According to several media sources, electric vehicle (EV) maker Fisker Inc. (NYSE: FSR) will likely file for bankruptcy. It has hired a firm with a background in bankruptcies and a law firm to prepare. The company’s stock was hammered down by 44% after the news to $0.19. Fisker had already received a “going concern” opinion from its auditors, which is doubt that it can survive another year financially.
In Fisker’s shadow is the trouble at Lucid Group Inc. (NASDAQ: LCID). Its stock is down 64% in the past year, while the Nasdaq is higher by 45%. Recently, Lucid posted mediocre financial figures for the most recent quarter and cut 10% of its workforce. It also estimated production of 57,000 vehicles this year, against previous expectations of 80,000. Lucid is chewing through cash at the pace of billions of dollars a year.
The entire EV industry is in the midst of an unexpected collapse. CNBC recently published a long analysis titled “EV euphoria is dead. Automakers are scaling back or delaying their electric vehicle plans.” It pointed out that Tesla Inc. (NASDAQ: TSLA) sales could be flat this year after half a decade of annual double-digit growth. Major manufacturers General Motors and Ford are slowing their EV plans, putting more weight behind popular hybrids and returning emphasis to sales of their gasoline-powered cars.
Lucid is caught in a vice. It does not have Tesla’s EV market share, which is over 50% in the United States. Tesla also makes money in terms of both net income and adjusted EBITDA. GM and Ford make money on non-EV sales, which buys them years to get their EV businesses in gear. (Here are 10 amazing things Elon Musk invented.)
Lucid is too small to make it with its balance sheet and a shaky EV market.
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