Lucid and Nikola may not be part of the future of the electric vehicle (EV) industry. At least, that is what prominent news service Reuters has suggested. They have too little cash, coupled with too little sales. Better to bet on Tesla and the world’s largest manufacturers. (These are the 13 biggest electric vehicle business failures in American history.)
[in-text-ad]
To make its point, Reuters quoted Thomas Hayes, chair of hedge fund Great Hill Capital, who said, “The only ones that have a chance besides Musk are the legacy auto providers and so far they are proving that they are losing money hand over fist trying to get into the EV game.” “Musk” is Elon Musk, the founder of Tesla, by far the leading EV market leader in the United States.
Tesla delivered 466,000 vehicles in the second quarter. By comparison, Lucid and Nikola produced pathetically small numbers. While legacy car companies like Ford did little better on a delivery basis than Lucid and Nikola, Ford has massive product development, marketing and dealership networks to help attack the market. Even if they do not reach their goals, they can outspend any car company to get there.
When Lucid and Nikola were founded, two broadly held assumptions about the industry existed. The first is that sales of EVs would skyrocket by mid-decade. The other was that people would pay high enough prices to support high margins. As Musk cut prices, the margin theory fell apart. And, except for Tesla, no real demand has materialized.
There is really nothing special about Lucid’s Air products. They have slick designs and high horsepower. But each Lucid has a price of over $95,000, limiting its buyer pool to a tiny number of customers.
Nikola makes heavy-duty trucks. It is a modest-sized market that is dominated by diesel engines. These trucks often cost over $150,000. Long-haul truckers may buy new trucks, but getting them to move to alternative engine solutions may be a hard sell, mainly when they are sold by a company in deep trouble.
Reuters is right. Lucid and Nikola are doomed.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.