Auto File: EV startup shakeout

Nu Ride

09/08/2023 15:00

Nick Carey
European Autos Correspondent 
    nick.carey@thomsonreuters.com    
    
Greetings from London, where the sun is making a rare appearance
today. While most of the world experienced the hottest July on
record, Britain has seen quite the opposite, with weather just
like the summers of my childhood – wet and chilly.  
    
The contrast in the fate of electric vehicle startups is also
just as stark. Buoyed by investors seeking the next Tesla in the
era of cheap money, a bevy of EV startups went public a couple
of years ago.  
Touting big plans and boasting hefty market caps, the harsh
reality is that mass producing vehicles is difficult and
expensive. Investor interest has waned and some startups like
Lordstown Motors have filed for bankruptcy, while others like
Arrival or Canoo have warned they may run out of cash.  
Yet as we will see from the news in autos world today, for some
EV startups there are hopeful signs they could be on the road to
sunnier weather: 
    
    Ups and downs in EV startup world 
    Dump that contract in the trash 
    Li Auto wants to overtake Mercedes, BMW and Audi 
 
    Hope for Rivian and Lucid, but Proterra hits the skids 
After struggling with cash burn and production issues, EV
startups Rivian and Lucid provided investors some reassurance
this week by saying they have enough cash to make it to 2025.  
Lucid received a lifeline in June with a $3 billion stock
offering led by its main shareholder, Saudi Arabia's Public
Investment Fund, which has provided it with the kind of funding
other startups can only dream of at this stage.  
While reporting results, Lucid not only stuck to its annual
production target but said it has cash to start making an SUV
next year and enough left over to make it into 2025.
     
Rivian, which has fought to conserve cash, upped its full-year
production forecast and said it has sufficient cash to see it
through 2025. After taking a hammering, the company’s stock is
up 35% year-to-date as it works its way through supply chain and
production challenges. 
    
But EV startup Proterra, which makes electric buses and battery
packs, filed for Chapter 11 bankruptcy protection on Monday.
When Proterra hit the market in 2021, it was valued at $1.6
billion, but as CEO Gareth Joyce noted the company “faced
various market and macroeconomic headwinds that have impacted
our ability to efficiently scale." 
 
    Essential Reading: 
    What’s cheaper? Charging a U.S. EV, or filling your tank? 
    Stampede for U.S. chip funding 
    Tough sell for North Carolina Lithium mine  
 
    UAW trashes Stellantis’ contract offer 
Contract talks between the Detroit Three and the United Auto
Workers (UAW) have for decades been steeped in symbolism,
especially the handshake between union officials and automaker
executives before the hard slog at the negotiating table
commences.  
But the UAW skipped the handshakes this year and union president
Shawn Fain opted for an entirely different symbolic act on
Tuesday when he angrily tossed contract proposals from
Stellantis in a trash can, citing numerous concessions the
automaker seeks from workers. 
During an online chat, Fain called Stellantis’ proposed cuts to
health-care coverage, fewer vacation days for new hires,
employer cuts to 401(k) contributions a “slap in the face” and
said they belong in the trash.  
The UAW meanwhile has a list of demands that includes pay raises
of more than 40% over four years. 
This year’s talks were always expected to be tough. Fain’s trash
can talk this week shows just how much distance remains between
both sides. 
 
    Li Auto chases after Mercedes, BMW and Audi in China 
Up and coming Chinese automaker Li Auto plans to outsell
BMW, Mercedes-Benz and Audi in China in 2024 as it speeds up the
rollout of new models and ramps up car production. 
CEO Li Xiang told investors the company wants to be the “No.1
premium car brand in China in 2024 in terms of sales.” The
company will launch four new models next year including three
EVs, he said. 
Western automakers have come under pressure from rising Chinese
brands, who are swift to come to market with new models laden
with consumer-friendly software. A price war started by Tesla in
January has also put pressure on Chinese EV startups like
Nio and Xpeng. 
 
    Fast Laps 
    Tesla finance chief Zachary Kirkhorn stepped down on Monday,
surprising analysts who considered the company veteran of 13
years as a possible successor to CEO Elon Musk. 
    Japan's Honda reported a 78% jump in quarterly profit on
Wednesday, boosted by rising sales, especially in the key U.S.
market, with an added lift from a weaker yen. 
    Lyft  shares dropped nearly 7% in extended trading on
Tuesday as the ride-sharing company signalled it would double
down on competitive pricing to catch up with larger rival Uber. 
    U.S. auto safety regulators said on Tuesday they were
investigating whether 1.1 million older Ram 1500 pickup trucks
should be recalled for power steering loss issues. 
    
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