EV companies Rivian, Lucid and others compile cash and reassure Wall Street
Previously thriving electric vehicle startups, buoyed by low interest rates, abundant capital, and Wall Street’s favorable outlook, are now hustling to demonstrate their resilience amid challenging market conditions, with some even declaring bankruptcy.
Prominent on their agenda is cash conservation.
Leaders from Rivian Automotive ,Lucid Group and Nikola Corp have outlined their strategies to decrease expenses while scaling their operations and striving to register their maiden profits. These actions span job reductions, alterations in production, supplier realignments, and priority shifts.
This urgency arises as the adoption of EVs is slower than anticipated and companies spent billions in a bid to swiftly introduce vehicles into the market to secure an edge in untapped segments.
This deceleration coupled with heightened competition has also impacted Tesla, the U.S. EV market leader, prompting it to undergo a global restructuring involving workforce downsizing by approximately 10%.
Some perceive the current status of the electric vehicle marketplace as an “EV winter” or a pause from the EV euphoria. Yet, others view it as a temporary setback that automakers need to navigate for long-term benefits.
Rivian has been on an expense-trimming spree, cutting down staff, enhancing its Illinois plant’s efficiencies, and halting the construction of a prospective multibillion-dollar factory in Georgia. This last step is likely to save over $2.25 billion in capital expenditure, also factoring in the launch of Rivian’s next-gen R2 vehicle at its existing plant in Normal, Illinois.
Lucid ended Q1 with roughly $4.6 billion in cash, cash equivalents, and investments, and a total liquidity of approximately $5.03 billion. Lucid CEO Peter Rawlinson maintains an optimistic outlook about the startup’s future despite notable demand challenges, significant losses, and capital requirements.
Rivian and Lucid recorded wider Q1 losses than Wall Street’s predictions, as per estimates by LSEG.
Nikola, primarily focusing on commercial vehicles, registered a 9-cent per-share loss in the first quarter, slightly beating Wall Street’s expectations. However, its revenue of $7.5 million was lesser than half of what analysts compiled by LSEG expected.
With cash reserves far lower than Lucid and Rivian, Nikola’s CFO Thomas Okray acknowledged the company’s need to trim its costs while bolstering its sales.
Shares of Rivian, Lucid, and Nikola are hovering around 52-week or all-time lows. Nikola’s stock, once valued higher than Ford Motor, is trading for less than $1 per share, threatening its listing on the Nasdaq.
Rivian’s shares have dipped by about 56% this year but are faring better than most high-profile EV startups, most of which went public via SPACs in the past five years.
Other EV startups like Lordstown Motors and Electric Last Mile Solutions have filed for bankruptcy, while Fisker is on the verge of bankruptcy and has stalled vehicle production.
Canoo, a lesser-known company, is set to report its Q1 results shortly. Canoo CEO and executive chairman Tony Aquila reiterated the need to continue raising capital and reducing costs in the company’s last investor call.
