Electric motorcycle maker Zapp Electric Vehicles to go public via SPAC

British electric two-wheeler maker Zapp Electric Vehicles is merging with a blank check company to go public on the Nasdaq at a post-money valuation of $573 million.

Zapp says it will use the merger proceeds to market its long-awaited i300 high-performance seated city scooter. The i300 was initially revealed in 2018, with promises of deliveries starting in late 2019. Then Zapp, like many other companies, hit a global pandemic that halted production and deliveries, giving the company time to reassess its approach to production. .

Zapp has partnered with a third-party manufacturing company and says it now has the capacity to build up to 10,000 scooters next year and finally hit European markets in 2023.

“We are at a strategic inflection point and the perfect time to go public,” Swin Chatsuwan, CEO and founder of Zapp, told TechCrunch. “Becoming a public company will provide Zapp with a number of potential benefits, including broader access to capital to help fund our growth and the global awareness and brand recognition that comes with listing on a major U.S. stock exchange. “

The deal with special purpose acquisition company (SPAC) CIIG Capital Partners II is expected to provide the combined company with $274 million in new cash to support its growth, assuming no buyout by public shareholders of CIIG II , as well as $5 million of existing cash. The problem is that assuming no buyouts are really part of the SPAC market these days. In 2022, reimbursement rates have reached approximately 81%.

CIIG II has approximately $294 million in cash in trust, so if, in a worst-case scenario, around 80% of investors decide to redeem their shares, Zapp will be looking at approximately $60 million in net proceeds from the transaction. , let alone once factoring in transaction and referral fees.

There is also no public private equity investment (PIPE) in this transaction, which would be capital secured upon closing of the transaction.

Zapp told TechCrunch that the company expects existing shareholders to renew 100% of their equity and that CIIG’s trust account will be sufficient to meet the company’s growth capital needs, including efforts. production, marketing and sales.

“We can’t predict the market, of course, but we were intentional about some things the market should like about our trade. First, we don’t have a minimum cash requirement to close,” said Chatsuwan. “And due to our low capital requirements, we aim to achieve positive free cash flow in the near term.”

To produce its vehicles quickly, cheaply and at scale, Zapp has partnered with Summit Group, a global automotive manufacturing company that has worked with major automotive customers like Ford, Honda, Toyota and Volvo. Zapp said Summit has the capacity to produce 300,000 units per year and can also provide tooling and logistics expertise.

CIIG II comes from the same sponsor and management team as CIIG Merger Corp., which last year partnered with commercial electric vehicle company Arrival. Since its IPO, Arrival has struggled to meet production deadlines, downsized to cut costs and recently delayed revenue until 2024. Arrival also received a Nasdaq delisting warning for trading too much. low. The company is trading at $0.35, down 95% year-to-date.

Gavin Cuneo, co-CEO of CIIG II, said TechCrunch Zapp would be different because “the company is entering a large and growing market that is rapidly moving to electric power.” The same could be said about Arrival, but we’ll let him finish his talk. “Swin and the team have developed an innovative product with a design and architecture that addresses the “urban motorcycle” category. The strategic partnerships Zapp has in place in manufacturing and financing reduce capital requirements and uniquely position the company to achieve near-term positive free cash flow.

Cuneo also noted that Zapp is ready to start production today and that its “asset-light” business model through a partnership with Summit has significantly reduced capital expenditure requirements.

That and CIIG II must complete a merger by May 2023 or they may have to return money to investors.

The i300

Zapp’s merger with CIIG is expected to close in the first half of 2023, when the company can ramp up production.

The i300 is built with a British-designed electric motor, which Zapp says puts it on par with the acceleration of high-performance motorcycles, but with the comfort of stepper architecture. The i300 can go from 0 to 30 miles per hour in just 2.3 seconds and has a top speed of 60 miles per hour in 5 seconds, according to Zapp.

The lightweight alloy and composite body means the bike weighs around 240 pounds without the batteries, which weigh around 13 pounds and are removable for charging inside. Zapp claims its packs can be charged from 20% to 80% with the company’s own fast charger in under 40 minutes, and through any standard household wall outlet in 80 minutes. The 1.44 kWh capacity batteries give the scooter a range of around 37 miles.

Zapp has four versions of the i300 available to reserve for a €100 deposit today – the Ocean, Bio, Carbon and Carbon Launch Edition. The bodywork of the Ocean (€6,900) comes from plastic technology recycled by the oceans. The Bio (€7,900) claims to use sustainable technology to create vegan composite bodywork. The Carbon ($8,900) is made with a carbon composite body, and the Carbon Launch Edition ($9,490) is the same but also comes with a red fender, commemorative plaque, Union Jack decal and diamond cut wheels.

Zapp wants its customers to be able to purchase vehicles through multiple outlets, including authorized dealer partners, online dealers and directly from the website. Zapp calls its DSDTC (drop-ship-direct-to-consumer) approach a way to eliminate the need for dealerships, which will give the company more control over the user experience.

“Once a customer places an order, their selected model will be processed and delivered directly to their doorstep by ‘Zappers,’ who are independent service agents who make deliveries in plug-in hybrid service vans. dedicated and designed for this purpose,” said Chatsuwan. “These Zapper vans will also manage our after-sales service program. »

Clarification: A previous version of this article stated that CIIG Capital Partners II merged with Arrival last year, when it was CIIG Merger Corp. which had merged with Arrival. Both share the same sponsor and management team.

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