Electric Last Mile Solutions will file for Chapter 7 bankruptcy, the Michigan-based startup said in a statement issued late Sunday.
Focused on developing last-mile delivery vehicles, the company has been in a downward spiral since shortly after it staged an IPO a year ago when it reached a market value of $1.4 billion. It has faced a series of setbacks since then, culminating in the resignations of both its chairman and chief executive officer earlier this year.
But Last Mile is just the latest among the many EV startups that have found it difficult to repeat the success of the segment’s big success story, Tesla. AMP, Bright Automotive, Coda and Detroit Electric are among the EV hopefuls that have failed. And analysts say it is highly likely others will follow, with the spotlight on struggling brands such as Canoo, Faraday Future and Lordstown Motors. The failure of ELMS meanwhile raises new concerns about nascent EV maker that have used SPAC mergers to raise cash.
Too many obstacles
“I’m very disappointed by this outcome because our ELMS team demonstrated incredible determination to get our electric vans ready to meet the critical need for clean, connected vehicles that reduce carbon emissions from ground transportation,” Interim CEO Shauna McIntyre said in the statement released Sunday. “Unfortunately, there were too many obstacles for us to overcome in the short amount of time available to us.”
Electric Last Mile Solutions was formed in 2020 and, as the name suggests, it targeted the growing demand for Class 1, or last mile, delivery trucks. That market segment has mushroomed with the rise of online shopping, customers looking to lower both operating costs and vehicle emissions. Internet giant Amazon Prime has ordered 100,000 last mile trucks from startup Rivian, and another 40,000 from Stellantis.
Electric Last Mile had planned to import partially completed battery trucks from China and complete the production process at an old General Motors assembly plant in Mishawaka, Indiana. That factory produced vehicles for the Hummer brand which GM abandoned after emerging from Chapter 11 bankruptcy more than a decade ago. ELMS CEO and co-founder James Taylor ran the Hummer brand during a lengthy career with GM.
SPAC merger spotlighted initial expectations
ELMS initially appeared to have a bright future considering the size of its potential market. That led it to form a SPAC merger that got it listed on the Nasdaq exchange in June 2021. The move generated around $379 million. And the stock soared, peaking at $14 a share shortly after it was listed. That gave the company a brief market valuation of $1.4 billion.
Shares have tumbled in recent months, investors spooked by the departures in February of its two co-founders, CEO Taylor and Chairman Jason Luo. It didn’t help that the company’s auditor, BDO LLP, also resigned a week later. ELMS has yet to file an annual report for last year.
It subsequently cut 24% of its workforce in March and then announced it faced a probe by the U.S. Securities and Exchange Commission. That, according to industry analysts, made it virtually impossible to raise new cash, even as its shares spiraled downward.
Options run out
By last week, the stock was down as low as $0.50 a share ahead of the company’s decision to liquidate.
The move means ELMS executives have given up on the chance to find a white knight that could, at the last minute, sweep in to save the company. There is still a chance that its remaining assets could be purchased out of bankruptcy. That happened after Fisker Automotive imploded in late 2013. Its assets were purchased by China’s Wanxiang Group, which renamed the company Karma Automotive.
Fisker founder Henrik Fisker has since launched a new company and, like ELMS, has used a SPAC deal to raise cash. That’s become a common approach among EV startups, a list also including Canoo, Lordstown Motors and Nikola. All three of those companies are struggling for survival.
But Electric Last Mile is the first EV newbie to go the SPAC route and fail.