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Buzzy EV upstarts are learning it’s hard to become Tesla

March 3, 2022, 5:55 PM UTC

Turns out mass-producing electric vehicles may be harder than investors hoped—especially during a global pandemic.

Three of the auto industry’s buzziest EV startups delivered disappointing news this week to Wall Street and prospective customers, putting a damper on hopes that a Tesla rival could emerge sooner rather than later. The reports come just months after two of those companies, Rivian and Lucid, set the markets ablaze with a blockbuster IPO and huge stock price jump, respectively.

The hits started Monday, when California-based Lucid reported losses of $2.6 billion in 2021 and lowered its production targets for this year. Lucid CEO and CTO Peter Rawlinson cited supply chain problems as the culprit for the fuzzier 2022 outlook, though he added that key components, such as semiconductors and batteries, remain accessible.

Fledging Ohio-based startup Lordstown Motors also drew investors’ ire Monday, announcing that it will need to raise more capital to launch its electric pickup truck in late 2022. The declaration came as Lordstown reported $81.2 million in losses and no revenue last year, a period during which its chief executive and chief financial officer each resigned.

Lordstown’s woeful week continued Tuesday, when The Detroit Free Press reported that General Motors has sold its stake of 7.5 million shares of the company, estimated at less than 5% of all shares. Reuters also reported Wednesday that Lordstown’s former CEO, Steve Burns, offloaded nearly 5.3 million shares

Rivian joined the pity party Wednesday, telling customers that inflation and higher parts costs required hiking its electric truck’s price tag by $12,000, pushing the final total above $80,000. Rivian CEO RJ Scaringe backtracked on the increase Thursday following numerous customer complaints, The Wall Street Journal reported.

How did Wall Street feel about these developments? So far this week, shares of Lordstown are down 25%, Lucid stock has dropped 14%, and Rivian shares are off 21%.

The onslaught of unpleasant news underscores the thin margins that separate success from failure for EV upstarts. It also illustrates the enormous head start that Tesla and legacy automakers possess as competition within the EV market ratchets up.

Take, for example, Rivian, which raised a stunning $13.7 billion from its November IPO. That total still pales in comparison to the reserves that its established rivals can tap.

Stack that up at Tesla, which reported $53.8 billion in revenues in 2021 and $17.6 billion in cash and cash equivalents to close out the year.

Or compare it to Ford, which announced a major reorganization Wednesday designed to accelerate its push into EVs. As part of the shuffle, the Detroit automaker now expects to plow $50 billion into EV development and production by 2026, up from initial spending plans of $30 billion by 2025.

While Lordstown’s long-term outlook appears bleak, Rivian and Lucid could still emerge from the crowded EV pack. Rivian’s IPO cash and big-name backers—Ford, T. Rowe Price, and Amazon, to name a few—give the company a decent runway. Lucid similarly boasts deep-pocketed investors, including Saudi Arabia’s state-owned Public Investment Fund.

And as Rawlinson argued, superior software could trump existing automakers’ infrastructure advantages.

“Our transformative (vehicle) range and efficiency are as much due to our in-house software as our in-house hardware,” Rawlinson said on an earnings call this week. “We truly are becoming as much a software company as a hardware company.”

That might be the case, but for upstart EV companies to gain traction, they can’t afford too many more weeks like this one.

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Jacob Carpenter


Adding to the band. Video game developer and publisher Epic Games plans to acquire the online music store Bandcamp for an undisclosed amount, bringing together two companies known for building creator-friendly platforms, PC Gamer reported Wednesday. Terms of the agreement were not disclosed. Bandcamp lets music artists sell directly to consumers, taking a significantly smaller cut of the revenues compared to Spotify, Apple, and other music streaming providers. Fortnite developer Epic Games, which is embroiled in a lawsuit against Apple over the tech giant’s app store fees, also earns a smaller commission on sales through its video game platform than rival Steam.

