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Tesla, Inc. (NASDAQ:TSLA) CEO Elon Musk issued a warning a year ago that Lucid Group, Inc. (NASDAQ:LCID) and Rivian Automotive, Inc. (NASDAQ:RIVN) could face the risk of bankruptcy if they don’t make necessary changes.
Tuesday’s Chapter 11 filing by Lordstown, Inc. (NASDAQ:RIDE) has reignited discussions about the challenges faced by new electric vehicle startups in a difficult environment.
What Happened: Future Fund‘s Gary Black expressed concerns that Lucid will continue to struggle in selling its $100,000 EV sedans. In the first quarter, the company delivered 1,406 units and aims to deliver 10,000 units in 2023.
"Many buyers worry if LCID will even be around in a few years," Black said.
See Also: Best Electric Vehicle Stocks
Black predicted Nikola Corp. (NASDAQ:NKLA), and Workhorse Group, Inc. (NASDAQ:WKHS) would likely file for bankruptcy protection this year.
Nikola and Workhorse are currently trading as penny stocks due to production and liquidity challenges. Nikola has shifted its focus from battery EV trucks to fuel-cell energy trucks and has withdrawn from the European market.
Why It Matters: Workhorse halted production and sales of its C-1000 EV truck in September 2021 after a regulatory report said the vehicle was unreliable. The company has since then effected several restructuring moves, although it is running thin on cash. It announced Tuesday that it has begun manufacturing its W750, a class 4 EV delivery van and Smyrna Truck would be its first certified dealer in Georgia.
Nikola, meanwhile, is conducting test runs of its hydrogen-powered fuel cell truck and trailer despite weak demand and an internal conflict.
Musk last year also highlighted the risk of other automotive companies, except for Tesla and Ford Motor Co. (NYSE:F), facing similar challenges if they fail to streamline their operations and cut costs.
Some individuals on Twitter had a different perspective on Lucid, believing that the EV startup’s strong Saudi backers would prevent it from failing.
Price Action: At the end of Wednesday’s trading session, Lucid saw a 5.25% increase, reaching $6.42, according to data from Benzinga Pro. Lordstown’s stock has been declining since the Chapter 11 filing, ending the session down 7.86% at $2.11. Workhorse and Nikola experienced gains of 0.83% and 5.45% respectively, reaching $0.8040 and $1.16.
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
