The company, which was previously worth more than industry giant General Motors, said on Monday that authorities had requested “the production of certain documents” related to an investigation by the SEC, adding it was cooperating fully.

Shares plunged by over 15% in early trading, as the company indicated the probe seemed linked to forecasts made as part of its reverse merger with Churchill Capital Corp. IV, a special purchase acquisition company (SPAC), first announced in February. Shares in Lucid later rebounded from the lows, trading down 9% at $42.85 each by mid-morning.

“The investigation appears to concern the business combination between the company (formerly known as Churchill Capital Corp. IV) and Atieva Inc. and certain projections and statements,” CFO Sherry House said in a regulatory 8-K filing with the SEC, without specifying further.

Lucid was once known as Atieva, and its battery supply business still operates under that brand name. 

This marks a tumultuous turn of events for a company that had overtaken Detroit’s Big Three carmakers in terms of market capitalization. It also raises further questions about the SPAC model amid cautionary examples that include Nikola and Lordstown Motors.

The news comes after reports of another probe of a high-profile EV maker. On Monday, Reuters reported that the U.S. securities regulator had opened an investigation into whether Tesla failed to properly notify its shareholders and the public of fire risks associated with solar panel system defects over several years under its SolarCity business. Tesla dipped 3.5%, falling below the $1 trillion market cap it achieved in October following a sales deal with Hertz.

Along with cryptocurrencies, non-fungible tokens, and meme stocks, listings via blank-check SPACs have become one of the hottest fads on Wall Street.  

Unlike the complicated and more exacting route of listing via an initial public offering, these reverse mergers offer unique advantages for startups.

For one, founders can effectively name their price for a deal, removing uncertainty over the valuation process inherent in a traditional IPO, where investors subscribe via a book building.

Secondly, the disclosure thresholds tend to be more lax, as no prospectus need be filed. As a result, companies with riskier business plans tend to favor this facilitated road map to market. 

The model has been a popular route for EV makers. Polestar, the electric-vehicle manufacturer controlled by Volvo Cars and China’s Zhejiang Geely, is currently seeking to list via a SPAC that would value the company at $20 billion. Ahead of a series of meetings with investment firms including Gerber Kawasaki, CEO Thomas Ingenlath told Reuters he expected business to boom with sales volumes hitting 29,000 this year before growing 10-fold by 2025.

Lucid’s own SPAC deal initially ran into resistance but was secured thanks to heavy interest from retail investors, according to CEO Peter Rawlinson. Small shareholders bought into the equity story of an EV maker backed by Saudi Arabia’s own sovereign wealth fund and aiming to outperform Tesla in the luxury segment.

The probe comes after a string of good news for the EV maker and Rawlinson, who is the former chief engineer behind the Tesla Model S.

In September, U.S. authorities awarded the Lucid Air Grand Touring an EPA-certified 516-mile electric range, the most of any electric vehicle on the road by far. InsideEVs reviewer Tom Moloughney also verified the model as the fastest-charging car on the market thanks to its 900-volt-plus onboard electrical system.

Last month, its debut Dream Edition launched to strong reviews, with the Wall Street Journal hailing the arrival of a “worthy Tesla competitor at last.”

The day after Motor Trend crowned it Car of the Year, Lucid’s stock shot up 24%, hiking its value to over $91 billion, briefly making the company more valuable than both Ford and General Motors.