The wave of electric-vehicle startups going public via so-called reverse mergers shows no signs of slowing, with Israel's REE Automotive the latest to join the party.
A reverse merger is where a private company goes public by being taken over by a company that's already publicly listed, thus avoiding the complexity of having to launch an initial public offering. The deals are typically done with a special purpose acquisition company (SPAC) that is set up solely for this purpose.
This was the case with REE which completed a merger on July 22 with a SPAC known as 10X Capital Venture Acquisition Corp. The merged company started trading the following day on the Nasdaq under the ticker symbol “REE.”
REE is expected to receive $500 million out of the deal which included some major participants, such as automotive supplier Magna International, as well as Koch Strategic Platforms.
A string of EV startups have all gone public in the past year via reverse mergers. The list includes Canoo, Faraday Future, Fisker, Lordstown Motors, Lucid and Nikola. Another EV startup, Mullen Technologies, also plans to go public via a SPAC deal in the near future.
Unlike those other EV startups, REE's product isn't an actual vehicle. Instead, the company is positioning itself as a supplier of off-the-shelf EV platforms. Its product is a flexible EV platform where virtually all of the mechanicals, apart from the battery and associated cooling and power distribution systems, are located within each of the wheel arches. We're talking the electric motors, suspension, braking, and even the steering. REE has branded the system as REEcorner technology.
REE said it has received significant interest in its platform and REEcorner technology, and expects to start mass production as early as 2023. The company is targeting potential customers in the delivery & logistic industries, as well as the burgeoning mobility-as-a-service industry.
REE also plans to expand to the United States and has selected Austin, Texas, for its local headquarters. Austin will also be home to an REE test center where the company, together with potential customers, will test the technology in real-world use. Approximately 150 jobs will be created by REE's U.S. operations.