R1T trucks on the assembly line at Rivian's electric vehicle plant in Normal on April 11, 2022.
Brian Cassella | Tribune news service | fake images
Once-popular electric vehicle startups, buoyed years ago by low interest rates, free cash and Wall Street optimism, are now scrambling to prove they can survive tougher market conditions. That's if they haven't already gone bankrupt.
The main topic of conversation: cash.
Executives of riviano automotive, Lucid Group and Nikola Corp. This week each detailed plans to cut costs as it tries to grow operations and make its first profits. Those efforts have ranged from job cuts and production shifts to supplier realignments and shifting priorities.
The fight comes as adoption of electric vehicles takes hold more slowly than many expected and after companies spent billions trying to bring vehicles to market to gain first-mover advantages in space segments. white.
The slowdown, as well as increased competition, has affected even the US electric vehicle leader. teslawhich is in the midst of a global restructuring that includes laying off approximately 10% of its workforce.
Wall Street analysts have referred to the current state of the EV market as an “EV winter,” the end of the so-called “EV euphoria” or, more optimistically, a temporary setback that manufacturers automobiles will need to overcome to make long-term profits. .
“Electric vehicle adoption in the United States likely entered an air pocket after having penetrated early adopters and specific regions,” Citi analyst Itay Michaeli wrote in a note to investors on Thursday. “The situation will not change overnight, but we see reason for optimism over the next 12 to 18 months.”
Rivian, Lucid, and Nikola stock performance over the past year.
Rivian has been on a cost-cutting mission for months. He cut staff, retooled his Illinois plant to increase efficiency and halted production at a new multimillion-dollar factory in Georgia. That latest move is expected to save more than $2.25 billion in capital expenditures, including the impact of starting production of Rivian's next-generation R2 vehicle at its current plant in Normal, Illinois.
Rivian reported $7.86 billion in cash, cash equivalents and short-term investments through the end of March, with more than $9 billion in total liquidity.
Lucid, for its part, ended the first quarter with approximately $4.6 billion in cash, cash equivalents and investments, with total liquidity of approximately $5.03 billion.
Lucid CEO Peter Rawlinson said he had never been “more optimistic” about the startup's future, despite notable demand issues, significant losses and capital needs. The company raised $1 billion from an affiliate of the Saudi Arabian Public Investment Fund, its largest shareholder.
“We have identified additional opportunities in cost of goods sold and will continue to focus on implementation and other areas to reduce costs. Over the long term, our technology will be a key driver of our gross margin,” Rawlinson told investors on Monday . “With scale, I think you'll see strong gross margins and efficiency will be the key factor.”
Rawlinson said the $1 billion illustrates the “continued confidence and strong support” of the Public Investment Fund, which owns about 60% of the company, according to FactSet.
Rivian and Lucid reported larger first-quarter losses than Wall Street expected, according to estimates compiled by LSEG.
In fact, Nikola slightly outperformed the Street with a loss of 9 cents per share for the first three months of the year, but revenue of $7.5 million was less than half what analysts compiled by LSEG were anticipating.
Unlike Rivian and Lucid, Nikola focuses exclusively on commercial vehicles rather than retail vehicles. Nikola Chief Financial Officer Thomas Okray said the company needs to reduce its costs while continuing to expand its sales, including possibly cutting prices for large customers in order to increase scale.
“We definitely need to optimize our cost structure. There's no doubt about it,” Okray told investors on Tuesday.
Nikola's cash reserves are much lower than those of Lucid and Rivian. The company's assets included $469.3 million at the end of the first quarter, consisting primarily of cash and cash equivalents of $345.6 million and truck inventory of $61.3 million.
Peter Rawlinson, CEO of Lucid Group, and Derek Jenkins, senior vice president of design and brand at Lucid Motors, sit in Lucid's Gravity electric SUV during the press day preview of the Los Angeles Auto Show in Los Angeles, California, USA, November 16, 2023.
David Swanson | Reuters
Shares of Rivian, Lucid and Nikola are trading near all-time or 52-week lows, and Nikola stock, which was once valued at more than Ford engine – trade for less than $1 per share. That puts the company at risk of being delisted from the Nasdaq, which executives are trying to avoid through a reverse stock split that must be approved by shareholders.
Rivian stock is down about 56% this year, but it remains the healthiest of the high-profile EV startups, most of which (aside from Rivian) went public through acquisition companies with special purpose, or SPAC, in the last five years.
Lucid shares have traded below $8 for most of the past year. Shares closed Thursday at $2.70, a drop of more than 60% in the past 12 months.
Other electric vehicle startups, such as Lordstown Motors and Electric Last Mile Solutions, have gone bankrupt, while Fisker is on the verge of filing for bankruptcy and has halted vehicle production.
less known canoo It is scheduled to report its first-quarter results on Tuesday. Tony Aquila, Canoo's CEO and executive chairman, during the company's fourth-quarter investor call last month said the company needs to continue raising capital and reducing costs.
“We have seen a very difficult market. We have adapted our disciplined approach to capital deployment by raising only the amounts of capital we need for each milestone, and we will continue to do so,” he said.
—CNBC Michael Bloom contributed to this article.
