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Full Version: [NEWS] EV start-ups: Can anyone replicate Tesla's runaway success?
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EV start-ups: Can anyone replicate Tesla's runaway success?

EV start ups 2023
Rising interest rates have made it harder for new start-ups to attract investment

From Arrival to Faraday and Rivian, numerous start-ups are vying to establish themselves as credible manufacturers

Since the emergence of Tesla, the electric vehicle market has blossomed.

Entrepreneurs around the world have examined the Tesla example and decided to create their own new electric vehicle. The idea was simple enough: throw some batteries below the seats, put in a powerful motor or four, design a rakish exterior and elegant interior, and people will flock to your product with wads of cash in their hands.

Upon closer examination, it took Tesla more than a decade to turn an annual profit after spending billions of dollars to get there and having throngs of buyers willing to pay upwards of US$100,000 (£82,300) per vehicle.

Just like in the “wild west” days of the automotive industry a century prior, many will enter and few will succeed. Tesla is currently on a path to succeed, but most of the other startups will not. Many of the hundreds of EV startup companies around the world are barely worth noting, but there are a few that have garnered the attention of investors, suppliers and potential buyers.

Tesla hit the market at just the right time. By the time the Model S was introduced, the global economy was in its long, slow and steady rise from the “Great Recession”. Investment money was virtually free as interest rates around the world were at or near all-time lows. Buyers were looking at Tesla as the latest way to display their personal success and/or their stand on breaking from the petroleum industry. Investors saw Tesla as the newest tech company and, later, the IBM/Microsoft/Apple wave that they missed decades ago. This supported Tesla’s growth through the tough times and prepared it for a position among the world’s automakers. But those days have come to an end and few companies will follow in its tire tracks.

This story is an extract from the March 2023 issue of AutoForecast Solutions' monthly report. Click here to download the full report, or to catch up on previous months

Interest rates have risen and investment money is no longer cheap. Promised “eventual” profits aren’t good enough to find financiers for a risky entry into the automotive industry. And the new players do not seem to have engendered the “cult of personality” that helped prop up Elon Musk and Tesla this past decade. It’s a different world with different circumstances, leading to even fewer startups being successful in the long term.

AFS is tracking hundreds of EV startups. While most of them do not have the inertia to qualify for coverage in the AFS forecast, here are a few of the most significant startups and where they currently stand in the marketplace. 


Twenty-six-year-old RJ Scaringe launched his EV startup in 2009 after earning his PhD in mechanical engineering from MIT. Originally named Mainstream Motors, the company evolved into Avera Automotive and then Rivian in 2011. The initial planned vehicle was a sports car, but the company pivoted quickly to focus on autonomous ride-sharing vehicles. By 2016, Rivian settled on a pickup and a sport-utility as the company’s first products.

Scaringe raised millions of dollars and acquired the former Mitsubishi factory in Normal, Illinois. With significant investment, substantial products and a manufacturing space in place, Rivian had the basics to launch an electric vehicle company. Unlike many of the startups of the time, Rivian’s initial production targets were relatively modest, adding to the company’s chances of survival. This package lured General Motors, Ford and Amazon as potential investors. In 2019, Amazon agreed to purchase 100,000 electric vans, a previously unannounced product, and acquire a sizeable stake in the company. General Motors backed away from a tie-up with Rivian, but Ford saw the startup as a good partner to develop large EVs for its brands and also purchased a stake to ensure the development of the new vehicle. By early 2021, Rivian had raised US$2.6 billion (£2.1bn) and an IPO later that year raised an additional US$13.5 billion (£11.1bn). Amazon held about 20% of the company while Ford’s stake was more than 11%.

Following the IPO, Ford decided to end the project with Rivian but held a stake in the company valued as high as US$100 billion (£82.2bn). Ford started slowly backing away from its investment, selling shares and taking financial hits along the way. In its financial report for the 2022 fiscal year, Ford wrote off US$7.4 billion (£6.1bn) of its Rivian investment as part of the US$2.2 billion (£1.8bn) loss for the year. Ford now holds just over 1% of the startup. 

Rivian has been slow in launching its products. The rollout of the R1T pickup was delayed and a fraction of its planned 2022 output was actually built. Delaying the R1S sport-utility has also hurt the company’s image to investors. All of this led to a US$5.0 billion loss in the first three quarters of 2022, more than doubling the loss from the prior year. Year-end production volumes narrowly missed even the most recently revised targets. Stock prices have fallen by 85% from their peak. Increased competition isn’t making things easier for the startup. Beating Tesla to the electric pickup market, Rivian found itself in competition with former partner Ford, which introduced an electric version of the most popular vehicle in the US. Although it has yet to sell its promised Cybertruck pickup, Tesla has cut the prices of its existing vehicles, putting pressure on Rivian’s US$75,000 (£61,700) pickup and US$92,000 (£75,600) SUV.

