EV startups are over budget and behind schedule. Who will win?
By last year, the world was supposed to have three-wheeled electric cars powered by roof-mounted solar panels. Cities were to see electric buses flooded with natural light and padded by soothing grays reminiscent of a luxury Manhattan apartment. Commercial deliveries would zip across the nation in matte electric vans, carrying more stuff for less money.
Electric vehicle startups, the subject of seemingly limitless industry buzz, raised millions of dollars from investors and would-be customers who were told that an electric future was just around the corner.
Instead, many of the stewards of that future are struggling to pay their bills. They are contending with higher costs, government investigations, lawsuits, C-suite turnover and investor burnout in a high-interest-rate environment. For many, the EV startup boom is turning into a bummer.
“There’s definitely a sense of fatigue,” said Jeff Osborne, a senior analyst focused on the sustainability and mobility technology sectors at TD Cowen, an American investment bank owned by Toronto-Dominion Bank. “These stocks, putting it bluntly, are dramatically out of favor. It’s very unclear who’s going to win.”
Of the 10 EV startups reviewed by Automotive News, just four have enough cash on hand to cover a year or more of operating expenses, and only a couple can cover more than two years, according to their most recently available Securities and Exchange Commission filings. Several, including Nikola Corp., Faraday Future Intelligent Electric Inc. and Arrival, have identified doubt about their abilities to continue as a going concern, are facing lawsuits by investors or government probes from agencies such as the SEC, or are dealing simultaneously with more than one of these issues. Some have been the subject of embarrassing short seller reports by investment research firms. And for the most part, the products they promised to investors and the public remain out of reach.
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— Molly Boigon
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