Desire to be the best choice in high end electric vehicle components. Desire to be the intel inside.”

Rimac declined to comment on speculation that he would buy Bugatti, but added cryptically “maybe soon.”