Electric vehicle stocks have diverged this year. On the one hand, we have Tesla whose shares have surged to a record high, giving it a market cap of over $1.4 trillion, and making it the eighth-biggest company in the world.
Many EV companies, on the other hand, have imploded, with most of them fighting for survival. Some, like Fisker, Proterra, ELMS, Bollinger, and Lordstown Motors, have already filed for bankruptcy. Here are some top EV companies that could file for bankruptcy in the near term as their cash runs out.
Faraday Future (FFIE)
Faraday Future is one of the top EV companies that may not survive for so long after spending $3 billion in capital in the last few years.
The most recent results showed that the company’s business continued losing millions of dollars. Its revenue in the last quarter came in at $9 million, while its net loss came in at over $77 million. The nine-month loss was over $234 million.
Therefore, a company losing all this money can only survive if it has a solid balance sheet. Unfortunately, Faraday does not have this luxury, since it ended the last quarter with about $79 million in current assets. Its cash and restricted cash stood at $7.3 million.
Faraday Future has secured $30 million financing, which will not be enough to fund its most ambitious plans. For example, it is working to launch mass-market vehicles priced at between $20,000 and $50,000.
Therefore, there is a likelihood that the company will run out of money soon as its business continues. This explains why the Faraday Future stock price has crashed by over 95% this year.
Canoo (GOEV)
Canoo is another vulnerable EV stock that may not be around for so long. Like Faraday, the Canoo stock price has crashed by over 97% this year, bringing its market value to about $13 million.
Canoo has a large market opportunity, which explains why it has received orders worth over $3 billion from companies like Walmart, NASA, and USPS. The challenge, however, is that the company is running out of cash and is already furloughing employees.
The most recent results showed that the company had just $5.7 million in cash and short-term investments. These are tiny numbers for a company that is still losing substantial sums of money for all vehicles it sells.
Mullen Automotive (MULN)
Mullen Automotive stock price has crashed by over 90% this year, dropping its valuation to about $13 million. Its market cap is significantly smaller than what it spent in acquisitions a few years ago. It acquired ELMS for $240 million and $180 it spent buying a 605 stake in Bollinger Motors.
Like Canoo and Faraday, its biggest issue is that it is burning a lot of money and is taking too long recognizing revenue. In its most recent nine-month results, the company recorded no revenues and made a loss of over $300 million. Its deferred revenue was about $16 million for the nine-month period.
Mullen Automotive has limited cash on its balance sheet, even assuming that the company receives the $250 million it says it has received.
There are many other EV companies that may not survive in the long term because of their balance sheet woes. Some of the other notable names are Xos Trucks, Dragonfly Energy, Lightning eMotors, Phoenix Motor, and Micromobility.
Some analysts believe that even some well-known EV brands like Rivian and Lucid are only surviving because of their wealthy backers. Rivian has received funding from Volkswagen, while Saudi Arabia backs Lucid.
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