Investors in the electric vehicle (EV) industry knew 2024 was going to be filled with bumps in the road. Fisker was a large reminder of just how quickly things can go downhill for automakers facing a cash crunch and slowing demand.
For many already cautious EV investors, the question now might be: "What company is next?" Is Lucid(NASDAQ: LCID) the next Fisker?
Let's dig in
All EV makers are dealing with a tough environment of high interest rates, slowing demand, a saturated high-end EV market, and a lack of affordable EVs. But their individual situations are much different.
In a recent regulatory filing, Fisker said it had just $121 million in cash and cash equivalents, and that $36 million of that was not immediately accessible. To make matters worse, the company has accounts payable of $182 million.
Fisker was also plagued with delays with suppliers and difficulty delivering vehicles to consumers. The New York Stock Exchange is beginning the de-listing process for the EV start-up, and the U.S. National Highway Traffic Safety Administration is opening a preliminary evaluation into claims of unintended movement in 2023 Fisker Ocean vehicles.
To put it bluntly, Fisker is in a world of hurt. Lucid was in a much better position at the end of 2023, when it announced it had liquidity of nearly $4.8 billion and sufficient cash until at least 2025 and was at least capable of delivering vehicles.
Raising capital
There's another important difference for investors: Lucid is still attracting investment, while Fisker has so far failed to do so.
Nissan was in advanced talks to invest in Fisker, which looked to be a small financial lifeline for the struggling EV maker, but those talks are reported to have ended. On the flip side, Lucid has recently secured a $1 billion follow-on investment from an affiliate of Saudi Arabia's Public Investment Fund.
Is Lucid the next Fisker?
There will be much evolution and growth within the EV industry over the next decade. That said, the near term is likely to bring some industry consolidation, bankruptcies, and mergers, among other possibilities.
Lucid, however, might avoid being the next Fisker because it has enough cash to last until 2025 at least, and the ability to still raise funds and attract investment.
It is far from out of the woods, though, and needs to launch its Gravity crossover later in 2024, hopefully to strong demand, and prove to investors there is reason to believe in its long-term vision. Lucid's situation is far from as dire as Fisker's, but investors should still consider it highly speculative this early in the EV story.
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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
