What to expect as EV startups face critical first-quarter earnings week

It’s earnings season again, and EV startups are on deck this week. EV startups, including Lucid (LCID), Rivian (RIVN), Fisker (FSR), and Nikola (NKLA), are all set to report Q1 earnings as funding and production come into focus.

Electric vehicle stocks fall on higher interest rates

Electric vehicle sales in the US hit another record in the first quarter of 2023, surpassing 250,000 units, according to recent data from Cox Automotive.

Despite the rising number of vehicles being produced and sold, EV startups are facing another issue this earnings season – dwindling cash reserves.

The EV makers listed above, including Rivian, Lucid, Fisker, and Nikola, went public during the low-interest rate environment following the pandemic. With interest rates near zero and an injection of funds into the US financial system, growth companies such as EV makers saw their valuations soar.

To cool the overheated economy, the Federal Reserve raised interest rates at a historic pace, hiking rates 10 times over the past year and a half.

As a result, many electric vehicle companies, and high-growth businesses in general, have watched their stock prices fall by 85% to 90% or even more, making it harder to access cheap funding through equity raises.

To make matters worse, Tesla slashing prices earlier this year on its most popular models created a ripple effect in the US market as automakers looked to remain competitive, putting pressure on margins.

EV startups’ first-quarter earnings preview

With EV startups set to report first-quarter earnings this week, investors will be looking for signs of financial distress.

First up will be Lucid reporting earnings on Monday. The EV maker produced 2,314 Lucid Air models, delivering 1,406 during the quarter. Although this represents an increase of 300% YOY, it missed Wall Street expectations of around 2,000 units.

Wall Street is expecting more revenue growth ($210 million), but higher losses and cash burn are expected with higher input costs.

Rivian is set to report Q1 earnings Tuesday after market close. After producing 9,395 vehicles in the first three months of 2023 and delivering 7,946, the EV maker said it remains on track to hit its 50,000 production goal this year.

With production and deliveries falling from the previous quarter, Rivian is expected to see slight revenue growth ($686 million) compared to $663 million in Q4. Losses are also expected to grow from the $1.7 billion posted in Q4.

Fisker and Nikola will also report earnings Tuesday. With Fisker delivering its first Ocean electric SUV model last week, the automaker is expected to see revenue rise in Q1, but it will likely see losses piling on as well.