Rivian and Lucid Face Falling Cash and Sales, According to Analysis

Key Points

• A recent analysis of America’s small electric vehicle (EV) makers concluded that their situation is deteriorating.
• This is due to diminished cash, troubling sales trends, and the expected policies of the incoming administration.

The Wall Street Journal has analyzed America’s small electric vehicle (EV) makers and concluded that their situation is going from “bad to worse.” The reason is “diminished cash,” troubling sales trends, and a Trump administration that could hurt the EV industry with new policies. There is speculation that the new administration will eliminate the $7,500 tax credit for individual EV sales.

Which EV Makers Are Hurting

The spotlight is on Lucid and Rivian.

The analysis focuses on Rivian Automotive Inc. (NASDAQ: RIVN | RIVN Price Prediction), Lucid Group Inc. (NASDAQ: LCID), and Canoo Inc. (NASDAQ: GOEV). Although it considers some recent funds Rivian and Lucid have received, it also shows sharp decreases from 2022 cash balances. The authors ask whether each company has enough capital due to extremely small sales, which could take years to rise to the level where they break even on a cash basis.

The analysis also takes into account the huge success of Chinese EV companies. Although tariffs largely block them from U.S. markets, these companies, led by BYD, have made some inroads in Europe. They usually have strong balance sheets and often receive financial help from the Chinese government. They completely dominate China, the world’s largest car market by far.

Although Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM) have yet to be highly successful with their EV products in America, each has a balance sheet to push into the sector, even if they have slowed their investments. The best description of them is that they will not go away.

Finally, Tesla Inc. (NASDAQ: TSLA) has 49% of the U.S. market. Its stock has skyrocketed since the election. Part of this is because of the assumption that the new administration will help Tesla’s sales due to Elon Musk’s relationship with Donald Trump.

While the Wall Street Journal analysis covered three dozen EV and EV battery companies, the spotlight was on Lucid and Rivian. This may be because they are well-known brands in the industry and the failure of either would be highly visible.

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