Off Topic » Electric vehicle startups are not a good investment

An article in my newspaper today, written by Jack Ewing and published by the NY Times discusses an EV truck company that apparently was mostly a scam. Here are some excerpts from the article

"The founder of the electric truck company Nikola was sentenced to four years in prison Monday in a fraud case that highlights the financial carnage left behind by a crop of electric vehicle startups and their promoters."

Milton was accused of pumping up the value of Nikola stock by making extravagant claims about the company." "Milton told investors that Nikola had working prototypes of emission-free long haul trucks, had billions of dollars' worth of binding orders and was producing low cost hydrogen fuel. All of those statements were false, said prosecutors, who had asked Ramos (the judge in the trial) to hand down an 11-year prison term and a $5 million fine. Lawyers for Milton, who denied the charges, had sought probation."

Perhaps more interesting the the last paragraph of the article:

"Investors have grown skeptical even of companies that have managed to produce thousands of cars. Shares of Fisker, which delivered about 3,000 vehicles through the beginning of November, have fallen 95% from a high set in 2021. Shares of Lucid, which has said it will produce at least 8,000 luxury electric sedans this year, are down 93%. Shares of Rivian, a maker of electric pickups and SUVs that many analysts consider the startup most likely to survive , are down 80%."

I wouldn't necessarily use a blanket term as a bad investment and there are many established and new (startups) that fit the description, being a startup in an up and coming tech only makes the risk higher by default. The list also namely concerns and picks only high-end niche manufacturers with higher volatility.

The immediate post covid years were a unique mix of developments in that regard, Tesla for instance managed to drop by 70% and recover to 40% considering 2021 as base. And within the same period established giants such as Ford or VW also did the 40/50% swings so...

To be honest if I had the disposable income to play around with shares or if the practice was more developed in my corner of Europe there would be much more interesting background candidates in terms of companies developing batteries and energy storage technology with most promise - it is the underlying foundation for all electrification to follow and not only in terms of vehicles.

Cable TV is littered with talking heads (usually speaking to an attractive woman wearing a short skirt suit and 5" heels) making stock buying and selling recommendations. I would like to see a quarterly review of every talking head's recommendation. Show the amount of the gain or loss and get an explanation of what went right or wrong.

Something tells me, you would only ever see the results for the talking heads that guessed right.

Newsflash: Volume manufacturing of cars (and motorcycles) is hugely capital intensive and you don't make money until the economies of scale kick in. To compound it, the bet on EVs taking off isn't really panning out except for Tesla. Speaking of Tesla, their first manufacturing plant was the former NUMMI plant in CA. The plant was built by Toyota (who obviously knows the business) and Tesla got it at a fire sale price because of the 2008 financial crisis. If that hadn't happened, I doubt they would have survived.

To me, the vehicle manufacturing story that's really amazing is Bloor's resurrection of Triumph.

Yep the Triumph rebirth is amazing but sadly now all produced in far east to enable compete pricing and just development in UK

BMW's are made in Germany and are competitively priced, at least for a premium brand. How do the Germans do it, but Triumph can't?

I was impressed that VW managed to suck up the big emission scandal of a few years ago, paying big fines, dealing with huge diesel vehicle recalls, and agreeing to build an extensive EV charging network in the U.S. None of that drama seemed to have affected the company all that much. Not even all of the bad press. The company just keeps rolling along.

Zitat von Richard230 im Beitrag #8

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I was impressed that VW managed to suck up the big emission scandal of a few years ago, paying big fines, dealing with huge diesel vehicle recalls, and agreeing to build an extensive EV charging network in the U.S. None of that drama seemed to have affected the company all that much. Not even all of the bad press. The company just keeps rolling along.

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Zitat von Richard230 im Beitrag #8

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I was impressed that VW managed to suck up the big emission scandal of a few years ago, paying big fines, dealing with huge diesel vehicle recalls, and agreeing to build an extensive EV charging network in the U.S. None of that drama seemed to have affected the company all that much. Not even all of the bad press. The company just keeps rolling along.

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Zitat von Valks im Beitrag #10

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Zitat von Richard230 im Beitrag #8

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I was impressed that VW managed to suck up the big emission scandal of a few years ago, paying big fines, dealing with huge diesel vehicle recalls, and agreeing to build an extensive EV charging network in the U.S. None of that drama seemed to have affected the company all that much. Not even all of the bad press. The company just keeps rolling along.

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Also not an outlier when you consider the incredibly shady and unethical stories and recalls that came out of the auto industry in the last 30-40 years... be it European, North American or Asian manufacturers each had their moment. And VW due to market presence, volume, and investment on the world scale is better set than most to survive something like that.

Toyota and Ford arguably could too, while it would likely sink Mazda or Nissan.

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Toyota announced a big recall this week

https://www.reuters.com/business/autos-t...uit-2023-12-20/

But being absolutely enormous and very well organised they’ll manage it and it won’t be a problem. The bigger issue could be if this is a wider issue with the airbag supplier. I.e. a previous supplier of airbags, Takata, had an airbag issue that went across manufacturers and sent Takata bust.

Oh dear, I expect a few execs falling on their swords (figuratively speaking).

I read in my newspaper yesterday that the electric scooter rental company Bird, is on the financial rocks and close to being bankrupt.