Electric Last Mile, Lordstown, Canoo: these cash electric car start-ups

Rivian is not the only “baby Tesla” facing the harsh realities of the automotive industry. Just at the time when the media manufacturer of electric pick-ups is forced to reorganize to solve its logistical problems, several other young people are shooting at the electric car today in great difficulty due to lack of money.

Electric Last Mile Solutions, a Michigan-based start-up founded by a former General Motors employee, announced on Sunday its intention to file for bankruptcy on Chapter 7. “Management said in a statement. The company had been listed since June 2021, but the course had since melted, and the search for funds had failed.

The beginning of a long series? Lordstown Motors explained in mid-May that it had to postpone planned investments in its plant due to difficult market conditions. The US start-up planned to raise $ 250 million this year, but had to revise its plans to $ 150 million. The release of its first vehicle, the Endurance, is further delayed.

The party is over

The leaders of Canoo, launched by former BMW employees, in turn issued a warning a month ago to the SEC, the US stock exchange policeman: due to inability to raise new funds, they explain, “we will not be able to to execute our business plan and we may be forced to close down or reduce our operations significantly. ”Estimate of their need for new financing: $ 600 million.

The British specialist in electric buses and vans Arrival may also find itself short of cash. According to analysts at German bank Berenberg, it will have only $ 150 to $ 250 million left by the end of the year, an amount “insufficient to fund the necessary liquidity by 2023,” they write. At the end of March, Arrival still had $ 735 million.

After wanting to take advantage of the “Tesla bubble”, these start-ups became listed by merging with SPACs (special purpose acquisition companies) and raised hundreds of millions of dollars. But since the end of 2021, the party is over – or at least interrupted: the “bubble” is emptied of air, and investors look twice before giving them the fresh money they need to continue their development. car market in crisis.

Some have expected, such as Rivian, which still has $ 17 billion in cash, raised during its IPO. Others are backed by deep-pocketed shareholders, such as Lucid, to whom Saudi state entities have just contributed $ 3.5 billion: the company still has $ 5.4 billion in cash. By comparison, Lordstown or Canoo have more than 200 and 100 million in cash, respectively (end of March 2022).

Radio silence in Byton

Building a new car manufacturer is not a long calm river. This requires billions of investments, as the reality is brutally reminiscent of these young shots. Fragile, they may find it difficult to withstand the setbacks associated with production start-ups, shortages, or even cost increases affecting the entire automotive industry.

Alongside listed companies that are forced to publicly chronicle their finances, others have already disappeared, or are in the process of disappearing, more discreetly. This is the case with Byton, which in early 2019 announced its first vehicles in Europe in late 2020. This is not happening. And on the company’s website, it has been radio silence since January 2021.

According to an article in “Nikkei Asia” from November last year, the company, although originally supported by the Chinese Tencent, Foxconn and FAW, then stopped paying wages and one of its creditors had asked for the initiation of a bankruptcy proceeding. Byton employed 1,600 people at the end of 2019.

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