It’s done. Sono has leapt over another huge milestone on the journey to getting the Sion on the road with news of its IPO (initial public offering). Of course, this development didn’t happen overnight. Months of preparation have gone on behind the scenes. You can see that the first documents were prepared months ago on the SEC, US Securities and Exchange Commission, homepage.
In recent weeks, Sono has resolved some of the major issues necessary to be able to succeed on the stock exchange floor:
- Technology within the Sion has been updated to make it even more state-of-the-art. The addition of the new 54 kWh battery, its increased charging capacity and full solar integration give the Sion a massively high competitive advantage.
- The overall plans were updated and coordinated with the involvement of all stakeholders, which makes them both resilient and reliable.
- The price was adjusted to better reflect the break-even point. As a member of the Community Advisory Board, I am particularly pleased that the old price could be maintained for all existing reservation holders.
The IPO will enable the company to raise the financial means to initiate the Sion’s final development phase. The Sion project is now in a better position than ever before. This means that Sono is now entering into the next phase of its development as a company. Here, too, lie many new and major challenges and risks to overcome:
- Building several prototypes in manufacturing is one thing. Now series production in Trollhättan has to be prepared.
- 11 series-validation vehicles must prove by summer 2022 in the safeguarding and development that clean preliminary work has been done.
- As a company, Sono has to build new structures and manage rapid growth. A large number of new employees will be needed to get the vehicle on the road and into the hands of the customer.
In recent years, many automotive start-ups have failed at precisely these steps. Some, like Tesla, BYD and Weltmeister, have succeeded. They provide the blueprint for how these steps can be taken.
Many of us reservation holders have a lot of questions. Since the announcement of the IPO, I have received countless emails about this. Unfortunately, as an "insider", I was not allowed to give any answers. All the more reason for this blog. I had the opportunity to talk to Torsten Kiedel - Chief Financial Officer (CFO) of Sono Motors - about the IPO. I have collected the most important eight questions and answers in this blog post. Happy reading!
Sebastian: Hello Torsten, thanks for taking the time! Sono went public! Congratulations!
Torsten: Hi Sebastian, thanks very much! I’m really pleased that we have this opportunity to discuss this new development with one another!
Sebastian: But before we get stuck into the big questions, tell me, how are you doing after this huge announcement?
Torsten: I'm doing great, I'm very happy that we could take this step together.
Sebastian: I believe you there. Let’s perhaps start with the basics. Why have you gone public? How does sustainability and the goal of having fewer cars on the roads, via sharing, fit in with the steady growth of the stock market?
Torsten: In essence, there is a very central reason for this. Namely that through the IPO we've raised $156 million to accelerate the next phase of our growth. The IPO helps us on the way to putting the Sion on the road and thus pave the way for climate-friendly mobility.
Sebastian: Why did you decide on the USA and NASDAQ? Wouldn’t European stock exchanges be a more obvious choice?
Torsten: The reasoning behind the USA and for NASDAQ is first of all that the American capital market gives us much more flexibility. American investors are somewhat more open to companies that are still in the so-called early stage, i.e. "pre-revenue". At the moment the Sion is not yet generating sales and there is simply more risk appetite among US investors and therefore also more openness to buy Sono shares or invest in us.
Sebastian: Sono Motors is then publicly listed. Is there then a risk that Sono will be taken over? Perhaps because other companies have their eyes on both the technology and the expertise?
Torsten: In order to answer that, perhaps a few basic words about going public. This involves issuing additional shares in orders to raise new money.This is a capital increase and not a sale of the founders’ shares or those of other shareholders. The founders continue to hold the majority of the voting rights, which currently rules out a takeover against the will of the founders.
Sebastian: Okay, I’m sure that reassures a lot of people out there. As you know, I represent the Community within the company. At the end of 2019, when Sono was on the verge of insolvency, many supporters increased their deposits or even reserved new vehicles. In return, they were awarded so-called Sono Points, i.e. the possibility to participate in any of the founders’ future profits. The more Sono Points you have, the larger your share of the total pool and thus potential payout. What happens to these points in the course of going public?
Torsten: The Sono Points are a promise from the founders Laurin, Jona and Navina to the reservation holders and to the Community. This has nothing directly to do with the company, but refers to the shares that are held by the three of them. The fact that we have now floated Sono Motors on the stock exchange does not change anything for the time being, because it has no direct impact on the points. The profit participation rights that the founders had earmarked for the Sono Points remain reserved for them.
Since we are now publicly listed on NASDAQ after a successful IPO, it would be easier for the founders to sell certain shares. The profit from this can then also be paid out proportionately, and after deduction of taxes and costs, to reservation holders with existing points.
Sebastian: All right! And what about Seedrs' shares? I myself have shares, as do 4,500 others. Would I then automatically get shares in my securities account?
Torsten: These shares will continue to be managed by Seedrs. In principle, such units can be converted into shares. For further details, please contact the Seedrs team.
Sebastian: Many Community members have been involved with Sono for a long time. Going public is, of course, going to mean a lot of change. It will also likely make people who think less about sustainability and more about successful share prices more aware of Sono. Dealing with that could be difficult for many in the Community. I also think that after going public, it’ll be important whether the share price rises or falls - and people want to earn money with that. Will this have an impact on your daily business?
Torsten: No — we are on the stock market to put the Sion on the road. Whether a future share price then rises or falls is something we, I as CFO, keep a close eye on. However, it doesn’t have a direct impact on the development teams’ day-to-day operations. Besides, we view our project in the long-term. Short-term price fluctuations are normal and we will not overemphasize them.
Sebastian: Buzzwords — Production and NEVS. The IPO filing lists risks on several pages as well as which contracts have still to be signed. Many people liked the fact that you always stood by NEVS as a manufacturer despite turmoil. Do you have anything to say regarding that?
Torsten: In NEVS, we have found a production partner who shares our vision of future-oriented and climate-friendly mobility. The production conditions at the former cult brand SAAB plant are optimal for us. It has the appropriate production capacities, an experienced team and production using electricity from 100 per cent renewable energies.
NEVS has been our production partner since 2019 and we have been in close exchange ever since, as we are currently. At the moment, the Sion’s production is not affected by the restructuring at NEVS. Production facility preparations for pre-series production in 2022 and the series production in the first half of 2023 are already underway. NEVS has already adapted to the current developments and the capacities required for Sono Motors have not yet been affected by the workforce adjustment.
Sebastian: Final question. A planned listing in the USA - are we now to imagine Laurin and Jona soon cruising around 5th Avenue in a stretch limo? What has become of our little Munich start-up?
Torsten: Even though it’s quite an amusing thought, I don’t think we have to worry about that. You’ve known the three founders for some years and can judge them well. These are values that don’t suit them at all and that is not what they stood up for. Besides, we still have a long way to go. There’s no time for trips in limos. We will stay right here in Munich and continue to work on getting the Sion on the road and Sono Motors further ahead. We’ve been doing this for over five years now and will continue to do so.
Sebastian: I don’t think I’m worried about that either. Many reservation holders are not just interested in the car, but the idea behind it and the desire to affect change. The IPO was a big and important step towards the goal. So, here once again — on behalf of all reservation holders — congratulations and a huge thank you Torsten. All the best for the future!
Torsten: Thank you Sebastian. Thanks to the Community for their continued support. We’ll, of course, keep in touch!