R1T trucks on the assembly line at the Rivian Electric Vehicle plant in Normal on April 11, 2022.
Brian Cassella | Tribune News Service | Getty Images
Once-hot electric vehicle startups — years ago fueled by low interest rates, free cash and a Wall Street rally — are now trying to prove they can survive tougher market conditions. That is if they haven’t already gone bankrupt.
Chief among their talking points: cash.
Executives of Rivian Automotive, Lucid Group and Nikola Corp. This week, everyone plans in detail to cut costs while trying to grow operations and make their first profits. These efforts range from job cuts and production changes to supplier reshuffles and shifting priorities.
The race comes as EV adoption is slower than many expected and after companies have spent billions in an effort to rush vehicles to market to gain first-mover advantages in the white space segments.
Of these three automakers, Rivian is in the strongest cash position as it struggles to adopt EVs. The company says it has enough cash to see it through its big R2 launch in early 2026.
The slowdown, as well as increased competition, has even affected the leader of the U.S. Teslawhich is in the midst of a global restructuring that includes laying off about 10% of its workforce.
Wall Street analysts have referred to the current state of the electric vehicle market as “EV winter,” an end to the so-called EV Euphoria or, more optimistically, a temporary retreat that automakers will have to overcome for long-term profits.
“U.S. electric vehicle adoption has likely entered the air pocket after penetrating early adopters and specific regions,” Citi analyst Itay Michaeli wrote in an investor note on Thursday. “The situation will not change overnight, but we see reasons for optimism over the next 12-18 months.”
The performance of Rivian, Lucid and Nikola stocks over the past year.
Rivian has been on a cost-cutting mission for months. It cut staff, upgraded its Illinois plant to increase efficiency and halted construction of a new multibillion-dollar plant in Georgia. This latest measure is expected to save more than $2.25 billion in capital expenditures, including the impact of the start of production of Rivian’s next-generation R2 vehicle at its current plant in Normal, Illinois.
Rivian reported $7.86 billion in cash, cash equivalents and short-term investments as of the end of March, with more than $9 billion in total liquidity.
Lucid, for its part, ended the first quarter with about $4.6 billion in cash, cash equivalents and investments, with total liquidity of about $5.03 billion.
Lucid CEO Peter Rawlinson said he’s never been “more optimistic” about the startup’s future, despite notable demand issues, significant losses and capital needs. The company raised $1 billion from an affiliate of Saudi Arabia’s Public Investment Fund, its largest shareholder.
“We have identified additional opportunities in cost of goods sold and will continue to focus on implementation and further areas for cost depletion. Over the long term, our technology will be a key driver of our gross margin,” Rawlinson told investors on Monday. “With scale, I think you’re going to see strong gross margins with efficiency being the key driver.”
Rawlinson said the $1 billion reflects the “continued confidence and solid support” of the Public Investment Fund, which owns about 60 percent of the company, according to FactSet.
Rivian and Lucid reported bigger first-quarter losses than Wall Street expected, according to estimates compiled by LSEG.
Nikola actually beat the Street, slightly, with a loss of 9 cents a share in the first three months of the year, but revenue of $7.5 million was less than half of what the analyst polled by LSEG had expected.
Unlike Rivian and Lucid, Nikola focuses exclusively on commercial vehicles rather than retail customers. Nikola CFO Thomas Okray said the company needs to cut costs while continuing to expand sales, including possibly cutting prices for large customers in order to build scale.
“We absolutely need to optimize our cost structure. There’s no question about that,” Okray told investors on Tuesday.
Nikola’s cash reserves are much lower than Lucid and Rivian. The company’s assets included $469.3 million at the end of the first quarter, consisting primarily of cash and cash equivalents of $345.6 million and truck inventory of $61.3 million.
Lucid Group CEO Peter Rawlinson and Derek Jenkins, senior vice president of design and branding at Lucid Motors, sit on the wrist of the Lucid Gravity electric SUV during the Los Angeles Auto Show press day preview in Los Angeles, California, USA, November 16, 2023.
David Swanson | Reuters
Shares of Rivian, Lucid and Nikola are all trading near 52-week lows or all-time lows, with Nikola’s stock – once worth more than Ford Motor – trading for less than $1 per share. That puts the company at risk of delisting from Nasdaq, which executives are trying to avoid through a reverse stock split that must be approved by shareholders.
Rivian’s shares are down about 56% this year, but they remain the healthiest of the high-profile EV startups, most of which (except Rivian) have gone public through special purpose acquisition companies, or SPACs, over the past five years.
Lucid’s stock has traded below $8 for most of the past year. Shares closed Thursday at $2.70, down more than 60% over the past 12 months.
Other EV startups, such as Lordstown Motors and Electric Last Mile Solutions, have gone bankrupt, while Fisker is on the verge of filing for bankruptcy and has stopped making vehicles.
Less known Canoo is scheduled to report first-quarter results on Tuesday. Tony Aquila, Canoo’s CEO and executive chairman, said during the company’s fourth-quarter investor call last month that the company needs to continue raising capital and cutting costs.
“We’ve seen a very tough market. We’ve adjusted our disciplined approach to raising capital by raising only the amounts of capital we need for each milestone and will continue to do so,” he said.
— The CNBC Michael Bloom contributed to this article.