Electric Vehicle Companies See Fall in Demand

A Rivian R1T electric truck outside Munro and Associates headquarters in Auburn Hills, Mich., on June 3, 2022. Rebecca Cook/Reuters

American electric vehicle (EV) start-ups are dealing with falling demand, as buyers look elsewhere, or put off purchases entirely.

High costs, quality-control issues, and supply-chain problems are taking a toll on the EV sector, according to the latest quarterly reports.

Several EV companies reported a declining interest for some of their latest vehicles, while production costs for each product rose even higher. For example, Rivian Automotive reported mixed quarterly results after a second recall in less than six months, reported Fox Business.

The company previously saw a net loss of $1.72 billion for the fourth quarter of 2022, compared to the $2.46 billion loss during the same period in 2021.

Over 12,000 electric trucks and SUVs were recalled, or almost 89 percent of all of those produced through September, after a faulty sensor in the front passenger seat was discovered, according to The Wall Street Journal.

EV Start-Ups Face Stiff Competition

At the same time, both Lucid, a luxury sedan manufacturer, and Nikola, which makes electric semi-trucks, are facing financial pressures.

Only Fisker, which is just starting production of its more affordable EVs, saw its orders improve, but only 56 have been produced so far, reported Reuters.

Meanwhile, Tesla has aggressively slashed vehicle prices this year to financially secure its industry dominance.

The price cuts by established rivals like Tesla and the recent release of cheaper EV models from legacy automakers have lessened demand for the new EV companies’ designs.

Fisker’s SUVs cost $37,499 to purchase, while Tesla’s Model Y is selling for at least $54,990 after the recent price cuts.

However, Rivian’s R1S SUV, which is almost twice as expensive as Fisker’s model, at around $78,000, while Lucid Air Pure sedans are being sold for about $87,400.

The four companies combined have already lost a total of $84 billion in value since the beginning of 2022.

“Certainly, what we’re witnessing in the macro[environment] and what we’re seeing in terms of interest rate is ... across the industry, having an effective moderating overall demand,” said Rivian CEO R.J. Scaringe on a conference call on Feb. 28.

Tax Credits Have Little Effect in Encouraging EV Purchases

Rivian’s goal of producing 50,000 vehicles in 2023 fell below previous estimates, as production was hit with supply-chain issues and temporary factory shutdowns to improve production levels at its Illinois plant.

The EV company lost $6.75 billion on $1.66 billion in revenue, for all of 2022, forcing executives to cut spending after two rounds of layoffs and delays in a number of products, reported Fox Business.

Rivian fell short of most investor’s expectations on revenue, taking in only $663 million in revenue.

The new start-ups took a hit last year when the Biden administration imposed domestic manufacturing requirements and price caps for EV part makers in exchange for receiving federal tax credits to build their vehicles.

It was hoped that federally funded incentives of up to $7,500 per EV made in America would cause demand in the sector to jump, but restrictions on foreign-made parts have put a damper on sales.

Unfortunately, most Rivian customers do not qualify for the EV tax credits.

At the same time, Lucid reported a decline in vehicle reservations to a little more than 28,000, as of Feb. 21, from 34,000 on Nov. 7.

Nikola also reported that issues that had softened demand for its electrically powered trucks would not ease anytime soon.

Reuters contributed to this report.