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December 24, 2021

If 2021 was the year for electric vehicle stocks, 2022 is the year for actual deliveries. At least that’s the wager. Investor money this year poured into Rivian and Lucid Motors, valuing the EV companies at a combined $150 billion. Neither company has generated meaningful revenue, and they’ve just begun getting keys into the hands of consumers.

Several other U.S. EV makers, including Canoo, Lordstown Motors and Fisker, have hit the public markets in the past year-plus with much lower valuations and promises to start delivering vehicles in 2022 or 2023. And last week, Harley-Davidson said it’s spinning off its nascent electric motorcycle division, Livewire, which will go public through a special purpose acquisition company valued at $1.8 billion.

It’s all funny money, so far. The only pure-play U.S. EV company with a real business is Tesla, whose market cap peaked at $1.2 trillion last month before sliding by about 19%. Outside of Tesla’s four models on the market, car buyers wanting to go electric have had a slew of options from large manufacturers. Popular choices include the Chevrolet Bolt, Nissan Leaf, Ford Mustang Mach-E, Mini Cooper SE and Porsche Taycan. Prices range from about $27,000 to more than $150,000.

Drafting off Tesla’s popularity, investors are betting that, starting in 2022, more EV companies will move beyond technology and sleek designs and succeed where so many have previously failed — manufacturing at scale. To get there, they have to contend with supply chain disruptions, labour market challenges, inflationary pressures, increasing competition and the likelihood of higher capital costs.

“The question is going to be who starts production and is able to convert this interest and the investments in the brand into deliveries and happy customers,” said Vitaly Golomb, a tech investment banker who focuses on EVs at Drake Star Partners. ”That’s really the next phase.”

Golomb, who’s based in San Francisco, said he invested in Rivian almost a year ago and preordered the R1T truck a year before that. As of Dec. 15, the company had received 71,000 preorders for its trucks and R1S SUVs. At the time of its IPO last month, Rivian said it would take until the end of 2023 to fill its existing order book.

Rivian sold its first 11 vehicles in the third quarter, for revenue of $1 million, and said it expects to fall “a few hundred vehicles short” of its 2021 production target of 1,200 vehicles. It lost $1.23 billion in the latest quarter, a big number but one it can stomach after raising $13.7 billion in its IPO, and building up to a current market cap of $87 billion.

Rivian’s other revenue source will come from providing vehicles to corporate delivery fleets. It agreed to provide Amazon with 100,000 vans that are “designed to achieve lower total cost of ownership while supporting a path to carbon-neutral deliveries.” Amazon expects to deploy 10,000 vans by next year.

Golomb said he’s bullish on Rivian because of its technical team and focus on manufacturing. He’s also optimistic about Lucid, which is trying to reach a very different type of driver.

Lucid is going after the electric sedan market. It’s taking orders now for the Air Pure, which starts at $77,400 and has a projected range of more than 400 miles per charge, according to its website. The top-of-the-line Air Grand Touring starts at $139,000 and can go 516 miles on a charge.

Growing into their valuations’
Lucid went public through a SPAC in July and is now valued at close to $64 billion. Through September, it had pulled in just $719,000 in revenue for the year, with deliveries officially beginning on Oct. 30. The company says it has about $1.3 billion worth of bookings and $4.8 billion in cash after losing $1.5 billion in the first three quarters of the year.

“Those two companies I think will do well,” Golomb said, referring to Rivian and Lucid. “It’s a question of them growing into their valuations.”

The EV industry got a boost in November, when Congress passed President Joe Biden’s infrastructure bill. That earmarked $7.5 billion to jump-start Biden’s goal of having 500,000 EV chargers nationwide by 2030, spurring a brief rally in shares of charging companies like ChargePoint Holdings, Volta and EVgo.

EV stocks, including Tesla, Rivian and Lucid, retreated on Monday after Sen. Joe Manchin, D-W.Va., said over the weekend that he won’t support Biden’s “Build Back Better” plan, which would have offered incentives of up to $12,500 for the purchase of an EV.