Troy-based Electric Last Mile Solutions makes stock market debut, eyes fall van launch
Troy-based Electric Last Mile Solutions on Monday became the latest electric-vehicle startup to go public via a tie-up with a special-purpose acquisition company.
The company — which is slated to launch a commercial electric van aimed at the growing market for last-mile deliveries — began trading on the Nasdaq Monday morning under the ticker symbol "ELMS." Its "Urban Delivery" van, with a starting price of about $25,000 with a federal rebate, is slated to be the first commercial electric van of its size to launch in the U.S., potentially giving ELMS a leg up on would-be competitors.
ELMS opened at $11.10 per share and closed up nearly 13.5%.
The company's stock market debut follows the completion Friday of its reverse merger with blank-check company Forum Merger III Corp., the combined value of which was pegged at $1.4 billion. Such a deal is an increasingly popular way for startups to go public without going through the traditional process of an initial public offering.
"Today is an important achievement for ELMS and a significant milestone in our mission to transform last mile productivity for our customers with efficient, sustainable and connected e-mobility workstations intended to improve their bottom line," founder and CEO Jim Taylor said in a statement Monday. "As a public company, we believe we now have all the pieces in place to launch the Urban Delivery later this year and are excited to help position America as the leader in EV manufacturing."
David Boris, former co-CEO and chief financial officer of Forum III and now director of ELMS, said in a statement that the startup is "uniquely positioned to capitalize on the growing, $1 trillion North American e-commerce market and redefine the last mile of delivery with more efficient and lower cost EV solutions."
The Urban Delivery van will be built at ELMS's recently-acquired facility in Mishawaka, Indiana, that once produced Hummers. The van is expected to have a range of about 150 miles.
ELMS also is planning a second vehicle, the Urban Utility, an all-electric medium-duty cab forward truck. A reveal of a working prototype is planned for later this summer, according to a news release.
Meanwhile, ELMS is and will remain headquartered in Metro Detroit, a choice that Taylor told The Detroit News was a deliberate one by him and his business partner to buck the trend of locating on the West Coast. Taylor is the former CEO of Workhouse, chief marketing officer of Karma Automotive, president of Cadillac and CEO of Hummer.
“We’ve gone consciously against the grain and we’re going to set up shop and show the world that you can succeed out of Detroit," he said. "That’s not a challenge for GM or Ford, but we’re a new startup and we want to prove the others wrong.”
Capturing a new segment
If ELMS's production schedule goes as planned, it could be the first company to bring to market a Class 1 commercial EV in the U.S. Its small commercial van could lead the way in a segment that is sure to gain some competition as legacy automakers and startups alike accelerate their EV production plans.
The company is aiming to capitalize on the growing demand for last-mile deliveries, as consumers in the U.S. increasingly turn to e-commerce and fleet operators look for ways to meet sustainability targets.
“It’s not a huge market right now for this size of van, but right now there’s no electric options in that market," said Sam Abuelsamid, principal research analyst at Guidehouse Insights. "So being first with an electric offering in this segment, that could help ELMS to get some initial traction."
"But," he added, "they’re going to have to have good support and service to sustain that and really convince customers to go with them instead of waiting for one of the established players to come out with something like this.”
To that point, Taylor said the company is looking to differentiate itself by offering connected data services and vehicle customization options.
“Over time, as we’re seen as a solutions company, not just a van company," he said, "that’s one of the things that will separate us from others."
SPAC pros and cons
Going public via SPAC allows companies to secure funding upfront before they've generated any revenue — an approach that carries some major advantages for startups but some risks would-be investors should keep in mind, experts say.
"Especially in a space that is becoming crowded, EV companies like ELMS can use this as a great tool to raise capital and it can be the difference between just being one of the herd, or getting noticed and succeeding," said Mike Windle, a financial adviser and owner of Plymouth-based Custom Wealth Solutions.
The big thing for investors, he said, is to view SPAC-led companies as speculative stocks.
Investors' appetite for SPACs has dimmed a bit as some SPAC-backed EV startups, including Ohio-based Lordstown Motors Corp., have struggled to meet expectations.
But in ELMS's case, Taylor told The Detroit News Monday, using a special-purpose acquisition company made sense from a timing perspective.
"But also from a personal standpoint, when you're in an IPO mode and going through each of the series of raises ... on your way up to an IPO, that's a huge amount of time that the executive team has to spend pitching and raising money," he said. "The SPAC process is very concentrated, but a big advantage now (that) we've closed ... (is that) we can focus 100% of our efforts on just execution."
Others that have faltered "drifted off from their business plan," Taylor said. "In our case, we stick to our commitments, stick to our milestones, stick to the business we proposed to our shareholders, and I'm sure that we're going to be fine."
ELMS reports that it has about 45,000 reservations that it will soon look to convert into orders. It will release its first financial report as a public company in August.
Meanwhile, “They’ve got a relatively short window of opportunity" before competitors enter the segment, said Abuelsamid. "So ELMS needs to execute really well and really quickly to grab some market share and hopefully hold on to it.”