- Electric vehicle companies Rivian and Lucid Motors went public in 2021 and are valued at a combined $150 billion, despite almost no revenue.
- Several other EV makers that are also pre-revenue hit the public market through SPACs in the past year-plus.
- Some companies have told investors they expect to start delivering a significant number of vehicles in 2022.
If 2021 was the year for electric vehicle stocks, 2022 is the year for actual deliveries. At least that’s the wager.
Investor money this year poured into Rivian and Lucid Motors, valuing the EV companies at a combined $150 billion. Neither company has generated meaningful revenue, and they’ve just begun getting keys into the hands of consumers.
Several other U.S. EV makers, including Canoo, Lordstown Motors and Fisker, have hit the public markets in the past year-plus with much lower valuations and promises to start delivering vehicles in 2022 or 2023. And last week, Harley-Davidson said it’s spinning off its nascent electric motorcycle division, Livewire, which will go public through a special purpose acquisition company valued at $1.8 billion.
It’s all funny money, so far.
The only pure-play U.S. EV company with a real business is Tesla, whose market cap peaked at $1.2 trillion last month before sliding by about 19%. Outside of Tesla’s four models on the market, car buyers wanting to go electric have had a slew of options from large manufacturers. Popular choices include the Chevrolet Bolt, Nissan Leaf, Ford Mustang Mach-E, Mini Cooper SE and Porsche Taycan. Prices range from about $27,000 to more than $150,000.
Drafting off Tesla’s popularity, investors are betting that, starting in 2022, more EV companies will move beyond technology and sleek designs and succeed where so many have previously failed — manufacturing at scale. To get there, they have to contend with supply chain disruptions, labor market challenges, inflationary pressures, increasing competition and the likelihood of higher capital costs.
“The question is going to be who starts production and is able to convert this interest and the investments in the brand into deliveries and happy customers,” said Vitaly Golomb, a tech investment banker who focuses on EVs at Drake Star Partners. ”That’s really the next phase.”
Golomb, who’s based in San Francisco, said he invested in Rivian almost a year ago and preordered the R1T truck a year before that. As of Dec. 15, the company had received 71,000 preorders for its trucks and R1S SUVs. At the time of its IPO last month, Rivian said it would take until the end of 2023 to fill its existing order book.
Rivian sold its first 11 vehicles in the third quarter, for revenue of $1 million, and said it expects to fall “a few hundred vehicles short” of its 2021 production target of 1,200 vehicles. It lost $1.23 billion in the latest quarter, a big number but one it can stomach after raising $13.7 billion in its IPO, and building up to a current market cap of $87 billion.
Rivian’s other revenue source will come from providing vehicles to corporate delivery fleets. It agreed to provide Amazon with 100,000 vans that are “designed to achieve lower total cost of ownership while supporting a path to carbon-neutral deliveries.” Amazon expects to deploy 10,000 vans by next year.
Golomb said he’s bullish on Rivian because of its technical team and focus on manufacturing. He’s also optimistic about Lucid, which is trying to reach a very different type of driver.
Lucid is going after the electric sedan market. It’s taking orders now for the Air Pure, which starts at $77,400 and has a projected range of more than 400 miles per charge, according to its website. The top-of-the-line Air Grand Touring starts at $139,000 and can go 516 miles on a charge.
‘Growing into their valuations’
Lucid went public through a SPAC in July and is now valued at close to $64 billion. Through September, it had pulled in just $719,000 in revenue for the year, with deliveries officially beginning on Oct. 30. The company says it has about $1.3 billion worth of bookings and $4.8 billion in cash after losing $1.5 billion in the first three quarters of the year.
“Those two companies I think will do well,” Golomb said, referring to Rivian and Lucid. “It’s a question of them growing into their valuations.”
The EV industry got a boost in November, when Congress passed President Joe Biden’s infrastructure bill. That earmarked $7.5 billion to jump-start Biden’s goal of having 500,000 EV chargers nationwide by 2030, spurring a brief rally in shares of charging companies like ChargePoint Holdings, Volta and EVgo.
EV stocks, including Tesla, Rivian and Lucid, retreated on Monday after Sen. Joe Manchin, D-W.Va., said over the weekend that he won’t support Biden’s “Build Back Better” plan, which would have offered incentives of up to $12,500 for the purchase of an EV.
Dan Pipitone, CEO of TradeZero, said the EV sector has been a hot space for investors on his stock trading platform all year, with outsized activity over the last couple months in the charging providers.
“Everyone is talking about the car makers and deliveries, but at the end of the day, gas stations are going to be necessary as well,” said Pipitone. “We’re talking about 5x growth in the next couple of years in terms of charging stations.”
The infrastructure companies stand to benefit regardless of which EVs consumers buy, so they make for a potentially safer investment. However, it’s poised to be a competitive market, and none of the players have a brand that resonates with consumers.
That helps explain why companies like Rivian and Lucid are the ones getting the Tesla treatment, trading on hype rather than fundamentals. Pipitone calls himself a “Tesla fanboy” and said he’s driving his second Tesla now.
“They had a huge headstart,” Pipitone said. “But at a $1.2 trillion valuation, was it worth more than 60% of all transportation companies combined? I’d say no.”
Investors have shown less enthusiasm for the next tier of EV makers, which have all come to market through SPACs. They’ve seen what’s happened with electric truck maker Nikola and Lordstown.
After going public via a SPAC in June of last year, Nikola shares shot up, pushing its market cap past $30 billion, higher than Ford at the time. A year later, a federal grand jury charged Nikola founder Trevor Milton with three counts of criminal fraud for lying about “nearly all aspects of the business” to bolster stock, according to the indictment. Nikola this week agreed to pay the SEC $125 million to settle charges it defrauded investors by misleading them about its products, technical capacity and business prospects.
Lordstown, on Ohio-based electric truck maker, soared after going public through a SPAC in October 2020. But the stock is down 887% from its high, similar to the drop suffered by Nikola.
Lordstown is under investigation by the SEC and Justice Department for potentially false or misleading statements from former management, including founder Steve Burns, who resigned in June. An internal investigation found inaccuracies around Lordstown’s preorders.
Delays, delays and delays
Amid their controversies, both Nikola and Lordstown have pushed back production schedules. In August, Nikola lowered its production guidance to 25 to 50 vehicles for the fourth quarter, down from a prior estimate of 50 to 100. Last month, the company said it’s now committed to delivering “up to 25 pre-series Tre BEV trucks to dealers for demos and to customers for freight hauling on public roads” in the fourth quarter.
Lordstown delayed its expected date of commercial production to the third quarter of next year from the second quarter, in part because of supply chain issues. The company announced in September that it was selling its Ohio plant to Foxconn, passing off hefty capital requirements.
Meanwhile, Canoo is promising to develop a pickup truck, a delivery van and a futuristic 7-seater that it’s calling a lifestyle vehicle, or a “loft on wheels.” Launch isn’t coming until late 2022 at the earliest, and customers can put down $100 on a pre-order.
Canoo went public through a SPAC in late 2020, and is now valued at $2 billion. Fisker started trading shortly before Canoo and now has a market cap of $5 billion. Fisker is accepting $250 reservation payments for its SUV called Ocean, and is targeting November 2022 to begin production.
Eventually, upstart EV makers have to prove they can do more than build nice websites, show demos and collect pre-order fees. They have to build and ship products, and they’ll be trying to ramp up manufacturing just as the rest of the auto market is shifting rapidly to their own electric-powered fleets.
Consumers have a wealth of options, and are unlikely to sit on their hands if production delays continue. Investors, similarly, have plenty of ways to play the market and a limited amount of patience.