Israel-headquartered REE Automotive has entered into merger agreement with 10X Capital Venture Acquisition Corp (10X SPAC), a special purpose acquisition company for a business combination that would result in REE becoming a publicly listed company on NASDAQ.
REE is aiming to disrupt the e-mobility industry through its highly modular REEcorner technology which integrates critical vehicle components (steering, braking, suspension, powertrain and control) into the arch of the wheel. REE’s proprietary x- by-wire technology takes a new take on the automotive concepts by being agnostic to vehicle size and design, power-source and driving mode (human or autonomous). The company says platforms utilising REEcorners can present significant functional and operational advantages over conventional EV ‘skateboards’ currently available in the market.
Interestingly, REE Automotive has numerous partnerships in place globally, including a recent pact with Mahindra & Mahindra that was announced in August 2020. REE’s innovative technology enables fully-flat and modular EV platforms that can carry more passengers, cargo and batteries as compared to conventional electric or internal combustion vehicles, thereby improving next generation e-mobility for new electric and legacy OEMs, logistics companies and service providers.
The Israeli-company is targeting commercial and MaaS markets, enabling them to build mission-specific electric vehicles as part of the shift towards electrification and autonomy. The company says the shift is driven by the growth in e-commerce, government regulations on carbon emissions and public policy, as well as newly developed mobility concepts which require complete freedom of design for the build-out of any size or shape of electric or autonomous vehicle – from Class 1 through 6.
The transaction values the combined company at a pro forma enterprise value of $3.1 billion (Rs 22,943 crore). Pursuant to the merger and following the share exchanges, the combined company is expected to receive approximately $500 million (Rs 3,700 crore) in gross cash proceeds from a combination of $201 million (Rs 1,487 crore) in cash held in 10X SPAC's trust account, assuming no public shareholders exercise their redemption rights at closing, and $300 million (Rs 2,220 crore) from a fully committed PIPE with participation from long-term strategic investors including Koch Strategic Platforms, Mahindra & Mahindra and Magna International.
Manufacturing through Tier 1 partners in over 30 countries
The company says it will utilise a CapEx-light manufacturing model comprised of globally located integration centres, which creates scalable and agile unit economics. REE will utilise manufacturing capacity via a secured and exclusive global network of Tier 1 partners in over 30 countries, with point-of-sale assembly. This strategy is expected to enable REE to reach profitability by 2024.
Daniel Barel, co-founder and CEO, REE Automotive said: “We believe that our technology will become the cornerstone for our customers to create better and greener e-mobility services that will be the backbone of our society. Being the only truly horizontal player in the market today positions us to play a major role in accelerating electrification of mission-specific vehicles in multiple sectors such as delivery fleets, Mobility-as-a-Service, e-commerce retailers and new mobility players. We are truly excited to be partnering with Hans Thomas and the 10X Capital leadership team as we begin our next chapter as a publicly listed company in our journey towards a better, cleaner and more sustainable e-Mobility future.”
Hans Thomas, chairman and CEO, 10X Capital said: “10X Capital has a strong commitment to sustainability and we are very enthusiastic to partner with REE as it executes on its strategic vision of becoming the cornerstone of next generation EVs. REE addresses an enormous total addressable market, and its ability to provide EV technology solutions to a broad array of markets is highly compelling. Daniel has assembled a world-class team of engineers and designers and is providing a truly unique offering in the EV space. We are also thrilled by the alignment with key strategic partners and investors that REE has assembled, and with a significant pipeline of orders reflected in its MoUs with top global automotive and mobility companies, we believe that REE is firmly on its way to establishing itself as a leader in the industry. The EV revolution is happening today, and it will be powered by REE.”
The proposed transaction is unanimously approved by REE’s Board of Directors as well as 10X SPAC’s Board of Directors and is expected to be completed by the end of the first half of 2021.