10 ms·
The Collapse of the EV SPACs: Another One Goes Bankrupt, Others on the Verge
- rapsey 3y agoSeems to me that the EV car market is going produce very few winners. Possibly killing off the old guard completely. Tesla is a given. The Chinese manufacturers (like MG) seem to be quite successful. The old European and US car makers are however failing quite badly. What they produce is hot garbage at a huge loss per car.
- bigbillheck 3y ago> Tesla is a given. It most certainly is not.
- rapsey 3y agoThey are shipping millions of cars, cheaper than the competition and at a profit?
- aredox 3y agoAnd they have some outstanding liabilities...
- rapsey 3y agoCompared to GM and the like they have a very low level and very little debt.
- mdorazio 3y agoDebt to equity ratios for OEMs according to Ycharts: Tesla: 0.11 Toyota: 1.06 GM: 1.65 Ford: 3.3 VW: 1.05 Seems fine to me...
- JumpCrisscross 3y agoNitpick: Tesla’s equity is more volatile than the others’. Linking debt to operating cash flow makes more sense.
- kojiromike 3y agoYou can quibble whether or not Tesla will continue to win at the scale it has, but it definitely doesn't seem likely to go bankrupt at the speed of a $6/share SPAC-boosted EV startup. It just doesn't really bear comparison to the other EV companies out there. It is not a startup, and has been publicly traded plenty long enough. Neither does it make sense to compare it to the old-guard ICE companies, which don't yet have their sea legs. Any company can fail (for a fairly broad definition of "fail"), given time, but there's no practical likelihood of Tesla suddenly going bankrupt in the near future.
- _Parfait_ 3y ago..Confident and wrong, I love it
- vel0city 3y agoWhere do you source your crystal balls? Mine never seem to work quite right. Maybe I'm holding it wrong?
- _Parfait_ 3y agoCrystal balls? What is the most profitable american car company? You let me know.
- vel0city 3y agoThe comment states Tesla performing well in the future is a given, a guarantee it'll exist in the future. We don't know what will happen in the future, I wouldn't say "x company existing in the future is a given". It'll probably keep doing very well. It may have some sudden event happen that makes it stumble. I wouldn't even state that the future of transportation in 20-30 years is a given. I wouldn't bet against Tesla in the next decade or so, but I wouldn't state its future performance is a given. You know, that whole "past performance does not guarantee future results" thing your broker keeps chanting. Unless you happen to have a crystal ball or some kind of time machine, in which case I'd like in on that.
- _Parfait_ 3y agoI'm so tired of the "I was actually making a semantic argument" thing people do to cover their ass. It's so lame.
- vel0city 3y agoWell, the answer to your "What is the most profitable american car company?", the American car company with the highest gross profit in 2022 was Ford. Maybe you need to polish that crystal ball a little bit more.
- tzs 3y ago> The old European and US car makers are however failing quite badly. What they produce is hot garbage That's not what I've seen in the numerous reviews I've read. Plenty of others get reviews similar to those of Tesla both from reviewers and their owners. Tesla has got by far the best charging network, and their drivetrain is top notch, but the car shaped object they put that drivetrain in is not great. The old car makers seem to be learning how to make good electric drivetrains faster than Tesla is learning to make the rest of the car. > at a huge loss per car. Aren't you jumping the gun a bit? It took Tesla 12 years from the time they started actually shipping cars to the time they started having profitable years.
