Billions in SPAC money has propelled a motley crew of eight electric vehicle names onto an index of America’s largest public companies as several battle major controversies.

Electric vehicle makers Lordstown Motors (RIDE) and Nikola Corporation (NKLA), both added to the Russell 3000 this month, went public via special purpose acquisition companies (SPACs) in 2020. SPACs pool investor money and search for private companies to merge with and take public.

Since going public top executives at both firms have resigned over accusations they misled investors.

Nikola founder Trevor Milton resigned in 2020 following allegations he exaggerated some of the company's technology. A 2018 video released by Nikola showed one of its electric trucks in motion on the road. The firm later admitted the truck was rolling downhill unpowered.

Lordstown’s chief executive and chief financial officer both stepped down over claims the firm misrepresented its order book.

Battery technology company QuantumScape (QS) was targeted by Scorpion Capital in an April 2021 report labelling the firm a “pump and dump SPAC scam” over its new battery technology. The firm has received funding from Volkswagen (VOW) and went public in a SPAC last year.

Rounding out the eight are EV charging firm ChargePoint (CHPT), battery pack maker Romeo Power (RMO), powertrain producer Hyliion (HYLN), fleet electrifier XL Fleet (XL), and car maker Fisker Inc (FSR).

Fisker Inc is founder Henrik Fisker’s second tilt at the electric car market. His first firm, Fisker Automotive, filed for bankruptcy in 2013.

Only three of the firms, XL Fleet, Romeo Power and ChargePoint have reported revenue, according to FT Alphaville.

The firms were added during the annual recalculation of the Russell 3000 index, which tracks the US equity market. The Russell 1000 sub-index includes large caps while small caps sit in the Russell 2000.

Boundaries are adjusted annually to account for market changes in the past year.

Both iShares and Vanguard offer US-listed ETFs to track the Russell 3000 and its sub-indexes, with the iShares Russell 1000 ETF (IWB), the Vanguard Russell 1000 ETF (VONE), the iShares Russell 2000 ETF (IWM), and the Vanguard Russell 2000 ETF (VTWO).

Following the June reconstitution, QuantumScape and ChargePoint jumped straight into the Russell 1000, while the remaining six joined the Russell 2000.

The first day of trading for the reconstituted index was Monday 28 June.

The firms stormed America’s corporate heights thanks to a string of multi-billion-dollar SPACS targeting the electric vehicle industry over the past 18 months.

SPACs swept across investment markets in 2020 with close to 250 SPACs raising more than US$83 billion.

They rode a wave of investor enthusiasm for the electric vehicle sector. In 2020 investor-darling Tesla (TSLA) returned 743 per cent and joined the S&P 500.

But enthusiasm has waned, and the eight electric vehicle firms have stumbled since their SPAC debuts. The eight are an average of 64 per cent off their 52-week highs, according to data from FT Alphaville.

Being included in a major index can add credibility to firms and increase investor interest because the passive funds which track the index will automatically add new additions to their holdings.

The results are mixed so far. Four of the eight are up as of Tuesday’s close in the US.

Elsewhere in the reconstitution, meme stock GameStop (GME) moved into the Russell 1000, as did big-data firm Palantir (PLTR) and fund manager Janus Henderson (JHG).

Avita Medical (RCEL), which is dual listed on the Nasdaq and the ASX, where it trades as AVH, joined the Russell 2000 for the first time.

Avita (ASX: AVH) closed Tuesday at $5.23, a 24 per cent discount on the fair value estimate of $7.

Disclosure: The author owns shares in Avita Medical.