In any business society, there is no shortage of success and failure stories.
Tesla, an once-struggling start-up, has leapt to become the world’s most valuable carmaker, bringing together a large number of imitators.
However, many new car startups are on the brink of survival, struggling for a glimmer of survival.
These startups realized their dream of going public in 2020 and 2021 through mergers with special purpose acquisitions (SPAC).
However, things went against one’s wishes, and the result was not what people wanted.
as a result, many enterprises went bankrupt and the loss of cash was amazing.
For those companies that are still in operation, the road to profit is complicated and confusing.
Lordstown Motors and Arrival unfortunately filed for bankruptcy protection, while Fisker got into trouble, as if he had entered the “intensive care unit”.
Although Rivian and Lucid seem to be in a better position, they lost more than $2.
1 billion in the most recent quarter.
What we are witnessing is more like the demise of a new biological species than industry consolidation.
” This is what an industry insider commented.
In the past year, electric car startups have begun to realize the complexity and huge capital requirements of making fully functional electric vehicles.
In addition, high interest rates and inflationary pressures persist.
Nowadays, the situation is getting more and more serious.
Even Tesla, an industry leader, has had to slash prices to cope with the cooling demand in the electric car market.
This triggered a warning from Tang Weishi, chief executive of Stellantis, that it could trigger a “race to the bottom” across the industry.
Now, traditional carmakers have begun to take the production of electric vehicles seriously.
In this series of anachronistic challenges, emerging automakers are suffering from the double whammy of a decline in early users and a decline in growth.
Many new electric car companies had expected to have expanded by this time, but industry insiders admitted: “No one expected that the road to success would be so bumpy.
” Nikola, Lordstown Motors, Canoo, Faraday Future, Fisker and Lucid all use SPAC as a springboard to raise money from retail and institutional investors.
Many of them have promised a timetable for rapid development and brilliant success similar to Tesla, but the reality is far more grim than expected.
In an investor report in 2021, Lucid executives ambitious predicted that they would deliver up to 90, 000 cars over the next year and expected to generate a sizeable revenue of $9.
9 billion.
However, in its most recent financial report, Lucid’s forecast was slashed to produce only 9000 cars this year.
Although Lucid’s first-quarter loss fell to $685 million from $780 million in the same period last year, and revenue rose from $149 million to $173 million, it was a far cry from the expected revenue of $9.
9 billion.
In response, a spokesman for Lucid explained in an email that great changes have taken place in the global environment since the initial forecast, including historic supply chain disruptions, macroeconomic downturns and rising interest rates.
These factors are beyond the control of Lucid and have a far-reaching impact on performance.
At the same time, other electric car startups face similar difficulties.
Lordstown Motors, a maker of electric pickups, for example, filed for bankruptcy last year.
Fisker’s Austrian subsidiary also joined the ranks of bankruptcy protection this month, although its US branch is still operating, but the situation is worrying.
In February, the company expressed doubts about its sustainability, and its manufacturer Magna International also revealed pessimistic expectations for the future production of Fisker Ocean products in its financial results.
Mullen Automotive, another car maker, made three reverse stock splits in 2023, raising the share price but not the overall value of the company.
Mullen currently has $47 million in working capital, but its negative cash flow in the last quarter was close to $67 million, and the company expressed “serious doubts” about its ability to continue to operate.
David Michery, CEO of Mullen, said frankly that “the market is the market”.
Everyone is affected by the environment, and Tesla is no exception.
In fact Tesla reported its lowest profit in more than six years in the first quarter of this year and the company had to cut prices to stimulate slowing demand but inventories still increased to 28 days from 15 days in the previous quarter.
In the face of such a severe market environment, Tesla has made several rounds of layoffs this year.
Lordstown Motors, once hailed as a rising star in the electric car industry, got into trouble last year and finally filed for bankruptcy.
However, even in the silence of the morgue, the company did not find peace.
In February, the Securities and Exchange Commission filed charges against Lordstown Motors for allegedly exaggerating the demand for its Endurance electric pickup truck.
After a period of dispute, the case has now been closed, but the plight of Lordstown Motors is not over.
After going through bankruptcy and restructuring, the company re-emerged as a new Nu Ride Co., Ltd. However, rebirth did not bring peace, but got caught up in another legal dispute.
They are suing Foxconn Group and its subsidiary Foxconn Venture Capital, accusing each other of fraud and failing to abide by their business and financial commitments.
Earlier, the two sides reached an agreement to jointly develop an electric vehicle platform.
At the same time, Arrival, the British electric car maker, is in a similar dilemma.
Also in February, the company filed for bankruptcy protection and eventually sold its assets to another start-up, Canoo.
It’s worth mentioning that Canoo also made headlines this year when its CEO’s private jet bill was twice his annual income.
On Tuesday, Canoo reported a quarterly loss that exceeded market expectations, reaching $110.
7 million, up from $90.
7 million in the same period last year.
Last month, Canoo even raised “substantial questions” about its ability to stay afloat.
Of course, even against the backdrop of the overall economic downturn, the electric vehicle industry is not without bright spots.
In March this year, Lucid successfully raised $1 billion from an affiliate of the Saudi Public Investment Fund to inject into the company’s future development.
new vitality.
, In addition, Canoo recently signed a car sales agreement with a paint manufacturer in the Middle East, which undoubtedly brings new opportunities for the company’s business expansion.
Mullen also announced a financing commitment of US$150 million this month, demonstrating the market’s continued attention to the electric vehicle industry.
However, as some startups gain a foothold in the market, traditional automakers are also actively deploying the electric vehicle sector.
Relying on their brand awareness, established service and warranty networks, and strong financial strength, they are gradually becoming important competitors in the electric vehicle market.
With the continuous efforts of automobile giants such as Ford and Hyundai, the advantages of these traditional automobile manufacturers have begun to emerge.
According to data from Kelly Blue Book, Tesla’s share of the U.S. electric vehicle market in the first quarter was slightly over 51%, down from more than 60% in the same period last year.
Industry insiders pointed out that “electric vehicles launched by traditional companies have put a lot of pressure on start-ups.
” Those traditional carmakers “offer more attractive options.
“, Looking back on the past few years, when funds were abundant in 2020 and 2021, it was difficult for startups to turn cash and hype into actual productivity.
They have been plagued by various delays, supply chain obstacles and manufacturing problems.
Nowadays, funds are running out and market demand is slowing down, and traditional automakers have become strong competitors.
The most vulnerable startups have succumbed to pressure, and more companies may follow in the future.
As Morgan Stanley analysts said in a February 23 report: “Trying to become the ‘next Tesla’ has proven to be a costly and challenging strategy.
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