[Music] welcome to your ultimate Pit Stop piston pundit let's dive into the world of electric vehicles EVS not so long ago investors were racing to pour their Capital into EV startups anticipating quick returns and record-breaking profits however the reality has taken a different turn the market is decelerating startups are bleeding money and share prices are plummeting join us as we delve into why these once-promising American EV starter ups are grappling with the harsh reality of dwindling EV
demand and a looming [Music] end reason number five the chill of the market and Tesla's price War EV startups once easily secured backing from major investors booed by the belief in Swift electrification and a sustainable future governments worldwide shared this optimism leading to ambitious emission reduction proposals however consumers weren't as ready while early adopters have embraced their Teslas average consumers find EVS too costly and impractical leading to a market slowdown in 2023 even
Tesla faced stagnation and resorted to significant discounts to maintain sales this decision rippled through the EV industry impacting startups like rivan and Lucid despite price Cuts Tesla thanks to its sales figures still turns a profit a feat not mirrored by startups with modest sales for instance rivan sold only 57,000 EVS last year and expects similar figures for 2024 the EV Market's growth has significantly slowed after impressive growth the previous year ended with a modest 33% growth in
the global EV Market current projections for 2024 hover around 20% reason number four the Investor's dilemma investors including some of the world's most influential are showing signs of discontent as sales forecasts for Ev startups like rivan and Lucid mirror those of the previous year rivan backed by Amazon and Ford and Lucid primarily funded by a group of affluent Saudi Arabian businessmen had all hoped for rapid growth however considering the sales performance over the past two quarters sig
nificant expansion may take longer than anticipated meanwhile shareholders are unlikely to see any dividends the Silver Lining is the backing of these startups by such formidable investors which bodess well for their long-term prospects yet it remains uncertain whether new investors are willing to venture into these companies the stock prices of both rivan and Lucid have been on a downward spiral Wall Street analysts report a 20% drop in just the last week for both companies since Tesla's decisi
on to slash prices rivan's value has plummeted by 44% while lucid has seen a 33% decrease looking at the bigger picture these companies are now worth a mere fraction of their value from a few years ago rivan valued at $153 billion in 20121 is now worth less than $10 billion lucid's value has dipped from $91 billion in 2021 to a current $6.9 billion before we delve into the third reason we at pist pundit would appreciate it if you could hit the Subscribe button your support fuels our passion to c
reate more content like this for you now let's shift gears and explore reason number three the financial Quagmire of EVS investor interest in EVS has dwindled primarily due to the fact that most EV companies both established and startups are far from turning a profit currently only Tesla and Chinese company byd are making a profit on their EVS the losses for the rest are substantial for instance Ford lost over $366,000 on every F-150 Lightning sold in 2023 rivan's losses amounted to $40,000 per
vehicle in the last quarter of 2023 leading to an estimated total loss of around $5.4 billion for the year Lucid also suffered significant losses last year losing over $650 million these companies have yet to figure out how to optimize production the production process remains prohibitively expensive and increased sales currently equate to even greater losses while established automakers like Ford can offset these losses with profits from internal combustion Vehicles EV startups are in Dire Stra
its rivan for instance has initiated its third round of layoffs in 2 years resulting in a further 10% Workforce reduction given these circumstances it's unsurprising that sales estimates are low rivan plans to maintain its production numbers for 2024 aiming to produce around 57,000 Vehicles annually Lucid also plans to keep its figures steady with a target of selling just 9,000 vehicles in 2024 reason number two the pricey predicament perhaps the most significant misstep made by EV startups was
their focus on luxury products the strategy was to generate initial income by selling high-end EVS to early adopters but they overlooked one crucial Factor this Market segment was already dominated by Tesla wealthy households had already purchased their Teslas and showed little interest in trading them for EVS from startup Brands however the situation is starkly different among average consumers for them such expensive EVS are Out Of Reach consider the prices an average EV cost around $55,000 in
January significantly higher than their gas powerered counterparts startups like rivan and Lucid offer even more exclusive models with the cheapest ones costing at least $77,000 a $7,500 federal tax credit does little to offset this cost it's clear that EV startups chose the wrong strategy they opted for exclusivity over high volume sales not realizing they were late to the luxury EV game or perhaps this was a forced move as startups lacked the resources to establish large-scale manufactur urin
g plants and hire thousands of workers to ensure mass production of affordable high volume EVS from today's perspective it seems that Legacy automakers will be the first to offer average EVS designed for the masses reason number one a global phenomenon American EV startups aren't the only ones grappling with challenges this is part of a global Trend where the automotive industry is coming to terms with the reality that the shift to electrification will take longer longer than anticipated in this
scenario survival is tough for most startups regardless of their origin take Chinese startups for instance a few years ago there were 500 such companies today that number has dwindled to around 90 and is expected to decrease further even startups with substantial Capital like Neo are struggling Neo once seen as a potential Tesla competitor started with impressive Investments and built a size ible assembly line however with only 8,000 EVS sold in the second quarter of last year it's now seeking
fresh capital from new investors another startup WM despite receiving over $5.3 billion in funding is unable to cover its losses leading to a recent bankruptcy filing considering these examples it's clear that American startups face a similar fate due to their overly optimistic projections this further underscores that the ongoing EV transition is far from sustainable most startups won't survive and Legacy car makers won't push for EVS any harder than they are compelled to by government regulati
ons indicating that internal combustion engines will continue to be the primary power source for Mobility for the foreseeable future thank you for joining us on this journey through the automotive world don't forget to subscribe to piston pundit to stay updated on the latest vehicle Trends and upcoming videos see you next time
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