To save money, Rivian has been cutting jobs. A previously planned second plant in Atlanta, reportedly expected to cost US$5 billion (£4.1bn), has been delayed while the company gets its first plant operating closer to full capacity. Rivian’s once-stellar image has been tarnished over the past year and more work is needed to get the company back on track.


Smaller EV startups tend to believe that focusing on commercial applications is the key to success. Delivery vans with shorter routes make sense for electric vehicle adoption because highway speeds are rarely encountered and overnight charging can be done at the warehouse. Additional incentives in the US from the Inflation Reduction Act have increased the demand for electric commercial vehicles. However, this market is getting crowded with legacy players (Ford, Mercedes-Benz and GM’s BrightDrop) as well as startups, like Rivian, backed by large delivery companies. 

Arrival was one of the first companies to announce its entry into this market and quickly dropped plans for other vehicles to focus on the delivery van. Smaller factories planned in the US and the UK were part of the novel approach that the company was taking in order to launch its vans with as little investment as possible. But more investment is always needed for an automotive startup and that is pinching Arrival.

Plans are still on the books for the factory in South Carolina to begin production in 2024, but more funding will be needed to get there. Already traded on the NASDAQ under the symbol ARVL, the EV maker has seen its stock price tumble from almost US$23 (£18.90) per share two years ago to around 35 cents (£0.29) a share currently. Recent bumps in the stock price have been attributed to short sellers entering the market. As a penny stock, finding new real investors is extremely tough.

Operating costs at Arrival are draining about US$30 million (£24.7m) quarterly, which, by comparison, looks good. Without dramatic cost-cutting and an infusion of cash, Arrival can only maintain this rate for a very short time before draining its coffers. At the time of writing, the company is estimated to not have enough financing to get through 2023.

Last year, Arrival was forced to let go of almost all employees in the UK. Executives have been shuffled and in February new CEO Igor Torgov was announced for the company. Torgov has no automotive experience and it is doubtful that he can quickly turn around the struggling startup. Reports have the company reducing staffing by half to save more money and to keep the company afloat until production is ready to begin.

Faraday Future

Seemingly the grandfather of EV startups, Faraday Future was founded in 2014. Early on, the company was viewed as a primary competitor for Tesla, even luring legacy automakers including Fiat-Chrysler and Geely as potential partners. Over the years, Faraday Future has demonstrated a number of running prototypes, such as the low-slung 2016 FFZero1 coupe and the FF91 crossover, the latter of which has been the production intent demonstrator. In the first year, the company claimed as many as 1,000 employees. A number of investors have been linked to the company, including Evergrande Health (later to launch its own EV brand), The9 (a Chinese video game company) and a range of venture capital groups. 

Despite all of the money funneled into the company, Faraday Future’s payroll was draining its coffers and the money was running out by 2018. Initial plans included building a greenfield plant in North Las Vegas, Nevada. By 2018, the plans for the new US$1 billion plant had been abandoned and the property was sold at a substantial loss. An additional plant in China was planned and quietly disappeared. To stem the bleeding further, the startup sold its Los Angeles headquarters and moved to a former Pirelli tire factory in Hanford, California. Layoffs continued. During these years of turmoil, a significant number of executives left the startup. Founder Nick Sampson resigned in 2018 followed by Senior Vice President Peter Savagian. CEO Jia Yueting stepped down in 2019 and was replaced by former BMW/Byton executive Carsten Breitfeld, who resigned in 2022. Two board members were pushed out in late 2022, accused of attempting to drag the company into bankruptcy.

Originally planned to launch an initial public offering (IPO), the company decided to join the stock market through a reverse merger with a special-purpose acquisition company (SPAC) known as Property Solutions Acquisition Corporation. The launch of the public listing on NASDAQ under the symbol FFIE valued the company at US$3.4 billion and raised about US$1 billion. Troubles followed the new public venture as the US Securities and Exchange Commission launched multiple investigations into the finances of Faraday Future in early 2022. Peaking at a stock price of US$16.54, FFIE fell below US$1 in September 2022 where it has remained, hitting as low as US$0.30 per share. With billions of dollars invested, market capitalization of the company remains below US$400 million.

Production of the FF91 was originally planned for 2018. Cost-cutting delayed the introduction of the final production version many times, which, in turn, pushed back the job one date by years. After years of promises, the production version of the FF91 was demonstrated in early 2022. With a production capacity of 10,000 units per year, output was announced to start before the end of March 2023 with first deliveries in April.