- sgt101 3y agoI thought that the point of EV's is that there is no drive chain? The issue for the big car makers is that their differentiation is in the ICE drive chain... Making that thing to any sort of modern standard is very difficult, making millions of them at the right price is really difficult. Electric motors in the wheels - not so much. So, the established players have to find reasons why consumers will buy their implementation of a generic technology. The potential ones are specialisms, brand & service. Service is difficult because EV's don't need much. My 4 year old tesla has had 1 tyre repaired and a lot of washer fluid poured in the front. Specialisms will include things like bullet proofing, radical looks... Brand will be available to Ferrari, Rolls-Royce, Bentley, Porsche, and few others but these will be small scale - although overall they will add up to be somewhat significant. But companies like Ford, GM, VW, Mercedes, Renault, Toyota and Honda are really screwed. Even Tesla! Personal mobility is going to be commoditized, margins are going to go, costs are going to have to be cut radically
- Infinitesimus 3y agoThink of drivetrain as all the magic that happens between power generation and what your wheels do. You have can the same batteries (or engines) in a car and get widely different driving dynamics. How does it put power down to the wheels? EVs are fantastic 0-60 machines in a straight line but the luxury brands you listed care about more than that (including status, of course). How does it corner? What happens when I floor the accelerator at 70mph? Does the car feel like a wild animal you're taming or a machine that feels like an extension of your body? Then you get to the other differentiators of interior design, extra tech capability, NVH management, etc. I'm excited for those areas to see some more useful innovation once 0-60 times stop being interesting. I think vehicles like the Prius, Leaf, etc are for the same audience as the corolla, altima, etc buyer. The playground for those who care about a particular 10% of their driving/badge experience will always exist regardless of what powers the vehicle
- saiya-jin 3y agoLike it or not, ICE cars still rule, and given their prices and lack of serious used cars markets so far with adequate pricing its not changing soon (I mean every BMW car I've bought was 20-25% of the price of new and was >95% of the car, so far they lasted 11 years / 150k km without any issues, I am not going to waste more money on cars regardless of technology). So sales of traditional ICE car manufacturers in electric space is not so important, at least for now. Given how much we destroy earth by mining all EV stuff I don't consider this as eco-friendly technology neither, at least not yet. Where I live (Switzerland) they don't plan to phase them out anytime soon. All EU goals will shift to later in future, everybody understands that, including politicians pushing for them. Also, Tesla had some good momentum in the beginning but right now they are just another e-car manufacturer among many, say Porsche beats them on everything actually important in car (apart from price, but then we talk about premium brands). So I wouldn't bet seriously on its future, it can be stellar or can flop ie if EU subsidies dry up.
- mschild 3y agoPrices are absolutely changing and the used car market for EVs is ramping up. Family member was looking for an electric car, but found new ones still a bit too expensive. There have been discounts from manufacturers. They decided to go for used. Bought a VW ID.3 for 23k Euro with 16000km. That's a car from 2 years ago. No crashes, battery still at 97% capacity.
- saiya-jin 3y agoYeah, that's type of car I am willing to spend max 6-7k used, in OK condition. Of course it won't be 2 years old, thats fine. That's the prices I am talking about.
- mschild 3y agoThat's fair and I'm not suggesting it's perfect. Even used EVs are expensive but it no surprise given the initial cost. Originally, that car sold for around 40k. That's a ~50% drop in 2 years and that car wasn't an outlier. Stands to reason that with advancing age and ever cheaper EVs we will see cheap used ones in your price range in a few years.
- piva00 3y ago> The old European and US car makers are however failing quite badly. What they produce is hot garbage at a huge loss per car. VW Group (VW, Audi, etc.) seems to be moving quite well into EVs, I don't understand how manufacturers with a huge know-how to manufacture ICEs could be taken as "failing quite badly" in a market that's barely 5 years in the mainstream. ICEs are much more complex machines to produce than EVs, battery tech is something that most automakers have gotten into. I think it's still too early to call shots like that, Tesla is still holding on its almost-first-mover advantage but it isn't a given it will stay that way when the competition increases. And competition has been increasing quite substantially.
- megaman821 3y agoIt sounds reasonable but people said the same thing 5 years ago. What year will I see the legacy automakers utilize their advantages to sell more electric vehicles than Tesla? I actually feel in 5 more years people will be saying the legacy automakers never had a chance because they were too set in their ways.
- andjd 3y ago> What year will I see the legacy automakers utilize their advantages to sell more electric vehicles than Tesla? <troll>Ford is selling thousands of F150 EVs a month. How many Cybertrucks has Tesla sold?</troll>
- labcomputer 3y agoYes, yet another promise that Elon broke!
- piva00 3y ago5 years ago major automakers didn't have full lineups of EVs already in production. Now they have, it's heavy industry, not tech, things take a while to R&D and ramp-up to full-scale production. Now there is full-scale production from multiple manufacturers, it only gets easier from here, maybe another 5 years is a good waiting time to see clear trends emerging.
