Factbox: What are EV startups doing to ride out weak demand?
18/06/2024 18:50
(Updates throughout)
June 18 (Reuters) - U.S. electric vehicle startups are
turning to cheaper models, slamming the brakes on their
production ramp-up plans and laying off employees to navigate a
slump in demand due to steep borrowing costs and high repair
expenses for the vehicles.
Fisker filed for bankruptcy protection on Monday, becoming
the latest electric-vehicle startup to succumb to fundraising
difficulties, production hurdles and challenges with
distribution.
Here's how EV startups are trying to steer through the
demand weakness:
FISKER FSR.N
Fisker is looking to sell its assets and restructure debt,
hurt by rapid cash burn to deliver its Ocean SUVs in the United
States and Europe.
Its Ocean SUV, is being investigated by the U.S.
National Highway Traffic Safety Administration for
safety-related incidents.
The company recalled more than 18,000 cars in North
America and Europe earlier this month due to faulty software and
non-compliance with safety standards.
Fisker issued a going-concern warning in March and said it
would lay off 15% of its staff and pause investments on future
projects until it secures partnership with a manufacturer.
Reuters has reported that Nissan 7201.T is in advanced
talks to invest in Fisker in a deal that could provide the
Japanese automaker with access to an EV truck while giving the
struggling startup a financial lifeline.
Demand has been weak for Fisker's flagship Ocean electric
SUV. Despite producing more than 10,000 vehicles in 2023, the
company delivered only about 4,700.
The company ended 2023 with cash and cash equivalents of
$325.5 million, compared with $736.5 million in 2022.
RIVIAN AUTOMOTIVE RIVN.O
Earlier in June, Rivian announced the second generation
of its R1T pickup truck and R1S SUV with new drive units and
other components to boost efficiency and reduce costs.
In March, Rivian introduced its smaller, less expensive
electric R2 SUVs and R3 crossovers with plans to start producing
the R2 at its existing U.S. factory to hasten deliveries in the
first half of 2026.
The move came weeks after the company said it was planning a
weeks-long production shut down this year to upgrade its
factories and cut costs.
The company expects to produce 57,000 vehicles in 2024, well
below estimates of 81,700 units. That is also far below the
estimated 1.8 million vehicles Tesla delivered in 2023.
After shying away from cutting the price of its vehicles
last year, Rivian in February introduced lower-range options for
its existing cars that are $3,100 cheaper.
The startup has focused on reducing its cash burn by
re-negotiating supply contracts and building some components
in-house. Rivian posted cash and cash equivalents of $5.98
billion for the first quarter, compared with $7.86 billion in
the fourth quarter.
LUCID GROUP LCID.O
Lucid Group said it will reduce its workforce in the United
State by 6% in May as slower-than-expected growth in demand for
electric vehicles hampers its path to profitability.
Lucid, backed by Saudi Arabia's Public Investment Fund as
its largest investor with a stake of more than 60%, is set to
start production of a more affordable mid-size car in late-2026
and its Gravity SUV this year, to attract a larger customer
base.
The company has missed analysts' expectations for revenue
for six straight quarters. It has slashed the price of the Lucid
Air Pure to $69,900 and is including two years of free scheduled
maintenance and charging allowance as an incentive.
Lucid in November unveiled its Gravity SUV that will start
under $80,000 and is expected to go into production late this
year.
The company has said it aims to start producing a cheaper
midsize vehicle in late 2026 to compete with Tesla's Model 3 and
Model Y vehicles, with a price point of around $50,000.
Lucid ended the first quarter with cash and cash-equivalents
of $2.17 billion, compared with $1.37 billion in the fourth
quarter of last year.
NIKOLA NKLA.O
Nikola is pivoting to big rigs powered by hydrogen, after
some of its battery-electric trucks caught fire in August and
forced a recall.
The company expects up to $170 million in truck revenue for
2024 with a target to sell 450 units this year, including its
hydrogen fuel cell electric trucks.
Nikola's cash and cash equivalents at the end of the first
quarter stood at $345.6 million, down from $464.7 million in
December.
(Reporting by Priyanka.G and Akash Sriram in Bengaluru; Editing
by Sriraj Kalluvila and Maju Samuel)
((Priyanka.G@thomsonreuters.com;))