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The logic was sound. The world will need far more batteries than it can produce today; with the right patch of land, and reputable technology, it would be almost impossible not to make a killing. 

This was the founding principle of Britishvolt, the troubled start-up that is now at risk of a second ignominious collapse in the space of a year, after one of its former employees started legal action in an attempt to reclaim months of unpaid wages. 

The global battery rush and broader electric vehicle boom are still in full tilt, attracting a glut of businesses large and small. But we are at that stage in the cycle of innovation where some of the flotsam is coming to the surface. The wider environment of higher rates and deeper investor scrutiny has exposed those with specious business plans or unrealistic ambitions.

Multiple EV-related companies made stock market debuts in the recent boom in special purpose acquisition companies, listed corporate vehicles which raise funds and then seek businesses to acquire. Of the more than 30 that listed in the US, only a handful have not issued a warning they could run out of cash within a year.

Inevitably, some cases of outright fraud have come to light. During the boom, a maxim did the rounds at hedge funds that bet against stocks: penny frauds had suddenly become billion-dollar frauds. 

Take the case of Nikola, the EV maker made famous when one of its trucks was rolled down a hill for a demonstration video. Its founder Trevor Milton is now awaiting sentencing after being convicted of defrauding investors by misleading them about Nikola’s technology to drive up the company’s share price. At one stage, Nikola’s market value ranked higher than General Motors until a hedge fund asked too many questions and brought it all crashing down.

Nikola limps on, just, after agreeing to pay $125mn to settle charges that it defrauded investors by misleading them. In August, the company had to recall all 209 of the trucks it had delivered to repair a potential battery pack flaw after a June fire in one of its vehicles.

It was always going to be the case that not all of the plethora of businesses hoping to get into EVs would make it. That, of course, is part of creative destruction, a polite term for the Darwinian process of bad companies going under to make way for better rivals or technology. The dotcom boom was followed by a deep cull of the more speculative, fraudulent and poorly conceived internet companies. From the wreckage emerged winners such as Google and Facebook.

And some bad actors were to be expected among those that rushed into an EV market awash with green-tinted gold, hoping to ride on the coat-tails of Tesla’s valuation, or the promise of government subsidies.

But that does not mean we cannot learn lessons from this cycle. One is the role that grown-ups should play in the start-up room.

Shareholders may have partly bought the Nikola hype because the company’s investors included Bosch and its board boasted a former GM executive. In a market full of grand visions and talk of saving the planet, investors looked for an external seal of authenticity. It was assumed that someone must have done their homework. 

Likewise, the lofty presence of Henry Kissinger on the board of Theranos and Rupert Murdoch on its investor roster may have offered a reassuring balm of acceptability to the fraud-ridden, failed blood-testing start-up.

But the great and the good can be deceived or misled by fraud like anyone else, as Kissinger and Murdoch were. And there is a temptation to cry “caveat emptor” at retail investors. As new booms emerge, one might hope that recent experiences might encourage the “grown-ups” to at least think twice and do more due diligence before backing another moonshot. 

The heady charge towards artificial intelligence is clearly one area ripe for new, innovative companies. Some will succeed and potentially change the way we live, while many others, both legitimate and not, will fail. Likewise it is hard to imagine that every single business scuttling to the waterhole of the investment boom offered by the US Inflation Reduction Act is without fraud. Whatever the EU response is, it will face the same issue. Subsidies draw scammers. There’s a Yorkshire saying: “Where there’s muck there’s brass”. Here, then, is another: Where there’s a gold rush, there are grifters.

peter.campbell@ft.com