Why Is the SEC Investigating the Lucid Motors Merger?

Serena Aburahma
· 4 min read
Lucid Motors is an
electric vehicle
manufacturer that has been making waves with its Lucid Air luxury sedan. Due to its range and suite of luxury features, some believe that Lucid could
even rival Tesla
. However, the EV company could be facing problems due to an investigation into Lucid Motors' merger with a SPAC.
According to
The Verge
, Lucid Motors is under investigation by the Securities and Exchange Commission. This is not the first electric vehicle manufacturer to be investigated for something like this, either.
Since the investigation is still in its early stages it’s hard to say what will become of Lucid Motors.

The rise of Lucid Motors

Before Lucid was gaining headlines for its car having the
best range of any EV,
it was a humble company focusing on battery technology. It was founded in 2007, and it merged with a special purpose acquisition company (SPAC) in February 2021. 
In October 2021, early adopters got the first shipment of Lucid Air vehicles. With the Air getting stellar reviews and showing promise for the company as a whole, the company's stock price saw a significant gain. There was a time when the stock was higher than manufacturers like Ford, and Lucid Motors has a value of greater than $20 billion.
Unfortunately for Lucid, they have encountered an issue related to that SPAC merger.
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Lucid Motors under investigation for merger with a SPAC

On December 3, 2021, the SEC subpoenaed Lucid Motors for documents related to its merger with the SPAC. This investigation is still ongoing, so it is unknown if any wrongdoing was done or if anyone associated with Lucid will face any charges. What is known is that the investigation is partially focused on the projected worth of the company.
To understand what Lucid is under investigation for, it is important to understand what a SPAC is. This is essentially money that is entirely meant for a merger with a company. It is a way for a company, in this case, Lucid Motors, to become public without the entire standard process. 
SPACs are perfectly legal, and they are quite common. However, there have recently been several instances of companies getting into trouble over issues involving their SPAC mergers. Lucid Motors is not the first EV company to get investigated for something like this.

Other manufacturers have issues with mergers

Nikola, Lordstown Motors, and Canoo are all EV startups that have been investigated by the SEC. Each of these became public companies through SPAC mergers. The SEC has questioned these companies' projected values in the same way that they are investigating Lucid.
In the case of Nikola, the company's founder faced criminal charges after an investigation from the SEC and Department of Justice.
Lordstown Motors launched an internal investigation into preorder claims and found that the CEO was misleading. Because of this, the CEO resigned.
Again, the investigation into Lucid is in its early stages, and it is unknown what the result will be.

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Even with the hit to the company's stock price, cars from Lucid Motors are still highly wanted and incredibly expensive. Unlike a Lucid Air, though, your car insurance can be cheap. If you are shopping for car insurance or if you're curious how much you could be saving, see how
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