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Hot or Not: How Have EV Start-Ups Fared So Far This Year?

Sept. 19, 2023
From Rivian to Fisker and Faraday Future, here’s how some big-name EV companies stack up after earnings. We also take a look at a buzzy new player.

With the summer earnings season and several ensuing investment bank conferences in the rearview (and Q3 results not too far away), we thought it was a good time to assess how some of the major electric vehicle startups have done so far in 2023 and what that could mean for the remainder of the year.

But first, how does this Hot or Not review work? How are we assessing these companies?

Each company was given a rating based on stated production/delivery goals, financials, major news/deals, and the outlook for its potential to perform better. The ratings are, from worst to best:

Not: The company isn’t doing well at all, and the outlook isn’t too good either.

Mixed: The company is meeting some goals but is still lacking in key areas.

Okay: The company is meeting most of its goals and has a pretty decent outlook.

Hot: The company is hitting (or exceeding) stated goals and has a good future.

There are also special designations of It’s Complicated, where a company has so much good and bad happening that it’s too hard to accurately place it, and Too Soon to Tell, where there’s not enough to say where it could go next.

A company’s designation can change drastically between updates, as these are all startups in the relatively new EV space. So, while a startup may not be doing so well in this round of Hot or Not, it could lead the pack next time around.

Faraday Future: Not

Faraday Future Intelligent Electric is a Los Angeles-based company started in 2014 that went public in 2021. After years of delays, the startup finally delivered its first vehicle, the FF 91 2.0 Futurist Alliance, on Aug. 15. The SUV, which was supposed to come out in 2018, then in late 2022, costs $309,000 and has a range of approximately 381 miles.

A notable priority with Faraday is that, much like fellow luxury EV maker Lucid, it is very focused on building a brand name and fancy features by organizing events such as “Delivery Co-Creation Day,” where customers will seemingly get to make a spectacle of finally receiving their car. Executives have touted their intention to make Faraday the “Ultimate AI TechLuxury” brand; but Lucid, unlike Faraday, actually has thousands of cars already produced and delivered.

Financially, Faraday’s picture is mixed. It ended Q2 with $17.9 million in cash, down from $120.6 million for the same quarter last year. However, CFO Jonathan Marako said in August the company has multiple sources of funding coming, totaling more than $300 million. Operating expenses were cut significantly last quarter, coming in at $56 million compared to last year’s $137 million. (Marako admitted during the earnings call that much of this reduction was due to “a decrease in engineering, design and testing services as the company substantially completed R&D activities related to the FF 91 vehicle in 2022,” while the company focused on production).

Production-wise, executives have been tight-lipped about providing any numbers.

Maroko said, “We're being prudent with our production ramp and the delivery of vehicles to market. We're an ultra-high-end vehicle manufacturer. So the key for us is not massive volume at this stage, but rather strong brand recognition driven by an exceptional product […] So the focus for the remainder of '23 is less so on huge volume and more so on brand building and creating a community of enthusiastic ambassadors to amplify our brand, and we believe that this will set the stage for a ramp in volume in 2024.”

Overall, Faraday Future has some promise if that 2024 ramp materializes.

Fisker: Mixed

Fisker recently made headlines with its decision to join Tesla’s supercharger network; the unveiling of its newest vehicle, the PEAR SUV; and its expansion into Europe. The company has produced more than 3,000 Ocean SUVs to date and, its manufacturing partner Magna Steyr will deliver 5,000 more by the end of September. There are also plans to nearly double daily production from 180 vehicles per day in Q2 to 300 vehicles per day by the fourth quarter this year.

But that production ramp news was slightly undercut by the news last month that Fisker was slashing its production goals for the year to a range of 20,000 to 23,000, which it attributed to supply chain constraints.

Q2 was the first quarter Fisker had automotive sales revenue, which drove most of the $825,000 it generated for the quarter. Overall, the company’s financials are in good shape, with operating expenses and net loss remaining relatively flat compared to last year.

Fisker has promise; its vehicles are reasonably priced compared to most competitors (the Ocean One Sport starts at $37,500 and the Alaska pickup at $45,500), but if it can’t scale efficiently that promise will mean little.

Lucid: Mixed

Luxury EV maker Lucid Motors had a rough second quarter and has been fairly quiet since releasing results in August. The company missed estimates by fairly large margins: It delivered 1,404 vehicles versus the expected 2,000, and its revenue of $150 million was more than $50 million below analysts’ estimates.

Executives' already downgraded production guidance of 10,000 cars for the year is on shaky ground as well. So far, 4,487 vehicles have come off the line, making hitting production goals a challenge, but not completely impossible, in what remains of 2023.

But it’s not all bad news. Lucid’s partnership with Aston Martin could get some important eyes on the brand, especially with its $249,000 Lucid Air Sapphire going into production this month. And CEO Peter Rawlinson said in an interview early this month that there are plans to target the middle segment of car buyers with a future vehicle priced around $50,000 (more than $30,000 less than its current cheapest vehicle, the Lucid Air).

But talk is just talk until thousands of cars leave the production line. Along with getting production up, Lucid needs to get its costs down and build a wider consumer base if it wants to succeed.

Nikola: It’s Complicated

Few companies can yo-yo quite like truck maker Nikola. At the beginning of the year, the startup was decidedly “Not” as it announced it would be laying off nearly 25% of its workforce and selling its stake in a joint venture. This was just a few months after then-CEO Mark Russell retired, leaving the business in the hands of Michael Lohscheller—who announced his resignation during the company’s second-quarter earnings call. But we’ll get back to that.

