After a few years where interest in electric cars has exploded, and with it there has been a significant flow of investment for the development of new models and new brands, it seems that we are entering a correction phase where sales continue to grow. but margins and costs adjust. A rhythm that not all brands can follow, and that will mean the bankruptcy of some companies in the sector.
Last December, Elon Musk told the media that there were only two North American companies that would manage to survive in this new era of the electric car. Tesla and Ford. The rest will end up disappearing.
Something similar can happen with the rest of the groups, where the support of the parent company is essential to overcome this sieve. But not all brands have a group behind them that supports them.
For example, Ford’s electric car division, Model E, is a source of money loss. But last year it managed to register 77,500 units, with a growth of 120% year-on-year. It is a division that is in heavy losses, some 3,000 million estimated for this year, but the support of the matrix means that it can continue its development until reaching the benefits.
Another example is Polestar. The Swedish brand owned by the Chinese group Geely, which is also in the red, with sales of 51,000 units and growth of 80% per year. A negative economic outlook, but thanks to the impulse of its owner it will allow it to continue its development.
We also have the case of one of the leaders in the sector, BYD. A manufacturer in the midst of a growth career that is boosting its sales by more than 100% each year, and that will allow it to exceed 3 million units this year. A positive dynamic in sales increase but also in profit margin, where it already exceeds 20%. Something that makes it very difficult for it to fall in the short term.
The manufacturers of electric cars that may go bankrupt in the next 12 months
CHILD It may be one of the names that could join this list. Sales figures are somewhat stagnant and international expansion is not backed by a product that is too competitive against its Western rivals. They have not arrived to break the market.
The Chinese brand continues with heavy losses and its future will largely depend on new releases, such as the NIO ES6. A crossover on which there are great hopes and which will be launched in China next week.
A model 4.85 meters long and equipped with 75, 100 and soon 150 kWh batteries, launched in 2018, which has represented 52% of the manufacturer’s sales between 2019 and 2021, which shows us that its success it is capital for the future of the brand.
We enter the danger zone, where we find Xpeng. The Chinese brand accumulated losses of 1,100 million euros last year, which indicates that the cash flow could be falling significantly, being enough for analysts to hold out between 12 and 24 months.
Something that, like NIO, will depend on the success of its latest releases. In this case it is another SUV, the G9. A model that is placed in the Tesla Model Y segment, but that has disappointed Chinese analysts who have indicated that it is worse than expected. Something that has caused the opening of a phase of internal turmoil and adjustments in the direction of seeking to resume the dynamics.
The situation of Rivian is even less optimistic. An American startup that has good cash flow, but is burning out fast. In 2022, the losses reached no less than 6.9 billion dollarsat the same time that the number of deliveries barely reached 20,000 units.
Two trends that will continue, high cash expenses and low production, which may result in Elon Musk’s prediction of Rivian’s fall in 12 months.
But if there’s one name that all signs indicate is the top favorite to drop in less than a year, this is it. Lucid Motors. A cash-burning manufacturer with very limited cash flow. Something completed with an almost anecdotal production capacity where it is estimated that this year it will barely reach 4,000 deliveries, with 8,000 units produced. Something that will mean that 50% of production will go directly to the list of units in stock.
Some dynamics in which, in addition to the demand and the capacity to produce cars, will have the variable of the macroeconomic situation. A situation with pessimistic overtones where inflation can stop many users from buying a new car, which will cause a market adjustment where only the strongest will be able to survive in the short term.
