EV startups from Lucid to Rivian see demand fade, supply chain issues
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[March 01, 2023] By
Abhirup Roy and Akash Sriram
SAN FRANCISCO (Reuters) - U.S. electric vehicle startups are seeing an
unsettling trend, with demand evaporating as potential customers look
for deals or hold off on purchases altogether.
Quarterly reports from several companies indicated weakening interest
for many of their newer products, a bad sign for companies wrestling
with high costs.
Luxury sedan maker Lucid, pickup and SUV maker Rivian and electric semi
truck maker Nikola all flagged economic pressure, with industry experts
saying price cuts by industry behemoth Tesla and the availability of
cheaper EV models from traditional automakers sapped demand for the
startups' new vehicles.
An exception was Fisker, which has barely kicked off production of a
$37,499 SUV. That is one of the cheapest prices in the EV group, and
Fisker, which has produced only 56 vehicles so far, saw orders improve.
The Model Y from Tesla retails for at least $54,990 after recent price
cuts, Rivian's R1S SUV is priced around $78,000 and Lucid sells its Air
Pure sedans for about $87,400.
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"EV startups have this sort of double whammy," Danni Hewson, head of
financial analysis at British investment platform AJ Bell told Reuters.
"On the one hand, competition and rate hikes, meaning money ain't so
cheap anymore. And on the other hand, inflation, creating a situation
where a consumer is thinking hard about the choices that they make now."
New federal incentives of up to $7,500 for electric cars made in America
raised expectations that demand in the sector would jump, although
conditions for what counts as U.S.-made have tempered enthusiasm.
Tesla also ignited a price war this year by aggressively slashing
vehicle prices, financially secure in its industry-leading profit
margins.
By contrast, Lucid reported a slump in reservations to over 28,000 as of
Feb. 21 from 34,000 on Nov. 7, adding it would not disclose the number
going ahead. Nikola said issues hurting demand for its battery-powered
trucks would not ease any time soon.
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![](../images/030123PIX/busine46.jpg)
R.J. Scaringe, Rivian's 35-year-old CEO,
introduces his company's R1T all-electric pickup and all-electric
R1S SUV at Los Angeles Auto Show in Los Angeles, California, U.S.
November 27, 2018. REUTERS/Mike Blake
![](http://archives.lincolndailynews.com/2023/Mar/01/images/ads/current/peasleymemorials_lda_2022.png)
Rivian forecast 2023 production well below analyst estimates on
Tuesday, citing nagging supply chain shortages, sending shares down
8% in after-hours trading.
"Certainly, what we're witnessing in the macro and what we're seeing
in terms of interest rate is ... across the industry, having an
effective moderating overall demand," Rivian Chief Executive R.J.
Scaringe said on a Tuesday conference call.
Rivian did not provide current orders, a number they have updated
every quarter.
Lucid and Nikola shares have fallen about 9% and 5% respectively
since releasing results, while Fisker has jumped 31% since reporting
a rise in orders.
Venture capitalist Cassie Bowe, a partner at Energy Impact Partners,
sees demand picking up from next year as the current sentiment
forces EV makers to cut prices and introduce lower-priced models
this year, and as the supply chain improves.
Bowe oversees investments in a host of startups, including EV
charging companies, and said she was looking at investment
opportunities in EV makers.
But the four companies have already lost a combined $84 billion in
value over the past year, given production woes and supply chain
disruptions.
"Across the world, there's a little dose of realism that's coming in
saying, maybe the targets that have been set up for EVs aren't
realistic and cannot be achieved," said Bala Lakshman, a partner at
KPMG's automotive strategy advisory.
(Reporting by Abhirup Roy in San Francisco and Akash Sriram in
Bengaluru; Editing by Peter Henderson and Bernadette Baum)
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