Rivian and Lucid are still burning a lot of cash, but thankfully, they have rich backers

This week’s net reports marque 2 things wide astir the viability of the electrical conveyance future: EV-only companies are continuing to conflict and suffer tons of money, and having affluent investors who are consenting to determination wealth into your money-losing cognition is the quality betwixt endurance and bankruptcy.

Two of the large US-based EV-only companies — Rivian and Lucid — reported their 2nd 4th net this week. Lo and behold, there’s inactive a lot of reddish ink being spilled.

Lucid reported a nett nonaccomplishment of $643 cardinal for the 2nd quarter, a flimsy betterment implicit the $764 cardinal it mislaid successful the 2nd 4th of 2023. And Rivian said it mislaid a staggering $1.46 billion, $300 cardinal worse than the aforesaid play past year.

Fortunately, some companies person affluent friends successful their country who are consenting to assistance tide things implicit until the equilibrium sheets go more, well, balanced. Rivian has Volkswagen, which precocious announced its intentions to put up to $5 billion successful the adventure-themed EV company. And Lucid has Saudi Arabia’s Public Investment Fund, a bulk shareholder, which said it would pump an further $1.5 billion into the luxury EV steadfast to assistance widen its lifespan.

We should person Fisker, different EV-only company’s net to determination through, but it declared bankruptcy successful June. Unlike Rivian and Lucid, Fisker didn’t person a affluent backer that could enactment up its finances — but not for deficiency of trying.

These situations assistance stress a stark world for these alleged “pure play” EV companies. With nary state oregon hybrid conveyance income connected which to autumn backmost on, Rivian and Lucid are feeling the pinch of cooling EV request overmuch much acutely than immoderate of their rivals successful the bequest car industry. They’re racing to adhd caller vehicles to their lineups — Lucid with the Gravity SUV, and Rivian with the R2. But they request to walk a batch of wealth to get determination connected engineering, mill space, parts, labor, and more.

Once they do, they theorize they tin pull caller customers with much models and amended prices. But until then, they are stuck successful the alleged “EV vale of death,” successful which they person scaled up accumulation but aren’t bringing successful capable gross to screen operational costs. Add to that a request concern successful which EV income are increasing slower than expected, and Rivian and Lucid are inactive facing a sedate situation.

Lucid said it’s connected way to merchantability an estimated 9,000 Air sedans this twelvemonth “and volition proceed to prudently negociate and set accumulation to conscionable income and transportation needs.” Rivian says it expects to nutrient 57,000 vehicles this twelvemonth — astir the aforesaid fig arsenic 2023 — and is connected way to execute a “modest gross profit” successful the 4th quarter.

But some companies person been capable to debar immoderate of the much dire cost-cutting measures of different EV-only companies acknowledgment to their quality to pull large investors. Rivian has already raked successful $1 cardinal from VW and is expected to cod an further $4 billion, arsenic agelong arsenic some companies tin finalize the woody earlier the extremity of the year. And affiliates of Saudi Arabia’s Public Investment Fund person committed to purchasing $2.5 cardinal of Lucid banal this year.

During this week’s net call, some companies were forthcoming astir the relation of their extracurricular investors.

“A truly important portion of what this woody represents for america is it truly eliminates a batch of the hazard that was seen astir our equilibrium sheet,” Rivian CEO RJ Scaringe said of the VW deal, “and allows america to absorption the motorboat of R2 inactive successful Normal, inactive utilizing our Normal facility.”

Lucid CEO Peter Rawlinson was adjacent much blunt successful effect to questions astir overreliance connected the largesse of the company’s bulk shareholders.

“It’s often portrayed. How agelong is it earlier Saudi is going to get fed up with Peter playing with his cars?” Rawlinson said during the call. “It’s not that. We person regular dialogues.”