By John Hugh DeMastri for the Daily Caller News Foundation | May 8, 2023
American electric vehicle startup companies are burning through cash ahead of their first quarter earnings reports this week, as pricing wars and production woes leave them struggling to stay afloat, according to Reuters.
Electric vehicle startups took a stock market beating in 2022 despite EV sales soaring worldwide in 2022, as the startup brands — which typically focused on the luxury market — got undercut by traditional automakers and price cuts from fellow luxury startup Tesla. Amazon-backed startup Rivian is expected to see its reserves slide by 6.8% to $10.78 billion, according to Reuters.
Rivian missed investors’ expectations for both production and sales, contributing to an expected loss of $1.75 billion in the first quarter, slipping from the $1.59 billion loss the company posted the same time last year, according to Reuters.
Luxury startup Lucid Group — which spent $3.3 billion from its reserves to end 2022 with just shy of $5 billion — is expected to lose another 36% of its reserves, Reuters reported. The company delivered 1,406 vehicles in the first quarter, just 8 more than it sold in the third quarter of 2022, falling well short of investors’ expectations, according to Nasdaq.
California-based Fisker is expected to post a 5% decline, while Arizona’s Nikola is expected to report a 15% decline when the two companies issue their first quarter earnings reports Tuesday, Reuters reported. Nikola has issued “going-concern warnings” in recent months, a sign that the company is unsure it will be able to pay all of its bills within a year.
“Any company that’s losing money with a low valuation is toast and EVs are no exception,” Thomas Hayes, chairman of hedge fund Great Hill Capital, told Reuters. “I think it is just a slow bleed. Maybe they’ll get lucky and some of their technologies maybe bought by bigger players.”
While EV startups in the U.S. are struggling, Chinese companies have grown to dominate their domestic market, putting China on pace for 50% of new vehicles sales to be all-electric by 2025. The Biden administration’s Environmental Protection Agency (EPA) has set a target of roughly two-thirds of all new vehicle sales in the U.S. to be all-electric by 2032, off the back of strict new tailpipe emissions.
Rivian declined to comment, with a spokesperson citing a “quiet period” ahead of its Tuesday earnings report. Lucid Group and Nicola referred the Daily Caller News Foundation to its upcoming earnings report.
Fisker did not immediately respond to a DCNF request for comment.
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