Rivian, Lucid and other EV startups scramble to shore up cash and reassure Wall Street

Once-hot
electric
vehicle
startups
—
years
ago
fueled
by
low
interest
rates,
free
cash
and
Wall
Street
bullishness
—
are
now
scrambling
to
prove
they
can
survive
in
tougher
market
conditions.
That
is
if
they
haven’t
gone
bankrupt
already.

Chief
among
their
talking
points:
cash.

Executives
of


Rivian
Automotive,


Lucid
Group
and


Nikola
Corp.
this
week
each
detailed
plans
to
reduce
costs
while
attempting
to
grow
operations
and
make
their
first
profits.
Those
efforts
have
ranged
from
job
cuts
and
production
changes
to
supplier
rearrangements
and
shifting
priorities.

The
scramble
comes
as
EV
adoption
takes
hold
slower
than
many
expected
and
after
companies
spent
billions
in
an
attempt
to
rush
vehicles
to
market
to
gain
first-mover
advantages
in
white-space
segments.

The
slowdown,
as
well
as
the
increased
competition,
has
even
impacted
U.S.
EV
leader


Tesla,
which
is
in
the
midst
of
a
global
restructuring
that
includes
laying
off

roughly
10%
of
its
workforce.

Wall
Street
analysts
have
referred
to
the
current
state
of
the
electric
vehicle
market
as
an “EV
winter,”
an
end
to
so-called
EV
Euphoria
or,
more
optimistically,
a
temporary
pullback
that
carmakers
will
need
to
overcome
for
long-term
gains.

“US
EV
adoption
likely
entered
an
air
pocket
after
having
penetrated
initial
adopters
&
specific
regions,”
Citi
analyst
Itay
Michaeli
wrote
in
a
Thursday
investor
note. “The
situation
will
not
change
overnight,
but
we
see
reason
for
optimism
over
the
next
12-18
months.”

Rivian
has
been
on
a
cost-cutting
mission
for
months.
It
has
trimmed
staff,
retooled
its
Illinois
plant
to
increase
efficiencies
and
paused
construction
of
a
new
multibillion-dollar
factory
in
Georgia.
That
last
measure
is
expected
to

save
more
than
$2.25
billion
in
capital
spending,
including
the
impact
of
starting
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
to
end
March,
with
more
than
$9
billion
in
total
liquidity.

Lucid,
for
its
part,
ended
the
first
quarter
with
approximately
$4.6
billion
in
cash,
cash
equivalents
and
investments,
with
total
liquidity
of
approximately
$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
we’ll
continue
to
focus
on
implementation
and
further
areas
for
cost
out.
Longer
term,
our
technology
will
be
key
driver
of
our
gross
margin,”
Rawlinson
told
investors
Monday. “With
scale,
I
believe
you
will
see
strong
gross
margins
with
efficiency
the
key
enabler.”

Rawlinson
said
the
$1
billion
illustrated
the “continued
confidence
and
steadfast
support”
of
the
Public
Investment
Fund,
which
owns
roughly
60%
of
the
company,
according
to
FactSet.

Rivian
and
Lucid
both
reported
wider
first-quarter
losses
than
Wall
Street
was
expecting,
according
to
estimates
compiled
by
LSEG.

Nikola
actually
beat
the
Street,
slightly,
with
a
9-cent
per-share
loss
during
the
first
three
months
of
the
year,
but
revenue
of
$7.5
million
was
less
than
half
of
what
analyst
compiled
by
LSEG
were
anticipating.
   

Unlike
Rivian
and
Lucid,
Nikola
is
exclusively
focused
on
commercial
vehicles
rather
than
ones
to
retail
customers.
Nikola
CFO
Thomas
Okray
said
the
company
needs
to
lower
its
costs,
while
continuing
to
expand
its
sales,
including
potentially
reducing
prices
for
large
customers
in
order
to
build
scale.

“We
definitely
need
to
optimize
our
cost
structure.
No
question
about
it,”
Okray
told
investors
Tuesday.

Nikola’s
cash
reserves
are
far
lower
than
Lucid
and
Rivian.
The
company’s
assets
included
$469.3
million
to
end
the
first
quarter,
consisting
primarily
of
cash
and
cash
equivalents
of
$345.6 million
and
truck
inventory
of
$61.3 million.

Shares
of
Rivian,
Lucid
and
Nikola
all
trade
near
52-week
or
all-time
lows,
with
the
stock
of
Nikola
–
once
valued
more
than


Ford
Motor
–
trading
for
less
than
$1
per
share.
That
puts
the
company
at
risk
of
being
delisted
from
the
Nasdaq,
which
executives
are
attempting
to
avoid
through
a
reverse
stock
split
that
needs
to
be
approved
by
shareholders.

Shares
of
Rivian
are
off
about
56%
this
year
but
remain
the
healthiest
of
high-profile
EV
startups,
most
of
which
(other
than
Rivian)
went
public
via
special
purpose
acquisition
companies,
or
SPACs,
in
the
last
five
years.

Lucid’s
stock
has
traded
under
$8
for
most
of
the
past
year.
The
shares
closed
Thursday
at
$2.70,
down
more
than
60%
in
the
last
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
paused
vehicle
production.

Lesser-known


Canoo
is
scheduled
to
report
its
first-quarter
results
Tuesday.
Tony
Aquila,
Canoo
CEO
and
executive
chairman,
during
the
company’s
fourth-quarter
investor
call
last
month
said
the
company
needs
to
continue
to
raise
capital
and
cut
costs.

“We
have
seen
a
very
difficult
market.
We
have
adapted
our
disciplined
capital
deployment
approach
by
raising
only
the
amounts
of
capital
we
need
for
each
milestone,
and
we
will
continue
to
do
so,”
he
said.

—
CNBC’s


Michael
Bloom

contributed
to
this
article.