The decline of new energy: Start-up companies in the US stock market that want to become the next Tesla are running out of money.

Under the "halo" of Tesla, from 2020 to 2022, a large number of US companies related to new energy have gone public through special purpose acquisition companies (SPACs). However, these companies are now facing a "dead end" situation.

On December 29th, the media analyzed 43 new energy-related companies that went public in the past three years. Among them, 5 have filed for bankruptcy or been acquired. For the remaining 38 companies, the analysis found that they urgently need additional funding. If they do not cut costs or raise funds, 18 companies will run out of cash by the end of next year, with 7 of them having cash only enough to sustain them for a few weeks:

According to the latest financial data, Nicola, once known as the "Tesla of the truck industry," and Fisker, which was once very popular, will run out of cash by the end of 2024.

Lordstown Motors, Proterra, and Electric Last Mile Solutions (ELMS), a US commercial electric vehicle manufacturer, have all filed for bankruptcy.

The stock prices of battery manufacturer Romeo Power and charging company Volta are only a small fraction of their initial valuations.

The remaining companies have also stated that they are working hard to reduce costs and have plans to raise funds.

In terms of stock prices, the median of the current stock prices of these 43 companies evaluated by the media has fallen by more than 80% from their first day of listing. This decline has caused the market value of electric vehicle startups to evaporate by billions of dollars.

Gavin Baker, Chief Investment Officer of Atreides Management, said it is the craziest bubble he has ever seen. The stock price decline has affected major investors, including BlackRock, Fidelity Investments, and Koch Industries, which has injected hundreds of millions of dollars into this industry.

They are not the only victims. Many individual investors have also been misled by the grand promises made by electric vehicle startups at the time of their listing.

The dilemma of new electric vehicle companies

Media analysis points out that the fate of electric vehicle startups shows the risks of blindly investing in the new energy industry. Although demand is steadily growing, it has not shown the explosive and exponential growth envisioned by many startups and investors. Even industry leader Tesla has had to continuously lower prices this year to attract more customers, making it even more difficult for other "new forces" in the United States.

When the capital market returns to rationality, some new electric vehicle companies that have not yet achieved mass production and delivery are clearly falling behind.

Take Lucid, which was once in the spotlight, as an example. The highly anticipated Lucid Air did not truly reach customers until 2021 due to supply chain and other issues. According to public data, Lucid produced a total of 7,180 cars in 2022, which is lower than its initial target of 20,000 cars.

In the first quarter of this year, Lucid delivered 1,739 cars, and in the second quarter, it delivered 1,404 cars, which is about 600 cars lower than market expectations, with a total production of 2,173 cars. The company has repeatedly lowered its production targets and laid off employees throughout the year.

As of the time of writing, Lucid's stock price has fallen nearly 47% this year.

The future prospects of electric car company Faraday Future are also not optimistic, due to recurring operating losses and continuous cash outflows from operating activities in its third-quarter financial report. There is significant uncertainty about whether the company can continue to operate.

Faraday Future has raised nearly $1 billion in financing to develop technologies such as autonomous driving and facial recognition. According to the third-quarter report as of September 30th, Faraday Future burned an average of about $875,000 per day, resulting in its cash balance dropping to approximately $8.6 million at the end of the third quarter. The company's stock price has fallen more than 96% this year.

Wall Street CN mentioned that recently, more and more car manufacturers, including Tesla, General Motors, and Ford, have become cautious about the demand for electric vehicles. They are concerned that higher interest rates will increase financing costs, and the slowdown in major global economies may also impact car demand. Weak external demand will make it even more difficult for these new players.

Media analysis points out that even companies with cash reserves that can sustain them beyond next year are facing difficulties. For example, Li-Cycle Holdings (LICY), which is dedicated to recycling old batteries for material production in electric vehicles, has recently suspended the construction of its first large-scale facility in Rochester, New York, due to rising costs. This has complicated discussions with the government regarding loans.

As of the time of writing, the company's stock is currently trading at around $0.65, a 93.24% decrease from its listing price of $10.