What happened

Shares of RMG Acquisition (NYSE:RMG) and Tuscan Holdings (NASDAQ:THCB) -- two special purpose acquisition companies (SPACs) that are merging with electric-vehicle (EV) battery makers -- continued a recent surge today, up 4% and 20%, respectively, as of 1:25 p.m. EST. 

Shares of another EV SPAC, Hennessy Capital (NASDAQ:HCAC), were also moving higher, up 10%. But shares of GreenPower Motor (NASDAQ:GP) an EV company that has been on the decline, were down another 10% after a short-seller report said the stock should be down 90% based on its research. 

A red down arrow and an up green arrow over a stock sheet

Image source: Getty Images.

So what

White Diamond Research put out a 32-page report yesterday, accusing GreenPower Motor of misleading investors in a number of ways, and saying shares are worth no more than $1.50, compared with the approximately $20 current price. White Diamond doesn't disclose in the report whether it holds a short position in GreenPower Motor. 

The drop in GreenPower shares is in contrast to the recent surge for stocks in the overall EV sector. RMG and Tuscan are combining with EV battery technology companies Romeo Power and Microvast, respectively. Microvast's battery systems are already installed in over 28,000 vehicles, according to Tuscan. Romeo Power said that it had more than $300 million in contracted revenue at the time it announced its intent to go public through its merger with RMG in October. 

Shares of RMG and Tuscan are each up more than 30% in just the last five days. Shares of Hennessy, which is combining with specialty EV maker Canoo, have soared even more, gaining 68% since last week. 

RMG Chart

RMG data by YCharts

Now what

The accusations made against GreenPower Motor reinforce that investors need to research the businesses behind these fledgling EV companies that investors have been bidding up. GreenPower hasn't responded as of this writing, but the research report says the company isn't actually an electric-bus maker, but rather imports the product from China. White Diamond further said that the company rebrands the vehicles and sells them for highly marked-up prices, falsely claiming they are "buy America compliant," which affects eligibility for state subsidies. 

Whether White Diamond's report is accurate or not will likely come out eventually. But GreenPower investors have already moved shares up more than 1,000% year to date. As many stocks in the EV industry continue to soar, investors should be sure to do their homework, and not just try and get into the next hot sector.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.