DETROIT – Shares of EV start-up Electric Last Mile Solutions plummeted during intraday trading Monday to $1 a share after the company confirmed a probe by the Securities and Exchange Commission into its operations.
The late-Friday disclosure is the latest problem for the Troy, Michigan-based company following unexpected resignations last month of both the company’s chairperson and CEO. The departures were connected to ELMS’ determination that the executives lied during an internal investigation into share purchases ahead of the company going public through a special purpose acquisition company, or SPAC.
ELMS said it learned of the investigation by the SEC on March 7, according to the regulatory filing Friday. The company also said it was withdrawing previous guidance and would need to raise cash to its vehicles to market.
Shares of ELMS were down by as much as 47% during intraday trading Monday to $1 a share — marking the lowest price to date for a SPAC-backed electric vehicle start-up.
The company said it has sufficient cash to continue operations through between July and September 2022.
ELMS is among an influx of new EV start-ups to have gone public through a SPAC deal within the past two years. Following initial pops in share prices, most of the companies have been plagued by federal investigations, scandals and executive upheaval.
Nikola Corp., Lordstown Motors and Lucid Group are among such companies to have disclosed SEC inquiries. Nikola late last year agreed to pay the SEC $125 million to settle charges it defrauded investors by misleading them about its products, technical capacity and business prospects.
ELMS made headlines last year when it went public in June, as it prepared to begin producing electric commercial vans at a former General Motors plant in Indiana that last produced gas-guzzling Hummer SUVs in the mid-2000s.
The company is fully cooperating with the SEC investigation, according to the filing. ELMS said it “cannot predict the eventual scope, duration or outcome” of the investigation.