The bankruptcy of Lordstown Motors Corp. could herald more disruption in the electric vehicle market, according to Louis Navellier, president and chief investment officer at money management firm Navellier & Associates.
On Tuesday, Lordstown Motors RIDE
said it is filing for Chapter 11 bankruptcy protection and is suing former partner Foxconn.
Shares of electric vehicle giant Tesla Inc. TSLA
rose 2.9% on Tuesday, while electric vehicle makers Rivian Automotive Inc. RIVN
and Fisker Inc. FSR
increased by 2% and 2.8%, respectively. Lucid Group Inc. LCID
shares rose 9.1%, just days after hitting an all-time low, but Nikola Corp. NKLA
Related: Lordstown Motors files for bankruptcy protection and sues Foxconn
“There will be a shakeout in electric vehicles, because no one is making money except Tesla and BYD in China,” Navellier told MarketWatch.
In this context, the investor sees Rivian as particularly vulnerable, noting that the EV maker is still burning cash. “I think they won’t reach their economies of scale fast enough, but I hope I’m wrong,” he added.
Last year, investment research firm New Constructs added Rivian to its list of “zombie” companies, citing cash as a potential problem for the automaker. Rivian shares are down 25.5% this year.
Related: Shares of electric vehicle makers rise on Lordstown bankruptcy
Rivian is not alone when it comes to burning cash, according to Navellier. “Look at Lucid. Even with brilliant engineering, they’re burning tons of money,” he said, but acknowledged Lucid’s recent “payback” in the form of a $1.8 billion stock buyback by the Fund of Saudi Public Investment. Lucid has also forged a $232 million supply pact with Aston Martin Lagonda Global Holdings PLC UK:AML.
Meanwhile, EV maker Fisker must avoid the fallout from a recent recall, according to Navellier. Last month, Jaguar Land Rover North America recalled more than 6,000 Jaguar I-Pace vehicles built at an assembly plant in Graz, Austria, since June 5, 2018. “The vehicles have experienced thermal overload that may show- se as smoke or fire, which can occur under the vehicle where the high-voltage traction battery is located,” the US National Highway Traffic Safety Administration said in a report.
Related: Rivian buys mapping app Iternio, which plans routes, finds charging stations for electric vehicles
Fisker also has a manufacturing partnership with Magna International Inc. MG
to produce vehicles at the Graz factory, so they have to ensure that no problems are duplicated, according to Navellier.
The investor, which has Panasonic Holdings Corp. JP:6752,
Volkswagen Group XE:VOW
and Porsche XE:P911
in his portfolio, he is closely monitoring the evolution of solid-state battery technology. “At the high end, whoever perfects the solid state will win,” he said.
Navellier expects first solid-state batteries for electric vehicles to be built by Panasonic via Toyota JP:7203,
but he said it could be years before the technology is widely available. “We probably won’t have a solid state of mass availability until 2030,” he said.
Related: Tesla’s Cybertruck was delayed again. When will we see it?
He also expects Tesla’s long-awaited Cybertruck to be a big hit in the electric vehicle market. “It’s designed for the zombie apocalypse,” he said, adding, “I think Tesla is a serious player.”
Earlier this year, Tesla CEO Elon Musk said mass production of the Cybertruck wouldn’t begin until 2024.
Contributed by Sean Tucker.