January 30, 2023

Electric vehicle startups may crumble as quickly as they rose

3 min read

Even the Rivian, seen by many automotive experts as one of the most promising startups for Western electric vehicles, is not immune to the boom and bust cycle of the electric vehicle market. But experts say this is normal when new industries are started.

Raven’s stock has fallen 75% since its initial public offering last year. In November 2021, the Rivian cost more than Ford and GM, but now it is about half the price. His appeal as a Weight against Tesla, Extremely reputable investor And a 12-year increase in production is not enough to keep its stock price from falling to almost all electric vehicle companies.
In 2021, Raven created 1,015 vehicles, falling below that. 1,200 Target has more than doubled its production speed from last year – producing 2,553 vehicles in the first three months of the year – but with the necessary tools to be profitable and justify its high price. not enough. The company is already planning to make a second. Manufacturing plant in Georgia To complete its Illinois plant, where the current facility expects to produce 200,000 vehicles a year. Rivian, like many automakers, raised its prices amid rising inflation and a lack of supply but apologized and Withdrew the price increase On existing pre-orders following customer feedback.
The challenges are even worse for other electric vehicle companies that have gone public in recent years. Stock prices of Faraday Futures, Lord Stone Motors and Electric Last Mile Solutions have been down more than 70% since they went public through SPAC, and everyone has suffered. SEC investigation.
SPACs, which have been. Popular in electric car companiesAllow Companies without significant revenue or proven products Becoming a public trader without much scrutiny like the traditional initial public offering.
Urban Delivery Electric Van on Tuesday, September 28, 2021 at the production line at the facility of Electric Last Mile Solutions in Mashoka, Indiana, USA.

Electric car stocks could fall sharply into a boom and bust. New industries that allow investors to ride the financial rocket in the realm of wealth, but some companies that go public may not be in the less exciting times. The 2000.com statue is one of the most cited examples.

Although no new public companies involved with electric vehicles have been convicted of fraud to date, according to William Quinn, a lecturer at the Queen’s Management School in the United Kingdom who studied the stock market bubbles, fraud is indeed the stock market. There is something special about bubbles. He pointed to the British Bicycle Bubble of 1890 when hundreds of new bicycle companies entered the stock market at exorbitant prices. Almost all went bankrupt in a few years.

David Krish, a business professor at the University of Maryland and co-author of the book “Bubbles and Crash”, said he expects some electric vehicle startups to survive but many to fail. “Stories are being exposed,” Christian told CNN Business.

The fate of two electric car companies, Nikola And Lordstown MotorsThe worst-case scenario was in 2020 and 2021, respectively, after critical reports of misleading and inappropriate behavior by investment firm Hindenburg Research.

American electric vehicle companies are not the only ones that have lowered their prices. Chinese electric vehicle startups have also been successful. Nio’s stock has fallen 49% this year, while X-Peng’s 52% and BYD’s 17%. Even Tesla, the world’s most expensive carmaker, was not immune. Its stock is down 27% this year.

Crush sees the falling stock prices of companies that want to compete with Tesla, a testament to how difficult it is to replace startups that turn investors into businesses with a story that generates revenue and Prove yourself on paper with profit.

“Some of these companies are being exposed in a way,” Krish said. “There’s a saying, when the tide goes out, you see who’s not wearing a bathing suit.”

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