|Why some EV startups are gearing up for a shakeup|
It’s been a tough time for electric vehicle startups lately, marred by manufacturing errors, swoon in inventory and regulatory investigations. That’s mounting tension as smaller players ramp up production and compete for the kind of mainstream success Tesla enjoys.
“Not all startups will survive the upheaval that will occur in the nascent commercial electric vehicle industry,” Rick Dauch, CEO of electric van maker Workhorse Group, said on a conference call with analysts last week. The words were echoed by Lordstown Motors Corp. CEO Dan Ninivaggi, who said most smaller manufacturers would succumb to bigger players. Both companies have market values below $1 billion.
The candid comments point to the tough environment for EV startups these days. In the past few weeks alone, EV makers have slashed production targets, warned of the need to raise capital, killed off a vehicle model or antagonized customers with price hikes.
The electric vehicle market has attracted new entrants in recent years, with a number of companies going public through reverse mergers with blank check companies. While startups have run into trouble — in some cases, coming under scrutiny from federal authorities — many have fallen below their starting prices.
That’s not to say the whole EV space is sick. Indeed, Tesla ranks among the most valuable companies in the world, while Ford Motor Co. recently announced a sweeping reorganization to capitalize on the growth potential of plug-in models.
Even as some small businesses stumble, many startup leaders insist their companies will be fine on the other side, pointing to their distinct offerings.
Take Lucid Group, the maker of luxury electric vehicles that has a market capitalization of $37 billion despite the recent start of deliveries. As CEO Peter Rawlinson said on a conference call, “We don’t see ourselves in direct competition with any particular automakers.”
– Sean O’Kane, Bloomberg