At the beginning of each year, I write a series of predictions about what's going to happen in the energy sector over the next 12 months. Story of the Year It highlighted the potential for a major blow to the U.S. EV manufacturing industry.
I cited Fisker and Rivian as examples and questioned whether any U.S.-based electric vehicle specialists have the capabilities to compete with Tesla in that market.
That same week, I drew flak from listeners on a podcast where I predicted that every pure-play US EV manufacturer except for Tesla would be bankrupt or on the brink of bankruptcy by the end of 2024. As this unfolds, my only regret is that I didn't predict that they would all be in bankruptcy by mid-2024 instead of the end of the year.
this week, Fisker files for bankruptcyIt was the latest in a series of casualties in the growing conflict in the electric vehicle division, according to The New York Times. It is mentioned in the story In this regard, Fisker was one of several pure-play EV manufacturers that were able to raise billions of dollars in startup capital from investors caught up in the EV boom in 2020 and 2021.
Some of these companies are Proterra, arrivaland Lordstown Motors Fisker is one of several companies that have filed for bankruptcy before this one. Like RivianI am on the verge of making the exact same decision.
Lucid makes only one model, a luxury sedan, and it's having trouble finding buyers. I boasted. The company set a “record” for new deliveries in the first quarter of the year, but a closer look revealed that it only delivered 1,967 vehicles. The automaker then announced it would lay off 400 employees in May, in what appeared to be a move to conserve cash.
Woof.
Meanwhile, EV truck maker Nikola's stock price has fallen Record low Nikola's stock price has fallen this week as the U.S. EV market continues to soften. As of the close of trading on June 20, Nikola's stock price had fallen to just 33 cents per share. The stock crash came just months after the company delivered its first hydrogen fuel cell heavy-duty truck in the first quarter, but sold just 42 of them.
These and other pure EV makers are by no means serious competitors to Tesla.
It's also important to note that Tesla itself is struggling as EV adoption slows. 10% dismissal Tesla laid off employees in May amid a continuing slowdown in the EV market. The launch of Tesla's fresh-looking Cybertruck has been plagued by recalls, technical issues and customer complaints, and the company's overall sales numbers for the first quarter of 2024 were down significantly, both from the fourth-quarter figures and compared to the previous year.
But a decade ahead of its competitors, a vertically integrated supply chain, and diversification into other businesses give Tesla advantages other pure-play EV companies don't or can't enjoy, positioning the company uniquely among its peers to survive a shrinking market.
Traditional automakers like Ford and GM have been able to appease investors about staggering losses in their EV businesses (Ford somehow managed to I lost Offsetting big profits from their traditional gasoline and diesel divisions, the EV business is expected to post a $132,000 profit per vehicle sold in the first quarter of 2024. But even these companies have made a series of strategic shifts in the past six months, postponing or canceling new investment plans for the EV dream.
What we are witnessing here is a rapid return to reality for the US auto industry. EVs have been, are, and will remain niche products that serve a specific need of a limited demographic, mostly the wealthy. The reason that traditional gasoline and diesel-powered vehicle divisions of companies like Ford and GM still make huge profits is because that is where the real car market remains.
No amount of Soviet-style central planning, industrial policy, command-and-control decrees and regulations coming out of Washington, DC, will change this reality.
David Blackmon is a Texas-based energy writer and consultant who worked in the oil and gas industry for 40 years and specializes in public policy and communications.
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