Tesla, Other EV Startups Experience Growing Pains

Electric-vehicle startups, such as Rivian and Lucid, continue to struggle after piling up substantial losses in the first quarter. Investor support for Lordstown Motors is disappearing, leaving the company in dire straits. Fisker acknowledges it is facing production and cashflow challenges.

The challenges of the EV marketplace are even hitting Tesla, the dazzling star of the BEV segment which has seen its market cap soar past those of long-established companies such as General Motors and Volkswagen, is taking its lumps as its reputation among consumers declines and begins to advertise on television for the first time ever.

What’s wrong with the EV market? Supply chain problems. Too few buyers in the current calendar year. Cash burn among newcomers. Lots of bad press about insufficient charging infrastructure.

Rivian says its Q1 loss was $535 million, which was hit by writeoffs on inventory and losses on firm purchase commitments. The cumulative inventory writedowns and losses on firm purchase commitments of $822 million comprises $561 million of writedowns related to inventory on hand and $261 million of losses on firm purchase commitments, according to the start-up’s chief financial officer.

The BEV maker’s adjusted EBITDA for the first quarter of 2023 was $1.1 billion, the same as the $1.1 billion for the same period of 2022, according to Rivian’s quarterly financial report. The company ended the first quarter of 2023 with $11.8 billion in cash, cash equivalents and restricted cash.

R.J. Scaringe, Rivian founder and CEO, said during a conference call with analysts and investors the company’s production during the first quarter was in line with expectations. “As a result, we are reaffirming our production outlook for the year of 50,000 total units,” he says.

However, Rivian’s capital expenditures in Q1 2023 were $283 million compared to $418 million during the same period last year as the company tightened up on spending amid continued losses.

Lucid, which has promised to redefine the luxury market with its new BEVs vehicles, reports it lost $779 million in the first quarter even though its revenue nearly tripled to $150 million during the same period when compared to last year.

Fisker Ocean 23 screenshot_0

Lucid and Fisker Lagging

Lucid CEO Peter Rawlinson notes the company’s first-quarter production increased 225% year-over-year.

“We are on track to produce over 10,000 vehicles in 2023, with companywide initiatives ongoing that will enable Lucid to pivot to higher volumes as market conditions allow,” Rawlinson says in press release accompanying the quarterly financial report.

Like Lucid and Rivian, Fisker, which is re-emerging as an EV startup, also is modifying production expectations amid some supply chain snarls. The automaker now expects to produce 32,000 to 36,000 units by the close of the calendar year, down from a prior target of up to 42,400 units.

During an interview on CNBC, CEO Henrik Fisker says the cut in production guidance is related to the bankruptcy of a hardware supplier and is not related to software issues. However, the quarterly loss was also greater than expected, adding to the negative earnings reaction.

Lordstown Motors, which once promised to produce battery-electric work trucks in a former GM assembly plant in northeastern Ohio, is facing a loss of financial backing as Taiwanese manufacturing giant Foxconn reduces its support. The company’s stock has been devalued through a reverse stock split and the company’s founder and former CEO dumped his shares, according to filing with the Securities & Exchange Commission.

Twitter and the Teslarati Not Enough Any More

Meanwhile, Tesla CEO Elon Musk is telling investors the company will begin advertising for the first time in the face of rising competition from traditional automakers.

Tesla has suffered its own share of production problems as it tries to launch its oft-delayed Cybertruck, and the company’s overall reputation also appears to have been downgraded as Musk wrestles with his investment in Twitter.

Tesla, which in 2021 ranked eighth among the top 100 brands in an Axios Harris Poll, fell to 62nd in this year’s study, falling behind rival manufacturers such Toyota, BMW, Ford and GM. “The world’s leading electric vehicle company is defined by its billionaire CEO, whose messy takeover of Twitter, along with his unfiltered online persona, may have caused collateral damage to other parts of his empire,” Axios notes in a summary of Tesla’s performance reputation survey.

According to government targets, the industry is supposed to be selling more than 9 million BEVs per year after 2030. The question is whether the BEV startups, outside of Tesla, will last that long in order to take advantage of the growth in electrification.