Gores Guggenheim Stock Is Banking on the Wrong Car at the Wrong Time
Editor's Note: This article was updated on Feb. 14, 2022, to remove an outdated reference to the Polestar 1.
The verdict is still out on the viability of Gores Guggenheim (NASDAQ:GGPI) stock.
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Gores is a special purpose acquisition company (SPAC) with plans to merge with Polestar, an EV maker gaining serious attention. If you're connected to the electric vehicle industry, the new normal presents both opportunities and frustrations.
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On the positive end of the spectrum, the coronavirus pandemic forced millions of people to consider the benefits of EV ownership.
No matter how much combustion-powered cars have improved over the century-plus, they still require frequent maintenance. No one wanted to be around others early in the pandemic, presenting issues if you wanted to get an oil change.
Even today, if you need service for your car, you might end up waiting a while. Even the most mundane parts are hard to come by as a result of supply chain disruptions.
All things being equal, EVs are built with fewer moving parts. This translates to fewer frequent maintenance requirements, which then translates to worry-free ownership (for the most part).
You can have EVs sit in your garage for a long period of time without much ill effect. That's yet another positive to check for GGPI stock.
But that doesn't mean the pandemic was a 100% positive benefit for Polestar or any other EV manufacturer. In reality, since people drive on the roads less often now, new car purchases aren't at the top of most households' priority.
True, EVs can save on fuel costs longer-term relative to the price of electricity. But again, with fewer people on the road, high gasoline prices are no catalyst for GGPI stock.
GGPI Stock Vs. Inflation
Interestingly, as my InvestorPlace colleague Eddie Pan pointed out, Polestar bought commercial time during the Super Bowl. The ad featured its Polestar 2. Pan rightly stated that "the Super Bowl is one of the biggest sporting events in the world." So, coughing up the $6.5 million for a 30-second spot could be money worth spent.
But even though I get that it's the "reasonably" priced EV (starting at $45,900), the broader economy is my concern about GGPI stock. As I mentioned in my interview with CGTN America anchor Sean Callebs, soaring consumer prices have left people into two camps: those who can save money as a luxury and those who have no choice but to.