Weekly Brief: EV Start-Ups Struggle as Established Brands Advance
Lordstown Motors lives to fight another day.
The embattled EV start-up cut an 11th hour deal with Taiwanese electronics giant Foxconn to purchase its Ohio factory for $230M. The agreement provides Lordstown with vital capital to produce its first EV, the Endurance pickup truck, which could be a rival for Tesla’s Cybertruck if it can make it into production.
That’s a big if. Lordstown’s journey toward a production-ready EV has been mired by financial setbacks, shady deals with hedge funds, SEC investigations, a SPAC, a high-profile General Motors sell-off and hundreds of millions of dollars of losses. The deal with Foxconn will see Lordstown transfer 400 of its employees to Foxconn.
Wisely, Foxconn doesn’t plan to limit its automotive future to Lordstown. Within hours of closing the deal, Foxconn announced that its new Ohio plant will also produce Fisker Automotive’s second production EV, a sub-$30,000 EV crossover painfully named the PEAR — an acronym for Personal Electric Automotive Revolution. The Fisker PEAR will start production in 2024. Fisker and Foxconn intend to build a minimum of 250,000 PEAR vehicles a year once the plant ramps up production.
It’s a nervy time for all EV start-ups these days, as whiffs of recession waft through the springtime air and rising interest rates and shrinking wallets make investors less likely to make investments in start-ups that require an immense amount of success to break even, let alone turn a profit. Last week EV start-up Canoo released first quarter results so dire that it triggered a 17% plunge in its stock value and predictions that the start-up wouldn’t last another quarter. Among the many grisly data points, Canoo reported a first quarter net loss of $125.4M, almost 10 times its quarterly losses from a year ago.
Canoo, like Lordstown, has garnered enthusiasm with its sleek designs and vision for an electrified future. However, it also has struggled with internal drama, SEC investigations and shady deals with investors. It’s currently suing one of its investors for selling off $61M in illegal stock trades, according to Canoo. If it wins, it may be able to keep its lights on for another few months. Or maybe not. This uncertainty across the EV start-up spectrum could flip the balance of power back to legacy carmakers transitioning to EVs, as opposed to newfangled companies trying to launch from the ground up.
Last week Volkswagen announced plans to bring all electric pickup trucks and SUVs to the US market in 2026. Rather than deliver them as Volkswagen pickups, the carmaker is choosing to revive an old-time American nameplate, the International Harvester Scout, and run its new line of EVs under that brand as a separate entity. After Scout pickups went out of production in the early 1980s, its assets fell into a forgotten vault owned by Navistar International, which VW acquired last year. It’s a clever move to bring the Scout back as an EV, since American customers don’t associate VW with pickup trucks but have shown an appetite for EV pickups, whether it be the Ford F-150, the Rivian R1T or the upcoming Tesla Cybertruck, which has generated huge press and enthusiasm. Paul Myles has more on the story.
