An R1T truck on the assembly line at the Rivian electric vehicle plant in Normal, April 11, 2022.
Brian Casella | Tribune News Service | getty images
Electric vehicle startups, once hot a few years ago thanks to low interest rates, free cash and a strong Wall Street, are now scrambling to prove they can survive in tougher market conditions. That is if they aren’t already broke.
The most important topic they talk about is cash.
Executives rivian Automobiles, Lucid Group and Nikola Corporation This week, we created detailed plans to scale each business and generate our first revenue while reducing costs. These efforts ranged from workforce reductions and production changes to supplier reallocation and shifting priorities.
The scramble comes after EV adoption has been slower than many expected and companies have spent billions of dollars to bring vehicles to market to gain a first-mover advantage in a gaping segment.
Of the three automakers, Rivian is in the strongest cash position as EV adoption struggles. The company said it has enough cash on hand to complete a large-scale R2 launch in early 2026.
The economic slowdown and increased competition have also impacted U.S. EV leaders. teslaGlobal restructuring is in full swing, with about 10% of the workforce being laid off.
Wall Street analysts have referred to the current state of the electric vehicle market as an “EV winter,” the end of EV euphoria or, more optimistically, a temporary setback that automakers will have to overcome for their long-term benefit.
“U.S. EV adoption is likely to enter air pockets after penetration among early adopters and specific regions,” Citi analyst Itay Michaeli wrote in an investor note Thursday. “Things won’t change overnight, but I see reasons for optimism over the next 12 to 18 months.”
How Rivian, Lucid and Nikola stocks have performed over the past year.
Rivian has been on a cost-cutting mission for months. It has cut staff, reorganized its Illinois plant to increase efficiency and halted construction of a multibillion-dollar new plant in Georgia. This final 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 total liquidity of more than $9 billion.
Lucid ended the first quarter with cash, cash equivalents and investments of approximately $4.6 billion and 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 Saudi Arabia’s Public Investment Fund, its largest shareholder.
“We have identified additional opportunities in cost of goods sold and will continue to focus on additional areas for implementation and cost savings. Over the long term, our technology will continue to be a key driver of gross margin,” Rawlinson told investors on Monday. He said. He said, “We believe that as we scale we will achieve strong gross margins, with efficiency being key.”
Rawlinson said the $1 billion shows the “continued confidence and unwavering support” of the Public Investment Fund, which owns about 60% of the company, according to FactSet.
Rivian and Lucid both reported bigger first-quarter losses than Wall Street expected, according to estimates compiled by LSEG.
Nikola actually beat the Street slightly, posting a loss of 9 cents per share in the first three months of the year, but its $7.5 million in revenue was less than half what analysts compiled by LSEG had expected.
Unlike Rivian and Lucid, Nikola focuses solely on commercial vehicles, not vehicles for retail customers. Nikola CFO Thomas Okray said the company must lower costs while continuing to expand sales, including lowering prices for larger customers, to build scale.
“We definitely need to optimize our cost structure. There’s no question about that,” Okray told investors Tuesday.
Nikola’s cash reserves are much lower than Lucid and Rivian’s. The company’s assets included $469.3 million at the end of the first quarter, consisting primarily of $345.6 million in cash and cash equivalents and $61.3 million in truck inventory.
Lucid Group CEO Peter Rawlinson and Lucid Motors Senior Vice President of Design and Brand Derek Jenkins at the press day preview of the Lucid Gravity Electric at the Los Angeles Auto Show held in Los Angeles, California, USA on November 16, 2023. Sitting in the trunk of an SUV.
David Swanson | Reuters
Shares of Rivian, Lucid, and Nikola are all trading near 52-week or all-time lows, with Nikola’s stock at one point ford motor – Trading for less than $1 per share. This puts the company at risk of being delisted from Nasdaq, which management is trying to avoid through a reverse stock split, which would require shareholder approval.
Rivian’s stock is down about 56% this year, but it remains the healthiest of the big-name EV startups. Most (except Rivian) have gone public through special purpose acquisition companies (SPACs) in the past five years.
Lucid’s stock has traded below $8 for most of the past year. The stock closed Thursday at $2.70, down more than 60% in the past 12 months.
Other EV startups, including Lordstown Motors and Electric Last Mile Solutions, also went bankrupt, and Fisker also came close to filing for bankruptcy and halted vehicle production.
less known canoe The company is scheduled to announce its first quarter results on Tuesday. Canoo CEO and Chairman Tony Aquila said during the company’s fourth-quarter investor call last month that the company must continue to raise capital and cut costs.
“We have seen a very challenging market. We have adjusted our disciplined capital deployment approach by raising only the amount of capital needed for each milestone and will continue to do so,” he said.
—CNBC’s michael bloom Contributed to this article.
