Electric bus.
Electric bus.
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  • Chamath Palihapitiya said Tuesday that his “biggest investment in climate change” is in commercial EV manufacturer Proterra, which is set to merge with blank-check firm ArcLight Clean Transition Corp. 
  • Palihapitiya noted Proterra’s first-mover advantage, revenue growth, and a runway of orders and backlogs as part of his reasoning for the investment.
  • “This transaction enables Proterra to take the next step towards our mission of advancing EV technology to deliver the world’s best performing commercial vehicles,” said Jack Allen, Chairman and CEO of Proterra.
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“Blank-check” ArcLight Clean Transition Corp. is set to merge with commercial electric vehicle company Proterra in what Chamath Palihapitiya calls his “biggest investment in climate change.”

On Tuesday, Palihapitiya announced via Twitter that the special purpose acquisition company ArcLight Clean Transition Corp. will merge with Proterra, taking the clean-tech commercial EV leader public.

Palihapitiya lead a round of $415 million in private investment in public equity (PIPE) in Proterra, with the likes of Daimler Trucks, Franklin Templeton, Fidelity Management & Research Company LLC, as well as funds managed by BlackRock tagging along.

The SPAC will provide resources, including $825 million in cash, to take Proterra’s portfolio of commercial EV tech to new levels of growth on the open market. The transaction represents an enterprise value of $1.6 billion for Proterra.

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Jack Allen, Chairman and CEO of Proterra, said of the move: "This transaction enables Proterra to take the next step towards our mission of advancing EV technology to deliver the world's best performing commercial vehicles. In addition, it introduces a partner in ArcLight that has a shared focus on sustainability and renewable energy."

Proterra is North America's number one EV bus original equipment manufacturer, boasting over a decade of experience in the industry. The Burlingame, California-based firm also develops world-class electric charging systems.

Palihapitiya gave a one-page investment thesis breakdown on Twitter that included some of his reasoning behind the Proterra move. However, based on the investor's recent public comments, one of the main drivers of his investment may be putting his money where his mouth is in terms of backing clean tech initiatives.

Palihapitiya, an avid supporter of green policies, appeared on CNBC last week and argued the "world's richest person should be somebody that's fighting climate change."  

However, the merger is also a good fit for ArcLight Clean Transition Corp's main goal, according to Jake Erhard, President, CEO and Director of ArcLight.

"We launched ArcLight Clean Transition with a clear goal of identifying and partnering with mission-driven companies with differentiated technology, compelling growth opportunities and a proven ability to execute," Erhard said.

"With a portfolio of leading-edge products, a substantial first-mover advantage over its competitors and a demonstrated ability to scale, Proterra perfectly fits these criteria. We look forward to working closely with the Proterra team to execute its strategic priorities and deliver shareholder value."

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Chamath Palihapitiya went even further, elaborating both qualitative and quantitative points about the validity of Proterra's commercial EV business in his Tuesday Twitter post.

First, he argued Americans are increasingly using public transport, taking over 9.9 billion trips in 2019 alone.

Palihapitiya also noted Proterra's first-mover advantage. The company has sold over 1,000 commercial electric vehicles in North America, representing over 50% market share for the burgeoning industry.

Finally, he mentioned the significant decline in EV battery costs since 2010 (over 85%), Proterra's impressive compound annual growth rate of 68%, and the $750 million in current orders and backlogs at Proterra as drivers of his "biggest investment in climate change."

Shares of ArcLight Clean Transition Corp. are up over 75% on the news, taking the SPAC to a market cap of close to $750 million.

Read the original article on Business Insider