SoftBank Vision Fund 2 and Porsche were among the investors in a late-stage round indicating the need for additional cashflow as new vehicle developers see the public markets shut off.
Croatia-based electric supercar technology developer Rimac Group received €500m ($536m) today in a series D round co-led by telecommunications and internet group SoftBank’s Vision Fund 2 as its publicly listed peers continue to struggle.
The cash was secured at a reported $2.1bn valuation and investment banking firm Goldman Sachs co-led the round. Sports car manufacturer and existing backer Porsche provided an eight-figure sum and now has a stake sized at approximately 20%.
Rimac is the owner of electric supercar brand Rimac Automobili and has also developed proprietary battery technology, vehicle components and electric vehicle (EV) and advanced drive assistance systems.
Porsche had supplied $83.2m for Rimac in March 2021 at a $925m valuation to hike its stake from 15% to 24%, having first invested in 2018. The latter’s earlier backers include fellow carmakers China Dynamics, Hyundai and its Kia Motors subsidiary as well as battery manufacturer Camel Group.
Rimac chief executive Mate Rimac told Automobilwoche in November 2021 the company was not planning to float any time soon and could wait up to a decade, contradicting reports five months earlier that it was considering an initial public offering in 2022 potentially valuing it at €5bn. The change in stance is likely linked to the performance of the electric sports car producers that already have listings.
Electric truck developer Rivian floated in November in an $11.9bn IPO but despite a pop that hiked its share price from $78 to $172, it has since slumped to just above $30. The sector’s most visible success story, Tesla, had increased its share price tenfold in two years to over $1,100 as of that month but is now sitting at $758.
Electric bus manufacturer Proterra’s shares are less than a quarter of their January 2021 peak. Electric sports car producer Faraday Future’s are a little over a sixth of what they were trading at the same month, as it continues to deal with Securities and Exchange Commission subpoenas over allegedly inaccurate statements made to investors.
Although the sector is dealing with the same tech bear market as everyone else, it does not add up to a welcoming environment for carmakers looking to go public, and Rimac is not the only corporate-backed EV developer to have raised big funds without reaching the public markets.
Off road vehicle developer Rox Motor secured $100m in a Tencent-led round in January this year and added $200m in April. Elsewhere in China, Haomo, Inceptio and Ruqi have each recently raised considerable amounts from corporate-backed consortiums this year.
Polestar, the electric car producer spun off by Volvo Cars and Geely, agreed a reverse takeover with special purpose acquisition company Gores Guggenheim in September 2021 at a reported $20bn valuation. Nine months on, that deal is yet to close despite Polestar having generated over $1.6bn in revenue last year, far more than newer businesses like Rimac.
The question is whether their investors are willing to keep pumping venture capital money into these companies or whether they let them go to the wall. The last cull in the sector saw Fisker and Coda collapse in the mid-2010s having collectively raised over $1.7bn. They subsequently pivoted and relaunched while Tesla went on to thrive – it can go either way.
Porsche sealed the creation of a joint venture with Rimac called Bugatti Rimac to run historic sports car brand Bugatti, formerly a subsidiary of the former’s owner, Volkswagen, in late 2021. For an investor like Porsche which already has a substantial stake in Rimac as well as that partnership in place, the answer is likely far clearer than it would be for others.
SoftBank is an investor in Ola Electric in addition to exiting autonomous vehicle developer Cruise earlier this year, and may see the sector as one with long-term potential. With little prospect of a public markets recovery any time soon, the space may be increasingly reliant on strategic corporate investors for funding.
Photo courtesy of Rimac Group.