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Lucid Motors’ mega SPAC merger is under investigation

The Securities and Exchange Commission (SEC) is investigating yet another merger between an EV startup and a special purpose acquisition company, or SPAC. This time, it’s the massive deal from July that turned Saudi-owned Lucid Motors into a publicly traded company worth more than $20 billion.

Lucid Motors announced the probe in a Monday morning stock exchange filing. The startup said that it received a subpoena from the SEC on December 3rd “requesting the production of certain documents related to an investigation” that “appears to concern” the merger, as well as “certain projections and statements.” Lucid Motors said it’s “cooperating fully with the SEC in its review.”

The startup, which was founded in 2007 as a battery tech company and rescued by Saudi Arabia’s sovereign wealth fund in 2018, announced in February that it was merging with a SPAC run by investor Michael Klein called Churchill Capital IV. Lucid Motors ultimately raised more than $4 billion in the deal and started shipping its first electric vehicle — the Air sedan — in October. The startup’s valuation had soared since, and it recently passed the market cap of legacy automakers like Ford. But Monday’s news sent Lucid Motors’ stock tumbling.

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The SEC is already investigating the SPAC mergers that turned Lordstown Motors, Canoo, and Nikola into publicly traded electric vehicle startups. The agency has been particularly focused on the validity of the financial projections these companies made when they announced the mergers, as well as any claims they made about the preorders collected for their vehicles.

Nikola’s founder was indicted earlier this year on charges brought by the SEC (as well as parallel charges from the Department of Justice), and the company recently said it has set aside $125 million for an expected settlement with the agency. Lordstown Motors’ CEO resigned after the company’s own investigation found he had made misleading claims about preorders for its electric pickup truck, though the SEC and DOJ are still probing the startup. Canoo said as recently as November that it continues to cooperate with the SEC in its own investigation.

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