Startups offering electric vehicles have been facing challenges this year. The situation could worsen.
The issue is not that EV sales are not increasing. They are, although at a slower pace. The problem is that they are not growing as rapidly as expected by car manufacturers.
Former Ford CEO Mark Fields told CNBC’s Squawk on the Street that automakers were expecting a faster pace of growth, leading to price reductions, rising inventories, and increased incentives from EV manufacturers.
Early adopters of EVs have different priorities, such as innovation and environmental impact. However, many of them have already bought their vehicles, and now EV manufacturers need to attract everyday consumers who prioritize cost and convenience. Factors like charging time, charging infrastructure, repair costs, and resale value are important for mainstream consumers.
Hybrid vehicle sales are increasing, benefiting companies like Toyota and Ford. Toyota, which has long predicted a slower transition to EVs, has seen success with its hybrid models. Ford, on the other hand, is focusing more on hybrid vehicles due to lower-than-expected EV sales.
Fields is confident that the transition to EVs will happen eventually, but it will take longer than anticipated. This prolonged transition poses challenges for EV startups that expected quicker adoption rates.
Struggling EV startups
Recently, the Wall Street Journal reported that Fisker, a Tesla competitor, had hired restructuring advisors amid potential bankruptcy concerns. Fisker’s shares dropped by 50% but rebounded after the company expressed interest in partnering with a large automaker like Nissan.
Rivian, backed by Amazon, decided to delay its factory plans in Georgia to save costs. This move eased concerns about funding for the launch of its next model, the R2. Tesla CEO Elon Musk suggested that Rivian might face bankruptcy if it does not cut costs significantly.
Lucid, backed by Saudi Arabia, has also experienced a decline in market value and production targets. The company’s market cap has decreased, and it has revised its production estimates downward.