Nikola’s second quarter was nothing short of impressive. The company announced multimillion-dollar deals and reported revenue of $15.36 million, beating estimates. As executives had promised, it also managed to trim costs, with losses coming to roughly $1 million less than Q1.

Unfortunately, the winning streak didn’t last.

Results from the investigation into a truck fire at company headquarters in June revealed the cause to be a coolant link in the battery packs of Nikola’s BEVs—packs engineered by Romeo Battery, a company Nikola purchased last year and is currently liquidating. This led to a voluntary recall of all 209 trucks with the packs that the company has sold.

The bad news didn’t stop there.

Since then, there have been more fires. Nikola’s new CEO, Steve Girsky, who took over after Lohscheller abruptly resigned and returned to Europe due to family health matters, recently discussed the company’s position in-depth during a fireside chat. He remains optimistic and said Nikola is still on the path to profitability by 2025.

Nikola has been through a lot in a very short time—most of it bad. But it continues to be the “little [company] that could” and still has a dream of establishing a hydrogen highway in North America. If it can turn its second-quarter surprise into a regular thing, it’s on the path to greatness.

Polestar: Okay

It has been a rough year for Polestar Holdings UK. Its first quarter, while good, was marred by an announcement of job cuts and a reduction in production guidance as it pushed back the rollout of the Polestar 3 SUV to 2024 due to a software issue with its largest shareholder, Volvo Group.

Q2 was marginally better: Polestar's reported $685 million in revenue was $70 million below estimates and its cash burn is only increasing. For the first half of 2023, its gross profit was $18 million, nearly 70% less than H1 of 2022’s $53 million, and it posted a small Q2 loss.

Much of the increased expenses, according to CFO Johan Malmqvist, was from “higher contract manufacturing costs of $52 million, supplier charges for semiconductors and batteries of nearly $18 million and an inventory impairment of $10 million.”

Still, there are bright spots: Operating expenses declined by 56% to $274 million, and executives expect to meet their updated guidance of 60,000 to 70,000 cars delivered this year, having delivered 27,841 thus far. So, like Lucid, a challenge but not impossible. The Polestar 4 is still on track for production starting in November with deliveries in China before year-end, while the Polestar 3 will begin deliveries in Q2 2024.

2023 has been a bumpy road so far for Polestar, but if it can get its deliveries up and cash burn down, it’s headed toward being a market staple.

Rivian: Hot

Simply put, Rivian had a rockstar Q2. It surpassed production and delivery estimates and even raised its full-year production guidance from 50,000 to 52,000. If it continues its production ramp like it did in H1, it’s well on its way to hitting that goal.

Financially, the company is also in great shape, relatively speaking. Q2 was the first quarter that its flagship truck, the R1T, was surpassed in sales by the newer R1S, which is more profitable, and gross profit increased by $35,000 per vehicle. Cash burn is also expected to go down, as the company lowered its 2023 capital expenditure guidance from $2 billion to $1.7 billion.

The main problem that has plagued Rivian has been the retail cost of its vehicle. Starting thousands of dollars higher than similar spec EVs, the company has had trouble justifying its more than $70,000 price tag. However, CEO RJ Scaringe recently spoke to that topic at the Morgan Stanley Conference, saying the used-vehicle market has been a litmus test for pricing and demand.

“The used marketplace represents a healthy check of pricing. If vehicles are selling used for more than MSRP, that means there’s a little bit of pricing room. It can also mean that demand is exceeding supply, which is good,” he said.

It’s also proved useful in gauging whether leasing is a good move for the company, which Scaringe said the company has “intentionally held off” on offering to prove the residual value of the trucks.

On the whole, Rivian is on the precipice of becoming a major market player. If Scaringe and his team can manage to start turning a profit and operating at full production capacity, it’ll be a very tough competitor.

VinFast: Too Soon to Tell

VinFast is a very new player in the EV game, at least in North America. The Vietnamese company was founded in 2017 and went public on the Nasdaq via a SPAC deal in August, opening at $11.10 per share. It quickly experienced a meteoric rise, peaking at $83.35 but has tumbled since then and, as of this writing, sits at $17.10. Still, at that price, it still has a market capitalization of $40.5 billion.

Since debuting, the company has been mostly quiet on official announcements but seems to have big plans. Executives said they plan to sell 50,000 cars globally this year and have announced they will release Q2 earnings on Sept. 21.

The company broke ground on an 1,800-acre facility in Chatham, North Carolina, on July 28. The project was originally announced in March 2022, with a construction start date initially set for later that same year. Production at the plant, which will manufacture the VF7, 8, and 9 vehicles, is set to begin in 2025. Once at full capacity, it will turn out 150,000 vehicles a year and bring more than 7,000 jobs to the area.

Inventory-wise, VinFast is targeting similar markets to Fisker and Polestar, it seems, with its all-SUV line up beginning at $46,000 for the VF8 and $83,000 for the VF9. Those are also the only two vehicles available for reservation, although, according to a prospectus filed in December 2022, it has plans to release the VF5, 6 and 7 in 2023.

It’s too soon to tell where VinFast will land in the market, especially with executives saying so little about their plans. But it’s far from the likes of, say, Faraday Future:  VinFast managed to produce an ICE vehicle in just 21 months and currently produces a line of e-scooters and e-buses in Vietnam in addition to its SUV line. With the end of Q3 nearing, leaders will hopefully start talking about what’s next.

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