It’s been a bad year so far for startups offering electric vehicles. It could be much worse.
The problem isn’t that EV sales aren’t growing. They are, despite a slowdown. The fact is, they are not growing as quickly as the automakers had predicted.
“The pace that all the automakers were expecting is not there,” former Ford CEO Mark Fields told CNBC Call girl on the street on Fridays. This, he added, is why we are seeing price cuts, increased inventories and increased incentives from electric vehicle manufacturers.
Early adopters of electric vehicles, he noted, have different purchasing criteria – such as innovation and environmental impact – than average buyers. But many of them have already purchased their vehicles, and now EV makers must win over cost- and convenience-conscious everyday consumers. For them, in addition to repair costs and resale value, charging times and inadequate charging infrastructure loom large.
“The consumer in the mainstream market will say, you know what, when you understand all these things, then I’ll really consider it,” Fields said. “But until then, I’ll stick with my internal combustion engine or, alternatively, as you’ve seen, hybrids, a really great solution for consumers right now.”
Sales of hybrid vehicles are soaring, to the benefit of Toyota, which was a pioneer of this technology and has long warned that the transition to electric vehicles will take longer than many believed. Ford has also enjoyed rising hybrid sales and plans to offer more such vehicles, even as it slows its electric vehicle plans due to lower-than-expected sales.
But Fields has no doubts about the transition to electric vehicles.
“The transition will absolutely happen, but it will take longer,” he said. And that, she added, presents a challenge for EV manufacturers that started in recent years with the expectation of faster adoption of EVs.
“With this longer path, many of them are going to end up in serious financial trouble, and you’re seeing that right now,” he said.
Electric vehicle startups in trouble
Wednesday, the Wall Street Journal reported that Tesla challenger Fisker had hired restructuring consultants to help it with a possible bankruptcy filing. The electric vehicle maker’s shares fell about 50% the next day. They recovered somewhat on Friday, after Fisker said he “often” works with outside consultants and that he was focused on trying to partner with a major automaker, which Reuters reported earlier this month could be Nissan .
But Fisker’s market capitalization stands at $97 million, down from $4.1 billion in 2021. It faces delisting from the New York Stock Exchange, and last month it cut jobs and warned that may not be able to continue operating.
Meanwhile, Amazon-backed Rivian recently announced that it will delay production plans in Georgia to save billions of dollars, helping to ease concerns that it lacks sufficient funds to complete the launch of its next model, the R2 .
This followed Tesla CEO Elon Musk suggesting last month that Rivian, which had just announced layoffs, only had about six quarters before bankruptcy. “They need to cut costs massively and the executive team needs to live in the factory otherwise they will die,” he posted on X.
Rivian’s market capitalization has plummeted from its 2021 peak of $153 billion to the current $10.8 billion.
As for Saudi Arabia-backed Lucid, its market capitalization has plummeted from a peak of $91.4 billion in 2001 to $6.2 billion today. Last month, it said it would build only about 9,000 electric vehicles this year, a far cry from the 90,000 it predicted for 2024 just three years ago.