It's tempting to think that the trend of EV startups going public by merging with special acquisition companies (SPACs) is over, with so many of them struggling or going bankrupt. But that's not necessarily true. A startup called Thunder Power Holdings went public on the Nasdaq exchange through a SPAC in June, and is now trying to raise up to another $100 million through a stock sale agreement.
All this is happening while the company's CEO, Wellen Shum, is facing 11 criminal charges from the Taiwanese government.
Thunder Power's filings with the Securities and Exchange Commission include all the details required for all publicly listed companies. On page 46 of its amended S-4 filing in April, Thunder Power explained that the Taipei District Prosecutors' Office filed charges against Shum in 2022. The case is currently pending at the Criminal Division of the Taipei District Court.
Shyam is accused of a number of securities offences relating to another company, Electric Power Technology Limited, of which he is chairman, which has some links to Sundar Power. Shyam owns around 75% of the combined company, with Electric Power also owning a minority stake. Shyam is accused of using Electric Power's assets to pay for “seminars organised by Sundar Power”. He is also accused of “directing the issuance of false press releases with the intent to spread rumours and misleading information”.
The criminal charges have prompted Taiwan's Securities Investor and Futures Protection Center to call for Shum to be removed from his position as Electric Power's chairman. Thunder Power's filing said Shum has maintained his innocence. The company did not respond to an emailed request for comment.
Thunder Power, surprisingly, is not a new company: It has been around in some form since it was introduced at the Frankfurt Motor Show in 2015. Shum told Top Gear that the company is “done.” [with] We have completed the “concept stage” and have now moved into the “certification process.”
But last year, Thunder Power admitted on page 31 of its initial S-4 filing in preparation for a merger with a SPAC that it “has not manufactured any electric vehicles.” That remained true in May of this year, according to another amended S-4 filing. At the time, Thunder Power said the only vehicles in existence were prototypes built by its China-based affiliate, Tonggao Advanced Manufacturing Technology (Taicang) Co., Ltd. Thunder Power said it had lost more than $35 million since its inception and had “no revenues.” It had just $921,349 in cash as of June 30, 2024.
After going public in June, Thunder Power inked a financing deal with Westwood Capital Group LLC, a New York firm that describes itself as “an investment bank that provides creative solutions to clients with complex financial needs.”
The deal allows Thunder Power to sell up to about $100 million worth of stock to Westwood, which the company can then sell on the public market. It's similar to many deals New Jersey-based Yorkville Advisors has made with EV startups and other companies that have merged with SPACs. Westwood has already been paid $1.5 million worth of Thunder Power stock in return for closing the deal, but Thunder Power said in a filing this week that it has not yet sold any more stock to the company.
There's one caveat, though: Thunder Power can't force Westwood to buy more shares if the stock price falls below $1 by Feb. 20, 2025, or below $1.50 a share after that date. Currently, the stock is trading below $0.50.