Running on empty: EV startups struggle to ride the high as demand bubble for green cars pops
Eden Villalovas
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Startups in the electric vehicle industry are experiencing dwindling funds amid supply chain problems, failing to keep up with a once strong consumer demand.
At least 18 EV startups that recently went public could run out of cash by the end of 2024 if they can’t cut costs or raise capital, with seven only having weeks of cash left, according to a Wall Street Journal analysis looking into 43 publicly traded companies. Among the EV companies analyzed, the median stock fell more than 80% from its market debut.
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Promising companies that emerged during the EV boom years ago have filed for bankruptcy this year. Lordstown Motors, an electric truck maker, filed for bankruptcy in June. Lordstown was once valued at $5.3 billion but only manufactured 80 electric trucks before closing down. Proterra, a leading electric bus maker, filed for bankruptcy in August. Electric Last Mile Solutions, a Michigan startup, filed for bankruptcy in 2022.
Securing funding in an economy with high interest rates, persistent inflation concerns, and some recession predictions has been difficult. The demand for EVs in recent years has outstripped supply, as dozens of companies are now fighting to survive while struggling to get the raw materials needed to make batteries and other components.
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The study found that another 16 companies have enough liquidity to survive beyond 2024, but only four companies are turning a profit. Lucid and Rivian Automotive, which target the high end of the market for EVs, are outpacing their startup competitors as registrations continue to rise.
Lucid registered 4,267 air units in the first eight months of the year, marking a 40% jump year over year, according to Experian registration data reported by Automotive News. While Lucid saw an increase in registrations month over month, the luxury company fell short of its sales target in 2023, set for 14,000 cars, with the company producing slightly under 4,500 cars while delivering 2,810 in the first half of the year.