Photo Credit: Mercedes
U.S. electric vehicle (EV) startups are grappling with declining demand due to high borrowing costs and expensive repair bills. This downturn has forced companies to pivot to cheaper models, cut back on production, and lay off employees to stay afloat.
Fisker recently filed for bankruptcy protection, highlighting the severe challenges EV startups face. The company is restructuring its debt and looking to sell assets due to rapid cash burn while delivering its Ocean SUVs in the U.S. and Europe.
The Ocean SUV is under investigation by the U.S. National Highway Traffic Safety Administration for safety issues, and more than 18,000 vehicles were recalled earlier this month due to faulty software and safety non-compliance. In March, Fisker issued a going-concern warning, announcing it would lay off 15% of its staff and pause future investments until securing a manufacturing partner.
Despite producing over 10,000 vehicles in 2023, only 4,700 were delivered, leaving the company with $325.5 million in cash at the end of
2023, down from $736.5 million in 2022. Rivian announced in June its second-generation R1T pickup truck and R1S SUV, focusing on new components to improve efficiency and cut costs.
Earlier this year, the company introduced smaller, cheaper R2 SUVs and R3 crossovers, planning to start production in 2026. Rivian also plans a production shutdown this year to upgrade its factories. The company aims to produce 57,000 vehicles in 2024, below the estimated 81,700 units and far less than Tesla's 1.8 million vehicles in 2023.
Rivian reduced its vehicle prices by $3,100 in February and is working to cut cash burn by renegotiating supply contracts and producing some components in-house. It reported $5.98 billion in cash for the first quarter, down from $7.86 billion in the previous quarter.
Lucid Group announced a 6% workforce reduction in May due to slower-than-expected EV demand. The company, backed by Saudi Arabia's Public Investment Fund, plans to produce a more affordable mid-size car by late 2026 and its Gravity SUV this year to
broaden its customer base.
Lucid has missed revenue expectations for six consecutive quarters and has reduced the Lucid Air Pure price to $69,900, offering two years of free maintenance and charging. The Gravity SUV, priced under $80,000, is set for production late this year. Lucid ended the first quarter with $2.17 billion in cash, up from $1.37 billion in the previous quarter.
Nikola is shifting its focus to hydrogen-powered big rigs after recalling some battery-electric trucks due to fires. The company anticipates up to $170 million in truck revenue for 2024, aiming to sell 450 units, including hydrogen fuel cell electric trucks. Nikola's cash reserves fell to $345.6 million at the end of the first quarter, down from $464.7 million in December.
As the EV market faces significant headwinds, startups are re-strategizing to survive and thrive amid challenging economic conditions.
