Electric vehicle makers burning cash, slammed by sky-high costs

Workers marry the body structure with the battery pack and the front and rear sub frames as they assemble electric vehicles at the Lucid Motors plant in Casa Grande, Arizona, on Sept 28, 2021.Every time Lucid Group Inc or Rivian Automotive Inc sells an electric car, they are losing hundreds of thousands of dollars due to staggering raw material and production costs, their latest earnings statements showed.

The company, which went public a little over a year ago and is backed by Saudi Arabia's Public Investment Fund, saw its market value shrivel by two-thirds this year to about US$20 billion from US$95 billion at its peak in November 2021. US-listed British firm Arrival SA warned last week it may not have enough cash to keep its business going toward the end of next year, and would have to cut jobs. It has yet to start mass production.

Canoo Inc said in May it had "substantial doubt" about remaining a going concern. At the end of September, it had US$6.8 million in cash and equivalents, down sharply from US$415 million a year earlier.Many EV startups recorded huge losses in the September quarter and warned that high costs were here to stay due to surging inflation and a global supply chain crisis.

The company, however, faced those challenges in a different time when it was nearly the only pure play EV maker and competition from legacy automakers including General Motors and Volkswagen was nascent."In the EV business ... being early stage is a money-burning exercise, it's difficult to get over the hump," said Canaccord Genuity analyst George Gianarikas.

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