Rivian, Lucid, and other electric vehicle startups are working urgently to secure additional funding and reassure investors on Wall Street.

This week, Rivian, Lucid, and Nikola unveiled strategies to cut costs while expanding operations and aiming for their maiden profits. These initiatives include workforce reductions, production adjustments, supplier reorganizations, and refocused objectives. Despite their efforts, all three prominent EV startups are trading near their 52-week or all-time lows.

Electric vehicle startups, once propelled by favorable market conditions, including low interest rates and investor enthusiasm, are now facing the challenge of proving their viability in a more challenging environment, with some already succumbing to bankruptcy.

A primary focus for these companies is securing sufficient cash reserves. Executives from Rivian Automotive, Lucid Group, and Nikola Corp. have outlined strategies to cut costs while expanding operations and striving for profitability. These measures range from workforce reductions and production adjustments to supplier realignments and strategic shifts.

The urgency to adapt comes as the adoption of electric vehicles progresses slower than anticipated, despite significant investments by companies aiming to gain an early advantage in emerging market segments.

Among these automakers, Rivian appears to be in the most favorable cash position amidst the sluggish EV adoption. The company asserts it has adequate funds to support its upcoming R2 launch scheduled for early 2026.

The EV market's deceleration and intensifying competition have even affected Tesla, the leading EV manufacturer in the U.S., which is currently undergoing a global restructuring, including workforce reductions of approximately 10%.

Financial analysts have characterized the current state of the electric vehicle market as an "EV winter," signaling a departure from the earlier enthusiasm surrounding EVs. However, some view this as a temporary setback that manufacturers will need to overcome for sustained growth.

Citi analyst Itay Michaeli noted in a recent investor note that U.S. EV adoption may have hit a temporary pause after initial penetration among early adopters and specific regions. Despite the challenges, Michaeli expressed optimism for the sector's prospects over the next 12-18 months.

Rivian has been engaged in a cost-cutting initiative for several months, which included staff reductions, enhancing efficiency at its Illinois plant, and halting the construction of a new factory in Georgia. The decision to pause factory construction is anticipated to save over $2.25 billion in capital spending, with plans to commence production of Rivian's next-generation R2 vehicle at its current Illinois facility.

As of March, Rivian reported $7.86 billion in cash, cash equivalents, and short-term investments, with total liquidity exceeding $9 billion.

Lucid, on the other hand, closed the first quarter with approximately $4.6 billion in cash, cash equivalents, and investments, with total liquidity around $5.03 billion. Despite facing notable demand challenges, substantial losses, and capital requirements, Lucid's CEO, Peter Rawlinson, expressed strong optimism about the startup's future. The company recently secured a $1 billion investment from an affiliate of Saudi Arabia's Public Investment Fund, its largest shareholder, which underscores continued confidence in Lucid's prospects.

Rawlinson emphasized the importance of identifying cost-saving opportunities and highlighted the significance of technology in driving gross margins, with scalability expected to enhance efficiency and profitability.

While Rivian and Lucid reported wider-than-expected first-quarter losses, Nikola's performance slightly surpassed analysts' expectations, albeit with lower-than-anticipated revenue. Unlike Rivian and Lucid, Nikola focuses exclusively on commercial vehicles rather than consumer vehicles. Nikola's CFO, Thomas Okray, emphasized the need to reduce costs while expanding sales, including potential price reductions for large customers to stimulate scale.

Nikola's cash reserves are considerably lower compared to Rivian and Lucid, with assets totaling $469.3 million at the end of the first quarter, primarily comprising cash and cash equivalents along with truck inventory.

Source: CNBC