EV startups burn through more cash as demand falters

US electric vehicle startups are expected to show the impact of Tesla’s price war when they report quarterly results over the next few days, with investors awaiting details on how the companies are managing cash amid a funding drought.

Even market leader Tesla (TSLA.O) has warned of “turbulent times” and traditional automakers with deeper pockets including Ford Motor (F.N) are losing money on EVs. The squeeze has already claimed its first casualty in electric truck maker Lordstown Motors (RIDEQ.PK), which filed for bankruptcy in June.

Companies including Lucid (LCID.O) and Nikola (NKLA.O) are likely to report another quarter of steep cash burn, as they continue to struggle with production and demand.

“The only ones that have a chance besides Musk are the legacy auto providers and so far they are proving that they are losing money hand over fist trying to get into the EV game,” said Thomas Hayes, chairman of hedge fund Great Hill Capital. Hayes follows the EV industry closely but holds no shares.

The one standout seems to be Amazon-backed Rivian Automotive (RIVN.O), which is likely to report a three-fold surge in revenue to $983.1 million for the April-June quarter.

The company’s cash outflow likely slowed to $1.19 billion in the second quarter, down by about $600 million from the January-March period, according to 13 analysts polled by Visible Alpha. Gross margins likely improved to a negative 51.3 per cent from negative 58.6 per cent.

“Rivian’s competitive advantages are shining brighter, with the company emerging as a demand creator when considering that the majority of its buyers have never previously purchased a pickup truck,” Needham analyst Chris Pierce said.

At least 8 analysts have raised their price target on the company’s stock, which has gained about 40 per cent so far this year.

Lucid, which is majority owned by Saudi Arabia’s Public Investment Fund, is expected to report deepening losses on Monday after it reported a fall in April-June production due to supply-chain problems.

It is set to post a cash balance of $2.76 billion for the April-June period, up from $900 million in the prior three months, after it announced a fundraise of about $3 billion, according to six analysts polled by Visible Alpha.

Nikola, which reiterated a going-concern warning in May, is expected to report a 15 per cent decline in revenue and widening losses on Friday.

Its shares have rallied nearly 40 per cent this year as the company attempts to reduce its cash burn with layoffs and the liquidation of a recently acquired battery business. However, that may still not be enough to meet its funding needs, analysts have said.

Fisker (FSR.N), which has healthy cash reserves and an aggressive profitability goal, is expected to report on Friday its first revenue from vehicle sales after the firm started deliveries of its Ocean SUVs in the June quarter.

But the company missed its production target in the quarter due to a parts shortage.

Investors will be keen to see Fisker’s reservation numbers as their Ocean SUV does not qualify for the $7,500 federal tax credit.