EV Quick Hits, Late May Edition
Pure Play EV Drops, EV Factory Growth Stops, and a Legacy Automaker’s EV Bubble Pops
Rivian Vs. Lucid Vs. Fisker: Pure Play EV Hell
The term “pure play” is industry-speak for a company that is relying on a specific product, technology, or design across all of its product offerings. A pure-play EV company is one that only offers EVs, unlike legacy automakers such as Ford, GM, Mercedes, Hyundai, or even Tesla which branches out into space from time to time.
The financial struggles of pure play EV companies today are becoming quite serious. Of the three pure play companies with EV offerings in the U.S., perhaps Rivian is best positioned for success. But Rivian is far from being profitable, and it is bleeding cash in a market that is not expected to grow nearly as much as it has over the past ten years. Without a gas-powered vehicle division to offset its EV losses, and with the affordable R2 and R3 models not being released until 2026 and 2027 respectively, Rivian will likely find itself running out of time and resources.
The picture is even worse for Lucid and Fisker. Lucid is a decade late to the EV game, trying to emulate Tesla’s fifteen-year-old strategy in the luxury sedan market strategy which Tesla owns outright. Liquidity issues have been addressed thanks to continuous cash infusions from Saudi Arabia, however it currently has only one vehicle in production (Lucid Air) and, while it is competitive with Tesla, it is a niche product targeted at an ever-shrinking customer base to which Tesla has already sold. And it just announced an elimination of 400 jobs from its workforce. Not looking good.
As for Fisker, it has already warned investors of imminent bankruptcy, it has closed its Manhattan Beach, CA, headquarters, and it cut the price of its Fisker Ocean by 40 percent as a means to stay alive. The car has received terrible criticisms, prompting a well-known tech reviewer to call this "the worst” car he has ever reviewed. Anyone owning a Fisker probably has buyer’s remorse over the real risk of not having after-sales support and warranty coverage should the company enter bankruptcy. And resale value? Don’t even ask.
Yep, it’s pure hell in the pure play world of EVs.
The Delay of EV Factory Expansions and Scaling Back of EV Jobs
The overall business case for EVs looks like it was greatly overstated. Don’t believe me? Just have a look at these new “revised” plans put forth by two domestic automakers.
Massive EV manufacturing facilities planned by Ford and GM are being delayed yet again. Ford submitted a revision only nine months after an originally planned $3.5 billion, 2,500 job EV battery plant that will reduce it down to $2.2 billion and 1,700 jobs. In 2022, GM announced a massive EV pickup manufacturing plant expansion, expecting to create 2,300 jobs and retain another 1,000 employees, but that looks less certain after a delayed launch of new EV pickups citing “demand” issues. You mean “no demand,” right?
The new site plan includes a 40 percent reduction in the number of parking spaces for the GM plant. Of course, this runs counter to the promises made by GM to bring over 4,400 additional jobs into Michigan as part of the state’s combined $4 billion EV investment. All of those “green” union jobs…where did they go?
These EV production and factory expansion pullbacks are leaving suppliers in a real bind. Plans for half a dozen new supplier facilities and hundreds of jobs are in jeopardy as the risks associated with sudden downward revisions of EVs become stark to suppliers who are being forced to re-tool their manufacturing and supply chains to deal with constantly changing EV business forecasts by automakers.
What’s going on here? Simply put, it’s the resulting impact of horrific miscalculations on the real world market demand for EVs. Early adopters of EVs willing to pay a premium for a battery-powered car or truck have already made their purchase, while the next wave of potential customers is proving to be much more hesitant to trade out their gas-powered vehicle for a more expensive EV.
Could any of these well-compensated, Ivy League educated CEOs see this industry reckoning coming?
Ford Looks to Force its Competition to Lose as Much on EVs as Ford Does
The obscene amount of government subsidies, loan guarantees, fleet contracts, and cash infusions received by Ford has certainly greased the wheels of their EV program. Ford took an exceptionally aggressive stance on EVs, with billions of sunk dollars and billions more in profit losses every quarter to comply with government EV mandates. According to the Wall Street Journal, Ford issued a statement that said they have “a critical interest in ensuring that a level regulatory playing field applies to the entire industry.”
Other automakers that have been slower to invest in EVs have financially benefitted from taking a more cautious approach and have kept their EV division losses at least manageable. By attempting to socialize EV losses across the entire auto industry, Ford is supporting government regulation to clamp down on automakers that have not invested as heavily in their EV ventures. In essence, Ford wants its competition to suffer as much as Ford.
How much suffering? The Journal reported that Ford’s EV division lost $1.3 billion in Q1 of 2024, roughly $132,000 on each sale. To boost sales, Ford has slashed prices on EVs and raised prices on the gas-powered models that people actually want to offset Ford’s EV losses. This shifting of costs will not be sustainable for much longer.
The EPA rule that Ford is following will likely get blocked in court, as it is clearly outside the authority of the EPA to issue a de facto EV mandate. If that happens, don’t be surprised if Ford asks for (and gets) more government handouts to prop up its failing EV program.
The Journal remarks that Ford is the “latest business to come down with Stockholm syndrome, but it won’t be the last.” It’s a sad commentary on the state of one of America’s largest automakers that it cannot compete on the world market without perpetual government support and all of the attached strings that come with it.
EV’s regulation and market control show the devastation caused by governmental invention.
MARKETS’ CONTROL MARKETS, DEMAND CONTROLS DEMAND, ECONOMIC DEVELOPMENT WORKS BETTER WITH LIGHT-HANDED REGULATION, AND GOVERNMENT’S ARE HEAVY-HANDED, OVERREACHING, AND TOO POLITICAL.
Any questions?
Great article!
The Alternate Reset has just started, and hopefully the ugly Rivian pickups will disappear!