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Producer: Robert Ferris

Apr 15, 2024

The EV revolution could bring more change to the automotive industry than since its founding, and the potential impact is a tempting proposition for entrepreneurs. But this business is not for the faint of heart and nothing like starting an app or a social media company.

It takes billions of dollars to build factories, design vehicles, secure suppliers, comply with regulations and find a way to distribute and
service cars. Many have dramatically underestimated the capital costs.

Going public through Special Purpose Acquisition Companies, or SPACs, is one way to raise funds. Balancing the need to respect age old industry practices, while finding ways to innovate in a highly competitive market is a struggle. The few that have been successful so far,
such as Tesla and BYD, are emulating some of the practices that helped automakers like Ford and General Motors emerge victorious from
the industries first wave of consolidation in the early 20th century.

But others like Fisker, Lordstown Motors, IndieEV and WM have failed or are at risk.

 

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Thankfully, @Spin's favourite SUVe - 2nd picture - is still in business and unexpectedly took fourth place in sales for the first quarter of 2024.

 

[Dougie01]

The car industry is tough no matter whether you're making ICEs or EVs.

Even after you figure out your market and product strategy, and get your engineers to design something, you still have to have a factory. Which is expensive:

• The high capital cost itself
• The high interest rate
• The lack of government subsidies, a place where China seems to be way ahead of the US and Europe
• The difficulty of spending it when you get it, in other words: permitting, building, outfitting a new factory
• The problem of matching factory capacity to demand for your product

Even the big established companies like Ford burn tremendous amounts of money building new factories and then finding that the demand is less (or more) than they projected.

There is a long, long list of car companies that went broke in the last 100+ years, many of them now incorporated into GM, etc. It's not at all surprising that new EV companies have a tough time.