The EV market is fierce and much of this can be attributed to a large number of well-set players as well as newcomers in this field.
However, not all electric car startups succeed in making a name in this segment. These newer and smaller companies face all of the issues faced by the largest automakers but they are not that well suited to handle them.
Examples Of How Electric Car Startups Are Presently Struggling
The recent plunge in the value of stocks of Rivian is one such example which explains how this segment is not for everyone.
Rivian’s shares touched an all-time high value of €167.85 (£142.94) however now they are being traded at €21.51 (£18.32).
Another such example is Lordstown Motors which is trying hard to sell its factory based in Ohio to Foxconn. The stocks of Lordstown Motors are currently trading at €1.87 (£1.59) which is much lower than its all-time high value of €14.78 (£12.58).
The case of another startup called Faraday Future is not much different as the stock worth of this company has also plunged to half its value.
Major Problems For EV Startups
So what are the problems that these electric car startups are currently dealing with?
Well, the list is pretty long as it is a new segment and due to the lack of a set road map the difficulties are immense. However, some of these problems include:
- Material price inflation and fluctuation;
- Supply chain issues;
- Cut throat competition;
- High volatility of the stock market.
It is worth noting that these issues are not unique to the EV segment. Rather ICEs also face similar problems.
Further to that, even the largest automakers in the EV segment undergo similar issues. It is just that due to a lack of resources, the startups face these problems at an intensified scale.
This is mainly because the suppliers choose to deliver their items to well set companies on priority rather than electric car startups.
A problem that further exacerbates the situation is that big players launch their products to compete with those of newcomers in the field. One such example is the Hummer EV which is a direct rival of the Rivian R1T.
Why Can’t All Startups Make It?
Well, the main reason is that not all of them follow a feasible plan and not all have a successful business model.
Those who are able to get to the limelight rise to prominence. One such example is Tesla but there are a plethora of others that have not seen another day’s light.
How Electric Car Startups Are At An Advantage, Somehow?
One aspect however that is a sort of light at the end of the tunnel for these electric car startups is that they don’t have to rely on the technology which others have already mastered.
Rather they can offer new and unique technology which enables them to compete with the giants in this field.
This is something no startup can even think of. For example, a new ICE based automaker can’t even imagine competing with the likes of Mercedes Benz or Volvo due to the legacy of these brands.
However, as all companies are starting afresh in the EV field, that’s why the startups haven’t lost their battle yet.
While there is still hope, there’s no doubt that electric car startups struggle when it comes to competing with the largest automakers.
This will aggravate in the future as the largest automakers are now gearing up by investing huge sums of money into the R&D in this segment.