Upcoming financial reports from U.S. electric vehicle startups are anticipated to reveal the repercussions of Tesla’s fierce price competition. Investors are eagerly waiting to see how these companies are managing their finances during a difficult funding period.
Even Tesla, the market leader, has cautioned about challenging times and established automakers with more financial resources, like Ford Motor, are experiencing losses in the electric vehicle market. The situation has already claimed its first victim, with electric truck manufacturer Lordstown Motors filing for bankruptcy in June.
Lucid and Nikola are likely to report another quarter of significant cash burn as they continue to grapple with production and demand issues.
According to Thomas Hayes, the chairman of hedge fund Great Hill Capital, apart from Elon Musk’s companies, the legacy auto manufacturers are the only ones with a shot at succeeding in the EV market.
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However, they seem to be losing money rapidly while attempting to break into the electric vehicle segment.
Analysts predict that Rivian’s cash outflow likely decreased to $1.19 billion in the second quarter, down approximately $600 million from the previous quarter. The company’s gross margins are also expected to improve, from a negative 58.6% to a negative 51.3%.
Needham analyst Chris Pierce expressed optimism about Rivian, noting its competitive advantages, especially in attracting customers who have never owned a pickup truck before.
As a result, at least 8 analysts have raised their price target for the company’s stock, which has seen a 40% increase in value this year.
Lucid, majority-owned by Saudi Arabia’s Public Investment Fund, is expected to report deeper losses due to supply chain issues that affected production in the April-June period.
The company is set to post a cash balance of $2.76 billion for the April-June quarter, up from $900 million in the previous three months, following a fundraising round of about $3 billion.
Nikola, which previously issued a going-concern warning, is expected to announce a 15% decline in revenue and wider losses on Friday.
Despite the company’s efforts to cut costs through layoffs and liquidating a recently acquired battery business, analysts doubt it will be sufficient to meet its funding needs.
Fisker, on the other hand, is anticipated to announce its first revenue from vehicle sales after delivering its Ocean SUVs in the June quarter. The company has healthy cash reserves and ambitious profitability goals. However, it missed its production target for the quarter due to parts shortages.
Investors will be closely monitoring Fisker’s reservation numbers, as the Ocean SUV does not qualify for the $7,500 federal tax credit.