R1T trucks on the assembly line at the Rivian electric vehicle factory in Normal on April 11, 2022.
Brian Casella | Brian Casella Forum News Service | Getty Images
Fueled by low interest rates, free cash and bullish sentiment on Wall Street a few years ago, electric vehicle startups that were once hot are now scrambling to prove they can survive tougher market conditions. That’s if they haven’t gone bankrupt yet.
Their main topic: cash.
senior executives rivian cars, sobriety group and Nikola Corporation This week, both companies detailed plans to cut costs while trying to expand their operations and make their first profits. These efforts range from layoffs and production adjustments to supplier rearrangements and shifting priorities.
The scramble comes as the adoption of electric vehicles has been slower than many expected and companies have spent billions trying to bring vehicles to market to gain first-mover advantage in white space.
Economic slowdown and increased competition are affecting even U.S. EV leaders Teslathe company is undergoing a global restructuring that includes about 10% of its workforce.
Wall Street analysts are calling the current state of the EV market an “EV winter,” the end of the so-called “EV craze,” or, more optimistically, a temporary pullback that automakers need to overcome to reap long-term gains.
“U.S. EV adoption is likely to struggle after penetrating initial adopters and specific geographies,” Citi analyst Itay Michaeli wrote in a note to investors on Thursday. “Things will not change overnight, But we think there is reason to be optimistic over the next 12-18 months.”
Rivian, Lucid and Nikola stock performance over the past year.
Rivian has been on a cost-cutting mission for months. The company has laid off workers, reorganized its Illinois factory to improve efficiency and suspended production at a new multibillion-dollar plant in Georgia. The final measure 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 as of the end of March, with total liquidity exceeding $9 billion.
Lucid ended the first quarter with approximately $4.6 billion in cash, cash equivalents and investments, and total liquidity of approximately $5.03 billion.
Lucid CEO Peter Rawlinson said that despite clear demand issues, significant losses and capital needs, he has never been “more optimistic” about the startup’s future. The company raised $1 billion from an affiliate of its largest shareholder, Saudi Arabia’s Public Investment Fund.
“We have identified additional opportunities in cost of sales and we will continue to focus on implementation and further cost reduction areas. In the long term, our technology will be a key driver of gross margin,” Rawlinson told investors on Monday. “As you gain scale, I believe you’ll see strong gross margins, with efficiency being the key driver.”
Rawlinson said the $1 billion illustrates the “continued confidence and unwavering support” of the Public Investment Fund, which owns about 60% of the company, according to FactSet data.
Rivian and Lucid both reported first-quarter losses that exceeded Wall Street expectations, according to estimates compiled by London Stock Exchange Group (LSEG).
Nikola actually beat Wall Street slightly, losing 9 cents a share in the first three months of the year, but revenue of $7.5 million was less than half what LSEG analysts expected.
Unlike Rivian and Lucid, Nikola focuses on commercial vehicles rather than vehicles for retail customers. Nikola Chief Financial Officer Thomas Okray said the company needs to reduce costs while continuing to expand sales, including possibly lowering prices for large customers to expand scale.
“We absolutely need to optimize our cost structure. There’s no question about it,” Oakley told investors on Tuesday.
Nikola’s cash reserves are much smaller than those of Lucid and Rivian. The company ended the first quarter with assets of $469.3 million, consisting primarily of $345.6 million in cash and cash equivalents and $61.3 million in truck inventory.
On November 16, 2023, at a press conference at the Los Angeles Auto Show in Los Angeles, California, USA, Lucid Group CEO Peter Rawlinson and Lucid Motors Senior Vice President of Design and Brand Derek Jenkins sat On the rear trunk of the Lucid Gravity electric SUV.
David Swanson | Reuters
Rivian, Lucid and Nikola are all trading near 52-week or all-time lows, with Nikola’s stock price exceeding Ford – Trading at less than $1 per share. That puts the company at risk of delisting from Nasdaq, a risk executives are trying to avoid through a reverse stock split that requires shareholder approval.
Rivian’s stock is down about 56% this year, but it remains the healthiest of high-profile EV startups, most of which (except Rivian) have gone public through special purpose acquisition companies (SPACs) in the past five years.
Lucid’s stock has traded below $8 for much of the past year. The stock closed at $2.70 on Thursday, down 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 suspended vehicle production.
little known Kanu First-quarter results are scheduled to be released on Tuesday. Canoo Chief Executive and Executive Chairman Tony Aquila said during the company’s fourth-quarter investor call last month that the company needs to continue to raise capital and cut costs.
“We have seen a very difficult market. We have adapted a disciplined approach to capital deployment to raise only the capital required for each milestone, and we will continue to do so,” he said.
—CNBC Michael Bloom contributed to this article.
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