DETROIT (Reuters) – Electric Last Mile Solutions (ELMS) said on Friday it has agreed to go public through a reverse merger with blank-check company Forum Merger III Corp in a deal that values the U.S. electric commercial vehicle maker at $1.4 billion.
The deal will provide ELMS with $379 million in gross proceeds, including $155 million from such private investors as BNP Paribas Asset Management and Jennison Associates. It is expected to close in the first quarter and the company will trade on Nasdaq under the symbol “ELMS.”
ELMS, based in Auburn Hills, Michigan, plans to launch a small Class 1 delivery van – the UD-1 – in the third quarter of 2021, followed by a larger Class 3 truck in late 2022.
Both vehicles will be assembled at the former Hummer plant in Mishawaka, Indiana, that ELMS intends to acquire from China’s Chongqing Sokon Industry Group Stock Co Ltd when the deal closes, ELMS Chief Executive James Taylor said.
A blank-check or special purpose acquisition company (SPAC) is a shell company that raises money through an initial public offering to buy an operating entity, typically within two years. SPACs have emerged as a quick route to the stock market for companies, particularly auto technology firms, and have proven popular with investors seeking to recreate Tesla Inc’s high stock valuation.
ELMS’ vehicles will be based on Sokon’s commercial van made in China through a joint venture with Dongfeng Automobile Co Ltd, speeding development time, said Taylor, a former General Motors Co executive.
The battery for the vehicle will be supplied by Chinese battery company CATL, he said.
The UD-1 has a starting price of $32,500 before the $7,500 federal tax credit and a driving range of 150 miles. It will include such features as over-the-air updates.
“The demand for cost effective solutions to support the e-commerce ecosystem is overwhelming,” Taylor said. “This industry promises rewards to first movers.”
The Indiana plant has capacity to assemble 100,000 vehicles annually. ELMS plans to build 4,100 UD-1 vans at the end of next year, more than double output to 9,100 vehicles in 2022 when the second vehicle is added, and grow to 83,000 for both in 2025, he said.