Following Canoo over the past two years could be described as a roller coaster ride, but it’s more like a sled ride with only modest upticks along the way as its stock price careened from US$17 in early 2021 to about US$1 in February 2023. Today, the company’s market cap is under US$400 million. Originally founded as Evelozcity in 2017, the company changed its name to Canoo in 2019 and merged with an SPAC in late 2020. Trading on the NASDAQ under the symbol GOEV, Canoo was valued at US$2.4 billion. 

With its uniquely styled products, Canoo targeted commercial and ride-sharing applications. Its van, eventually named the Lifestyle Vehicle, is 4.4 meters long with a windshield stretching almost to the leading edge of the vehicle to maximize interior space. An entry-level two-seat cargo version (Lifestyle Delivery Vehicle, or LDV) is offered for about US$35,000 (£28,800) while versions with more seats push the price to US$50,000 (£41,100).

Based on a very flexible design, a pickup version has also been shown as a later addition to the lineup. A number of personnel changes, failed partnerships and questions about financing have plagued the company from the beginning. 

Former Opel executive Karl-Thomas Neumann, hired to help lead the company, exited Canoo in 2019 and co-founder Stefan Krause left in 2020. Hyundai announced in 2020 that it would work with Canoo as part of its electrification plan but this cooperative effort was abandoned in early 2021. Also in 2021, the US Securities and Exchange Commission started an investigation into the SPAC merger and questions from investors about sudden changes in the company’s direction.

New leadership moved the company to Arkansas and promised a new production facility in the region. Facilities in Bentonville, Arkansas; Pryor, Oklahoma; and Oklahoma City, Oklahoma have been announced, as late as November 2022, with production planned to begin in 2023. To spur faith in the startup, Canoo signed agreements with fleet leasing companies promising orders for thousands of LDVs.

Continued financial issues put the company at risk in the short term. To raise additional funding in February 2022, Canoo offered 50,000,000 shares at a discounted rate, leading to a further decline in the value of the stock. The company reported losses of more than US$400 million in the first three quarters of 2022, including nearly US$118 million in the third quarter alone. The same quarterly report showed cash at the end of September 2022 limited to just US$6.8 million.


Entrepreneur Pham Nhat Vuong started building his fortune when he founded Vingroup in 1993. A quarter-century after branching the conglomerate into food, entertainment and healthcare markets in Ukraine and Vietnam, Vuong decided to enter the automotive industry through the Vinfast subsidiary. The new venture purchased an old General Motors plant and worked with BMW to introduce its first, ICE vehicles. Vinfast’s GM-based Fadil sub-compact quickly topped the Vietnamese sales charts in 2021, but the company shifted its focus to electric vehicles.

While the ICE-powered models were competitive in Vietnam, exporting them posed a problem largely because of their connections to GM and BMW. Developing electric vehicles from the ground up would allow Vinfast to export products and target big markets like Europe and the US. A full range of electric models was announced in 2019 and exports were scheduled to begin in late 2021. Although the timeline shifted, vehicles went on sale in the home market and were introduced to export markets in 2022. At the end of 2022, the first batch of nearly 1,000 Vinfast SUVs arrived at the port in California.

The speed at which Vinfast was moving was truly impressive. The multi-billion-dollar Vingroup financed the early stages and public offerings in Singapore added to the bank account. To reduce shipping costs and make the vehicles more appealing, a US$2 billion greenfield plant in North Carolina was announced with production capacity of 150,000 vehicles annually. With stores opening in California, Vinfast began laying the groundwork for US sales in early 2023. However, the VF8 and VF9 EVs were not ready for customer delivery.

Early word on the stateside vehicles puts doubt on their competitiveness. The US$50,000 (£41,100) Vinfast VF8 mid-sized crossover was promised to feature a range of 250 to 290 miles, depending on the battery pack, but the first batch of vehicles were said to have 30% less range. Blaming outsourced software, Vinfast was working on an update before the vehicles arrived at the port.

Other components posed safety or reliability issues and needed to be redesigned or replaced. On top of everything else, the competitive nature of the electric vehicle market caused the prices of various models already on sale to fall by thousands of dollars before the VF8s and VF9s could be unloaded.

Through February, the North American operations have been consolidated. Originally separate, the Canadian and US sales groups were combined into one group and redundant positions eliminated. Additional jobs have been cut as the group continues to reduce costs in North America and around the world.

The larger Vingroup is navigating financial problems. Vingroup ended 2022 with a 19% drop in revenues, but showed a modest profit of US$84 million (£69.1m), up from the previous year’s loss of US$320 million (£263.3m). Getting Vinfast up and running and successful is necessary to return the investment from Vingroup and stabilize the conglomerate. Some 7,500 potential workers in North Carolina are also counting on Vinfast to be successful.

Sam Fiorani