- yardie 3y agoI have never understood why SPACs aren't illegal. Even when someone knowledgeable in finance describes it to me on the surface, in layman's terms, it appears sketchy. A SPAC is basically a way for investors to dump a company with no real business model, yet, onto the unsuspecting public. It relies heavily on pump and dump strategies to raise funds before its special opportunity time runs out. While you can't time the market this seems like a vehicle designed to do exactly that. Its just odd.
- rapsey 3y agoI thought SPACs were some new thing but they are actually not. They just show up periodically to scam a new generation.
- bombcar 3y agoThey basically have no "real" legitimate reason to exist, but they don't run afoul of any laws, so they only appear when there are scams to be done.
- boeingUH60 3y agoThe SPAC pioneers were actually good investors, e.g., Bill Ackman and Martin Franklin. The shysters came in 2020 and ruined it for everyone.
- esotericimpl 3y ago[dead]
- polygamous_bat 3y agoUnfortunately, SPACs are legal (so far) because they are a Frankenstein's monster made of legal body parts. There's nothing illegal about creating a public company, no matter how stupid it is, if your finances are above broad. Financially, SPACs are as simple as a public company gets: practically take people's money and hold them in a big pot. There's also nothing illegal about a public company acquiring or merging with a private one, although I believe this is the Achilles' heel of our current legal system: mergers generally don't require the same level of minute disclosures an IPO does. Clearly, this is a regulatory arbitrage, just like a lot of our "innovations" in the past decade, fueled by a near zero interest rate. The way to move forward would be to take another look at our regulation and close the arbitrage. Otherwise, next time there's a low interest rate environment, I can guarantee you there will be another garbage SPAC boom.
- sxvtemp 3y agoFor an EV manufacturer to truly succeed, it's not just about making electric cars. They also need to heavily focus on the recharging network and infrastructure. The car is just one piece of the puzzle. The real challenge? I think is setting up a dependable recharging network cover the entire region/country.
- oh_sigh 3y agoWhy, with charging standards? It's not like we needed ford gas stations, Honda gas stations etc. For Tesla it made sense since they were the first movers, but I think everyone else will just rely on the infra provided by 3 or 4 big players
- jackmott 3y ago[dead]
- _fat_santa 3y agoI think a more fundamental problem for these companies is the actual manufacturing of the vehicles. It's easy (relatively speaking) to develop a one-off prototype, it's much harder to scale that up to build 1000/cars/month for example.
- rjmunro 3y agoJust because Tesla has a recharging network and a car company doesn't mean others need a similar setup. It's fine for them to be separate companies. Just make sure your car supports ISO 15118 Plug and Charge. It may be the case that it is easier to get a return on investment on installing chargers than building cars. If you go down that route, you might want to strike deals with car companies and their dealerships to include setting up your charger network on cars when they are sold.
- dougSF70 3y agoThis applies to all SPACs not just EV SPACs. In the traditional IPO route the underwriting firm will have performed some due diligence - from a reputational risk standpoint. Without that element, SPACs were always going to be attractive to firms that had zero substance.
- fifteen1506 3y agoTo anyone else who is not north-american: SPAC has nothing to do with PAC, the political tool/org/whatever it is. My brain for some reason confused the two.
- sakopov 3y agoRivian actually had a really good quarter. They're still losing $32K per vehicle but this number has been coming down substantially every quarter so the margins are improving and they're almost at a break-even. Nikola secured a grant from California Transportation Commission for $42M recently. This one was very shocking because they were basically a scam company a couple of years ago.
- gizmo385 3y agoWait, how are they almost at break even if they’re losing 32k per vehicle?
- sakopov 3y agoThey went from losing ~$160K per vehicle in Q2 2022 to $32K in Q2 2023. So at this pace, they could break-even within the next 2 or 3 quarters.
- pgwhalen 3y agoOn the one hand, they're trending towards break-even. On the other hand, they're losing the price of a car amount of money every time they sell a car. Doesn't seem great for a car company.
- labcomputer 3y agoBecause they’re not. Nowhere close. Although 32k/vehicle includes all fixed costs. By my calculations, with current ASP and marginal unit costs, they need to sell about 35k R1 vehicles per quarter to achieve positive gross margin. For reference they sold about 12k last quarter. So, yea. I don’t think they’ll get to positive GM before burning through all their cash. Edit: I should give them more credit. I didn’t think they would ever achieve positive marginal unit economics, but the last two quarters have showed that they have.