It’s been a nasty 12 months to date for startups offering electric vehicles. It could get quite a lot worse.
The problem isn’t that EV sales aren’t growing. They’re, despite a slowdown. It’s that they’re not growing as quickly as carmakers had anticipated.
“The pace that every the automakers were expecting isn’t there,” former Ford CEO Mark Fields told CNBC’s Squawk on the Street on Friday. That, he added, is why we’re seeing price cuts, rising inventories, and increased incentives from EV makers.
Early EV adopters, he noted, have different purchase criteria—paying homage to innovation and environmental impact—than average buyers. But loads of them have already purchased their vehicles, and now EV makers must win over regularly consumers more focused on cost and convenience. For them, charging time and inadequate charging infrastructure loom large, along with repair costs and resale value.
“The patron throughout the mainstream market goes to say, you understand what, in case you work all that stuff out, then I’ll really consider this,” said Fields. “But until then, I’ll either stick to my internal combustion engine, or alternatively, as you may be seeing, with hybrids, a extremely great solution for consumers immediately.”
Sales of hybrid vehicles are soaring, much to the advantage of Toyota, which pioneered the technology and has long warned that the EV transition will take longer than many believed. Ford has also enjoyed surging hybrid sales and plans to offer more such vehicles, whilst it decelerates its EV plans given weaker-than-expected sales.
But Fields harbors no doubts as regards to the transition to EVs.
“The transition will absolutely occur, nevertheless it could take longer,” he said. And that, he added, spells difficulty for EV makers launched in recent times with the expectation of faster EV adoption.
“With this longer path, various them are going to get into real financial trouble, and as well as you’re seeing that play out immediately,” he said.
Struggling EV startups
On Wednesday, the Wall Street Journal reported that Tesla challenger Fisker had hired restructuring advisors to assist with a possible bankruptcy filing. The EV maker’s shares fell by roughly 50% the subsequent day. They recovered somewhat on Friday, after Fisker said it “often” works with outside advisors and that it was focused on attempting to partner with an enormous automaker, which Reuters reported earlier this month may thoroughly be Nissan.
But Fisker’s market cap stands at $97 million, down from $4.1 billion in 2021. It risks being delisted from the Recent York Stock Exchange, and last month it cut jobs and warned it’d unable to proceed as a going concern.
Meanwhile, Amazon-backed Rivian recently announced that it would probably delay factory plans in Georgia as a way to avoid wasting billions of dollars, helping to ease worries that it lacked sufficient funding to see it through the launch of its next model, the R2.
That followed Tesla CEO Elon Musk suggesting last month that Rivian, which had just announced layoffs, had only six quarters or so until bankruptcy. “They should cut costs massively, and the exec team must live throughout the factory or they’ll die,” he posted on X.
Rivian’s market cap has plunged from a 2021 peak of $153 billion to $10.8 billion today.
As for Saudi-backed Lucid, its market cap has plummeted from a peak of $91.4 billion in 2001 to a $6.2 billion today. Last month, it said it could construct only about 9,000 EVs this 12 months—a far cry from the 90,000 it predicted for 2024 just three years ago.
This story was originally featured on Fortune.com