Even though a record 1.2 million electric vehicles were sold in the United States last year, the reality of the electric vehicle market does not meet industry expectations. Electric vehicle growth has slowed this year in the United States, and as evidenced by recent moves by several companies, both auto giants and startups are adapting to the road ahead.
For example, electric vehicle industry leader Tesla on Saturday warned investors of “significantly lower” growth after cutting prices of its electric vehicles in a bid to boost demand last year. Ford is delaying a planned $12 billion in investments in electric vehicles, delaying some planned electric vehicle launches and shifting its strategy toward new, more affordable electric vehicles.
Meanwhile, startups like Rivian and Lucid have not been able to pivot as quickly as Tesla or Ford, even though both of these startups have wealthy backers (Amazon has a 17% stake in Rivian and the Saudi Arabian Public Investment Fund owns 60%). of Lucid, according to Bloomberg). On Wednesday, these relatively new companies predicted they would produce electric vehicles at numbers below analysts’ estimates.
According to Reuters, Rivian expects to produce 57,000 vehicles in 2024, much lower than analysts’ estimates of 81,700 electric vehicles and lower than the 57,232 electric vehicles produced last year.
An R1T model electric truck on the pilot production line at Rivian headquarters in Irvine, California, U.S., Wednesday, July 5, 2023. Photographer: Alisha Jucevic/Bloomberg via Getty Images
Lucid expects to produce 9,000 units this year, even as Wall Street estimates called for 22,594 electric vehicles. Lucid predicted it would earn ten times that amount (90,000 units) by 2024 when it went public three years ago.
Employees at electric vehicle startups are dealing with the consequences of lower profit margins and lower-than-expected demand. Rivian cut its workforce by 10%; last year the company lost about $2 billion. Polestar, another electric vehicle startup, cut 450 jobs globally last month.
“For these automakers, investors want to see demand,” David Wagner, portfolio manager at Aptus Capital Advisors, told Fortune.
While the all-electric market may slow, sales could continue to rise. Cox Automotive expects electric vehicles to make up 10% of the U.S. auto market by the end of 2024, up from 7.6% last year.