Cash-poor transportation startups gambling for fresh capital
As transportation and electrification startups struggle to raise capital, they are increasingly asking shareholders to increase the number of authorized shares. The thinking goes that having more shares increases the flexibility to sell them directly, use them to back secured debt or perform a host of other financial engineering moves.
In blackjack, the move pays off with a good hand — an 18 or higher — 53.8% of the time. The chance of getting to 21 is 30.4%.
For companies that have tried it, the results are yet to be seen. Nikola raised its authorized share count to 1.6 billion from 800 million on Aug. 3 . It immediately increased the number of shares it will sell at a 2.5% discount to Citigroup. The bank already has an at-the-market arrangement in place.
The new at-the-market cap equals the $600 million. That’s how much Nikola says it needs to get through the launch of its fuel cell trucks and continue investing in hydrogen distribution.
Cash-poor Workhorse Group is asking shareholders to boost its authorized shares to 450,000 from 250,000 in a vote on Aug. 28. In both cases, the electric truck makers have little cash left to scale their businesses and no other obvious moves.
Extra shares don’t always help
Electric bus and battery maker Proterra Inc. doubled its shares to 1 billion from 500 million on June 23. It filed for Chapter 11 bankruptcy on Monday. Even if Proterra emerges with an approved reorganization plan, common stock shareholders face being wiped out. They are at the back of the line among creditors.
Proterra is not fighting its delisting from the Nasdaq next Thursday. The bankruptcy court is allowing Proterra to keep operating as its Chapter 11 proceeding plays out.
The reverse split
A variant of splitting in blackjack — reverse splitting — is another popular move. Companies facing delisting from the Nasdaq because their share price has fallen below $1 for 30 consecutive days try it. In a reverse split companies trade one new share for a multiple of existing shares. That artificially props up the stock price without affecting its underlying book value.
Both share authorization increases and reverse splits speak to desperation. Increasing the number of authorized shares invariably dilutes shares held by current investors.
Such dilution helps explain why Nikola had to chase down proxies to pass its authorized share increases in each of the past two years. A regulation change in Delaware this month lowered the threshold of proxies needed to pass this year’s proposal.
Workhorse still needs one vote beyond 50% of all its outstanding shares to pass its proposal. It has a proxy solicitation firm chasing shareholders — the majority of whom are individuals, not institutions. Investment banks and the like typically vote large blocks of shares.
“We have been very strategic in how we have cleaned up our balance sheet and financed our efforts to date,” Workhorse CEO Rick Dauch told analysts on the company’s second-quarter earnings call on Wednesday. “The financing options that we are looking at require us to issue more shares.”
You want a cab with that chassis?
After electrifying Ford Motor Co. chassis for customers like Purolator, Bimbo Bakeries and Cintas, Motiv Power Systems is moving into offering cabs with the chassis.
Motiv said the cab addition could increase its market share threefold. Expanding across Class 5-6 would include box trucks that support dock-height warehouse loading; buses capable of carrying 18-30 passengers; refrigerated box trucks; flatbed; bucket lift; work trucks; and more.
Motiv would compete with legacy companies like the Shyft Group, which offers ground-up EVs through its Blue Arc business, and Daimler Truck, which will bring its Class 4-5 Mitsubishi Fuso-based eCanter back to the U.S. in Q4 under the Rizon name.
The Argo Series medium-duty EV cab was developed with customers who have racked up millions of real-world EV driving miles. Though it doesn’t sound like a big number, Motiv has put 180 EVs with 2 tons or more of cargo capacity on the road over the past 14 years.
“The Class 5 MD [medium-duty] space is not that crowded, at least currently,” Motiv CEO Tim Krauskopf told me in an email. “The key question is who is actually shipping trucks in any measurable quantity, and Motiv has for longer than any of them.”
Argo Series arrives in late 2024
The Argo Series hits the market in late 2024 targeting Class 4-6 box trucks, step vans, shuttle buses, refrigerated vehicles, vocational vehicles and other specialties. Bodybuilders Morgan Olson, Carrier Transicold and Rockport Commercial Vehicles create the upfits for Motiv’s next-generation powertrain. Motiv claims it is capable of a 150-200-mile range using a lithium iron phosphate battery from startup Our Next Energy.
“Many have joined the commercial EV space by jumping in headfirst and starting with ultra-modern, flashy designs that don’t always offer practical driving experiences,” Jim Castelaz, Motiv’s founder and chief technology officer, said in a news release.
Added Krauskopf: “There are more Class 3 vehicles. But few other companies have more than 100 Class 4 or higher in full operation,” Krauskopf said.
The Argo cab’s composite structure includes windshields with built-in heat to save on defrosting energy. Its seats are heated with specially designed airflow, and a shorter bumper-to-back-of-cab provides greater maneuverability. The weight savings from composites offsets battery weight that allows more payload.
The chassis cab is available for pre-order and will be on the road in late 2024. Argo vehicles will be manufactured in Detroit . They are eligible for the Inflation Reduction Act tax credit and qualify for some incentive programs. Prices were not announced.
About the money
Motiv has stayed in the game in part because it is attuned to California’s generous incentive programs. The privately held company explored a reverse merger during the special purpose acquisition company (SPAC) frenzy. But it did not find a partner. Motiv’s last publicly announced fundraising — $20 million followed by $15 million — came in 2020.
“Motiv has very strong backing, and the market needs both legacy and new blood to supply all of the vehicles needed for the dramatic and comprehensive fleet transformations to zero emissions,” Krauskopf said. “As a private company, we have not announced specific round-by-round support, but continue to be backed by our existing investors.”
TuSimple running late again
TuSimple Holdings told the Securities and Exchange Commission this week that it would not file its required second-quarter financials on time. The autonomous truck developer had telegraphed this in June when it worked out a deal with the Nasdaq to get all of its overdue financials filed by Sept. 30. So far, it has filed one of the reports.
If it misses that date, the Nasdaq is likely to delist TuSimple (NASDAQ: TSP) from the exchange since it already delayed doing that. Depending on what happens with TuSimple’s strategic review of its U.S. operations, it may not need a listing.
After laying off more than half its U.S. workforce since December and shuttering a Texas facility, selling its U.S. business is one option TuSimple is considering.
Briefly noted:
Hedge fund Antara Capital, a big holder of Nikola shares and formerly a big debt holder at Workhorse Group, has boosted its stake in struggling Class 1 delivery van maker Arrival.
Daimler Truck North America makes the Class 8 battery electric eCascadia at its home plant in Portland, Oregon. Now it sells them there. Titan Freight Systems is the first local customer.
Buy America is helping Lightning eMotors land new business. The Teton, Wyoming, Village Association Improvement and Service District received nearly $1 million in federal infrastructure money to buy four electric shuttle buses and charging equipment from Lightning.
That’s it for this week. Thanks for reading. Click here to get Truck Tech via email on Fridays. And keep up with the latest Truck Tech TV conversations on the FreightWaves YouTube channel on Wednesdays. Next week’s scheduled guest is Steve Girsky, the third CEO in less than a year at electric truck maker and hydrogen distributor Nikola.
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