Experts say many electric car startups are doomed to fail — but these 5 are built to last

Not every electric vehicle startup working to tap into the market will make it, but companies like Lucid likely will, experts say. Lucid

  • More startups are entering the electric vehicle space in the hopes of disrupting the market.
  • But not all of these companies are going to make it, experts say.
  • Here are the players of the EV market that experts say are built to last.

Dozens of electric vehicle companies are hoping to disrupt the global car market, but not all of them are built to make it in the long run.

EV startup activity has accelerated in recent years as the demand for electric vehicles is expected to keep growing over the next decade. Electric or hybrid vehicles will make up more than half of all light vehicles sold globally in 2026, according to BCG. The global consultancy also predicted that zero-emission vehicles could replace gas-guzzling ones for new light-vehicle sales across the world just after 2035.

It’s a promising time for the startups that are backed by bullish investors with deep pockets, and especially for those led by innovative thinkers with a penchant for new business models.



“They’re not bound by traditional constraints that legacy manufacturers have been operating under,” Kristin Kolodge, executive director, driver interaction and HMI at consumer intelligence firm JD Power, told Insider of EV startups. “They have an ability to think outside the box.”

But many challenges come with being a nascent company, especially in the auto business, which is particularly unforgiving of startups. The industry has huge overhead costs and low margins, dominated for decades by a select few megacorporations.

Not only do these players need to convince customers of their technology, they’re also competing against one another for enough funding. This is all while they’re establishing an entirely new supply chain and rushing to meet ambitious launch dates. EV startups are also entering the industry at the same time legacy automakers are scrambling to reinvent their own lineups.

“I worry with a lot of these startups about how they’re going to be able to execute when they actually have to ship cars and service them,” Mike Ramsey, VP, analyst, automotive and smart mobility at advisory firm Gartner, Inc., said.

Some, like Lordstown Motors and Nikola Corp., have already seen how difficult it is to succeed — even before any cars hit the market. But others are sure to make it.

Here are the major players of the startup EV market that are built to last, according to experts.

Rivian-R1T-1

Rivian

CEO: RJ Scaringe

Headquarters: Irvine, California



Founded by MIT graduate RJ Scaringe, Rivian came onto the EV scene in 2009. Twelve years later, Rivian could target a valuation of $70 billion in its upcoming initial public offering, Bloomberg reported.

The company is expected to launch two vehicles this year, the all-electric R1S SUV and R1T pickup, which experts say smartly line up with consumer tastes.

“The fact that their first two vehicles are going after two segments that are genuinely attractive to people, that’s really important,” said Mike Dovorany, VP, automotive and mobility practice at market research firm Escalent. “People want SUVs. They want trucks.”

Rivian is also hoping to tap into unique features with its flagship vehicles. For instance, it just demonstrated a $5,000 slide-out camp kitchen accessory. It might be over-the-top, but that kind of creativity is what could help Rivian last long-term, experts say.

“The new startups are certainly creating some new experiences with shopping, with marketing, that are some fresh approaches that we’re seeing certainly resonating with consumers and in many cases, they are creating some new features as well that are very nontraditional,” Kolodge said. “It starts to demonstrate a different form of creativity that maybe you’re not quite seeing yet at the traditional manufacturer level.”

tesla supercharger

Tesla

CEO: Elon Musk

Headquarters: Palo Alto, California

Tesla may not technically be a startup anymore, but for many, it remains the quintessential EV company. Having entered the electric industry in 2003 with little competition, the company snatched up early adopters and successfully established a devoted fanbase in the same way that it established its manufacturing and production expertise.

“They are so smart about the things that they did right to knock down the obstacles,” Ramsey said of Tesla. “The Supercharger network that means that this doesn’t have to be a second vehicle. It can be your only vehicle. The super long range. The interior packaging. That’s what I think the other companies need to do, too.”



Tesla still has some major technological kinks to work out (see:Autopilot), and it has yet to prove it can be consistently profitable in the long term. But the company’s brand recognition is strong, a factor that is largely driving its lasting success, experts say.

“If you ask most consumers about electric vehicles, essentially Tesla has defined what an electric vehicle is to them. It is absolutely setting their expectations,” Dovorany said. “The result is that, as competitors are coming to the market, consumers are comparing them to Tesla, and if they fall short, it’s inhibiting their desire to own those vehicles.”

Arrival

Arrival

CEO: Denis Sverdlov

Headquarters: London, United Kingdom

Founded in 2015, Arrival has already attracted interest from automakers Kia and Hyundai, signed a $1 billion deal to deliver 10,000 electric vans to UPS, and has struck a deal to develop a ride-hailing vehicle with Uber.

The electric van startup was valued at more than $13 billion after merging with special purpose acquisition company ( SPAC) CIIG Merger Corp. in March — the largest listing ever for a British company — without having produced a single vehicle. 

To some, the company’s early success shows how serious Sverdlov, its Russian billionaire founder and CEO, is about sticking around. The company has also pulled names from legacy auto companies, like former General Motors vice president Mike Abelson, who is the startup’s CEO in North America.

Two of Arrival’s claims to fame include its unique approach to manufacturing — done at smaller-scale plants that cost less to build and operate than a standard auto production site — and the fact that its 215,000 square feet microfactories are in direct contrast to the likes of a Musk Gigafactory.

“We’re at the stage in history where we’re moving just beyond Tesla,” Kolodge said.

NIO

NIO

Headquarters: Shanghai

CEO: William Li



NIO has been one of the most successful EV companies to come out of China, having raised $5.4 billion in funding, per a Crunchbase estimate.

The seven-year-old startup said that as of last month, it had delivered more than 125,500 electric EC6 coupe SUVs, ES8 flagship SUVs, and ES6 SUVs to customers.

By delivering on its product promises and demonstrating that it is capable of financial success, NIO is the perfect example of a Chinese EV startup that is made to last, experts say.

“No one’s like Elon Musk, but they’re in the mold of Elon Musk and stepping into the auto industry with runs on the board,” said Michael Dunne, CEO of consultancy ZoZo Go. “They’re accumulating billions of dollars of funding that will be necessary so they don’t go out of business, and others have not raised nearly as much money.”

Lucid Motors

Lucid Motors

CEO: Peter Rawlinson

Headquarters: Newark, California

Headed up by former Tesla vice president of vehicle engineering Peter Rawlinson, Lucid has been working to make good on its promises to compete with Musk. Rawlinson came to Lucid having been chief engineer of the signature Model S.

The startup expects to launch its debut luxury sedan, the Air, later this year, after two pandemic-induced production delays. The company also expects to close its merger with SPAC Churchill Capital Corp. IV in the coming weeks.

One factor that separates Lucid from the others and makes it nearly infallible, experts say, is its focus on the consumer experience.

“Lucid is probably going to be relatively low-volume, but they’ve done a lot of work on the digital experience front-end for ordering, buying, and configuring, that I think is going to be helpful for them,” Ramsey said. “If they execute on that part of it well and give themselves enough space to be successful, I think that they could make it.”

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