In 2020, upon landing on Wall Street with a valuation of 3 billion dollars, Fisker presented itself to investors as the “Apple” of cars. Four years later, the US startup declared bankruptcy, eliminating the value of its shares and leaving the payment of creditors such as Google, Adobe and Sap pending. Fisker has thus joined four other companies born between 2020 and 2021, at the height of the enthusiasm for electric, and now defunct: Lordstown Motors, Proterra, Arcimoto and Arrival. A ferocious selection process is taking place in the car industry which is sending hundreds of billions into the stock market and could lead to new bankruptcies.
Tesla’s attempted imitation
The auto industry experienced a period of great euphoria at the turn of the pandemic, when it seemed that electric cars were destined to quickly conquer a majority share of global sales. The relative simplicity in building electric cars has apparently lowered the barriers to entry into a market that for decades had remained the prerogative of traditional manufacturers, the only ones capable of managing an extremely complex production chain. Then, the advent of Tesla and its extraordinary ride on the stock market up to 1000 billion in capitalization has convinced several entrepreneurs and just as many investors that the auto sector was upon us of a technological revolutionwith electric startups destined to quickly replace traditional manufacturers such as Volkswagen, Stellantis and General Motors.
Rivian’s flop
Thus, in November 2021, the pickup manufacturer Rivian was worth $105 billion in New York in 2021, more than Ford, despite having only delivered 156 cars at the time, all to its employees. Lucid Motors, another electric startup, reached 66 billion in capitalization in the same period, despite having yet to collect the first dollar from the sales of its cars. Yet, many analysts believed that the multiplication of the zero by infinity in the turnover item was justified by the enormous growth prospects for these and other fledgling companies such as Canoo, Fisker and Faraday Future in the United States, Xpeng and Nio in China.
Industrial and financial difficulties
However, expectations were not met. Many electric startups have encountered enormous difficulties in organizing production, finding themselves forced to postpone deliveries. The quality of the cars produced often turned out to be lower than expected, so much so that, for example, Fisker’s Ocean SUV ended up under investigation for failures in the braking system, steering and door opening mechanisms. Added to these intrinsic difficulties were market and financial ones. On the one hand, in fact, the demand for electric cars has slowed down in the West just as traditional manufacturers were also developing their battery-powered range. On the other hand, the increase in interest rates has led investors to move away from riskier securities, with uncertain profit prospects and, in any case, distant in time. Which, in fact, are electric startups.
From Pif to Amazon: who lost billions
Result: an unprecedented crash on the stock market which seems like the automotive re-edition of the explosion of the internet bubble at the end of the 1990s. For example, today Rivian is worth 10 billion dollars on Wall Street, 92% less than the highs of three years ago. Electric truck manufacturer Nikola (-95%), Lucid Motors (-96%) nor the Chinese Xpeng (-90%) and Nio (-93%) fared no better. Many investors, small and large, have been burned in this stock market bonfire of hundreds of billions: among them Amazon, the Apollo fund and the Saudi sovereign fund Pif. Their hope is that what already happened after the bursting of the dot-com bubble will happen: that is, that three-four solid startups will emerge from the stock market wreck, truly capable of becoming the leaders of the future of the automotive industry.
