EV Startups Face Stiff Competition From Seasoned Automakers

New EV companies see their stock prices drop, while Ford reports a 139% EV-sales increase.

May 11, 2022

EV Rivian SUV Charging Offroad

ALEXANDRIA, Va.—Startup electric vehicle (EV) companies are dealing with the same issues plaguing established automakers (supply chain problems, materials inflation, market competition), but seasoned car makers are better equipped to handle these hurdles, and stocks for startups are starting to drop, reports Axios.

Startups including Rivian, Lucid, Faraday Future and Lordstown have all seen their shares fall, as they attempt to compete with big car companies such as Ford, who reported that its EV sales increased 139% on the strength of its Mustang Mach-E and E-Transit.

Volkswagen’s electric fleet is also sold out in the U.S. and Europe this year, reports CNN, and the automaker has a backlog of 300,000 EV orders in Western Europe alone. Volkswagen sold more than 99,000 electric vehicles globally in the first quarter, up 65% from the same period last year.

Also, General Motors and Honda announced that the automakers will codevelop a line of affordable electric vehicles.

“While industry semiconductor chip shortages persist, improved inventory flow in April delivered a significant share gain of 1.0 percentage point over a year ago with Ford outperforming the industry. Inventory flow bolstered stronger F-Series, Mustang Mach-E, E-Transit and record April Ford brand SUV sales. We are now shipping all models of the electric F-150 Lightning,” said Andrew Frick, vice president, sales, distribution and trucks, Ford, in a news release.

Also, Ford is reportedly selling 8 million shares of its Rivian stock, according to Axios, and Rivian stocks fell by more than 20% to less than $23 since the Ford news broke. Lordstown Motors’ shares are at less than $2 each, which is much lower than its 52-week high of $15.80 a share, as the company faces a crucial deadline in its attempt to sell its Ohio factory to iPhone maker Foxconn, which would then manufacture Lordstown’s Endurance EV pickup on a contractual basis.

Faraday Future stock prices have lost more than half of their value over the last month, plunging to less than $2.

“My honest view is there are too many startups around, and not all of them will make it because at the end of the day it's a very hard job," Faraday Future CEO Carsten Breitfeld told Axios.

Breitfeld told Axios that he believes the company's plan to start with a few hundred units of its FF 91 ultra-luxury EV in the third quarter of 2022 will be key to its success.

Rivian could fare better than other startups, as it recently inked a deal with Amazon to supply the retailer with EV vans, and Amazon is one of the startup’s biggest investors. But Axios reports that Rivian’s Amazon partnership doesn’t appear to be as lucrative, with Stellantis poised to deliver EV vans to Amazon before Rivian.

Rivian, is burning about $750,000 in cash per vehicle, estimates Morgan Stanley analyst Adam Jonas.

"This is highly capital intensive stuff that many Rivian investors may not be ready for," Jonas said in a research note.

Tesla’s Elon Musk even says that succeeding as a startup automaker is incredibly difficult due to the complexity of the industry and the mammoth amount of capital needed to proceed.

“The history of car company startups is horrific; they have almost all gone bankrupt," Musk said at a Financial Times event.

A recent Convenience Matters podcast episode discusses how EVs are the future, and another episode explains how convenience retailers can attract and retain EV customers.

Visit the NACS Electric Vehicles topics page for more information about EVs. The NACS EV Charging Calculator was created to allow retailers to assess the cost and profitability of offering EV chargers at their sites. The calculator focuses on what retailer utility costs associated with EV recharging are and what the corresponding revenue must be to recover those costs after allowing for potential ancillary in-store visits and purchase profitability.

Read more about electricity demand charges and what they mean for retailers’ ability to turn a profit from EV charging in the September issue of NACS Magazine.