First Instagram, now TikTok. Eight state attorneys general announced an investigation Wednesday into the marketing practices of ByteDance’s TikTok, the most popular social media platform for U.S. teens, Bloomberg reported. The investigation comes four months after 10 state attorneys general announced a similar probe of Instagram, which has a negative impact on the mental health of millions of teenage girls, internal company research showed. Massachusetts Attorney General Maura Healey, one of the probe’s leaders, said the group will look at whether TikTok’s techniques for increasing usage among children violate state consumer protection laws. 

Checking out. Amazon will soon close all 68 of its in-person bookstores and retail shops as the e-commerce giant reallocates existing bricks-and-mortar space to its grocery and clothing businesses, The Associated Press reported. The move ends Amazon’s seven-year foray into operating bookstores, a move that surprised investors and customers given the company’s roots as an online bookseller. Amazon has struggled to gain traction with its in-person retail ventures, prompting significant investments in redesigning the shopping experience.

Bring it on, UAW. Apparently confident in his company’s employee compensation practices, and in how it treats its workers, Tesla CEO Elon Musk invited the United Auto Workers on Wednesday to hold a union vote at the electric automaker’s Bay Area plant, The Wall Street Journal reported. Musk tweeted that Tesla “will do nothing to stop” the UAW from seeking a vote, despite his prior opposition to organized labor. Tesla’s opposition to organized labor has caused a rift between the company and President Joe Biden, a labor-friendly Democrat who has been reluctant to praise Tesla


Going his own way. True to expectations, new Twitter CEO Parag Agrawal is taking the company head-first into a decentralized future. A New York Times article Wednesday explores how Twitter continues to invest heavily in giving outside developers more freedom to build within the social media platform, with the goal of creating a more customizable experience for users. The shift follows Agrawal’s ascension to the CEO position immediately after co-founder Jack Dorsey’s resignation last November. While Agrawal’s vision is drawing praise from many within Silicon Valley, it’s not yet clear how much the approach will help Twitter break through a period of relatively slow user growth that has frustrated investors.

From the article:

Its newly appointed chief executive, Parag Agrawal, has championed decentralization inside the company, hiring cryptocurrency developers and prioritizing related projects. Twitter executives now believe that decentralizing the social media service will radically shift online power, moving it into the hands of users, and pose a fundamental challenge to the walled gardens of companies like Facebook.

A decentralized Twitter could take years to emerge and might look much the same as it does today. But it could allow users to set moderation rules for their own communities and ease the pressure Twitter faces from lawmakers over how it moderates content. It might also open new revenue streams for the company.


Russia’s Ukraine invasion is killing its space business and forcing it to turn to China, by David Meyer

Google tells employees to return to offices by April 4, by Mark Bergen and Bloomberg

VCs and investors are giving billions to crypto founders, sometimes without any idea of who they actually are, by Amiah Taylor

Watch out for the ‘rug pull’ crypto scam that’s tricking investors out of millions, Amiah Taylor

Amanda Seyfried is playing Elizabeth Holmes in Hulu series ‘The Dropout’. Here’s when it airs, and how to watch, by Carmela Chirinos

Kraken CEO fires back at Ukraine’s request to freeze Russian crypto: ‘Step 1 would be to freeze all U.S. accounts’, by Ashley Lutz

How crypto donations became Ukraine’s financial lifeline, and what it means for the future of money, by Alex Tapscott


Ex-POTUS is MIA. The rollout of Donald Trump’s Twitter-esque app, TRUTH Social, continues to be curious at best and disastrous at worst. As Axios noted Wednesday, hundreds of thousands of prospective users remain stranded on a Truth Social waitlist, with no indication that they’ll gain access anytime soon. (My waitlist number remains 380,240, unchanged since I signed up to test the app on Feb. 22.) More strangely, Trump still isn’t using it! The app has plummeted to No. 84 on Apple’s App Store chart as of Thursday morning.

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