What happened
Followers of the electric vehicle (EV) sector likely always believed that there would be some big winners and many big losers. A new Securities and Exchange Commission (SEC) filing yesterday has put speculative names back into focus today, with investors selling shares. The stocks of QuantumScape (QS 2.02%), Lordstown Motors (RIDE 5.71%), and Faraday Future Intelligent Electric (FFIE -7.28%) are all dropping today after an SEC filing from Faraday Future. As of 1:45 p.m. ET, these EV stocks were lower as follows:
- QuantumScape was down 5.9%.
- Lordstown was down 4.9%.
- Faraday Future was down 5.2%.
So what
Investors think QuantumScape has massive potential with its solid-state battery technology for the EV industry. As recently as last November, the company was valued at more than $15 billion even though it hasn't yet proven the technology can be commercialized. So when Faraday Future said last night that it will be delaying the initial production of its FF 91 EV, and that it needs additional cash for commercial launch, other speculative EV stocks also took a hit.
Image source: Faraday Future Intelligent Electric.
Now what
Faraday stock more than doubled over several trading sessions earlier this month. But it seemed to come from retail traders betting on a potential short squeeze rather than any company-specific reason. The company lost $149 million in the first quarter and only held $276 million in cash as of March 31. So it wasn't surprising to see those stock gains disappear in less than a month.
Now it says supply chain issues are causing it to delay the start of production of its high-performance FF 91 electric sedan. It added that it needs additional cash and is seeking investor capital to fund its operations just to make it to the end of this year. For investors, it is reminiscent of the June 2022 announcement from fellow start-up Electric Last Mile Solutions that it was filing for Chapter 7 bankruptcy.
Lordstown Motors has had to shift its strategy to continue its business operations as well. As it continues to work toward the first commercial sales of its Endurance electric pickup truck, the company entered a strategic partnership with electronics manufacturer Foxconn. Foxconn purchased Lordstown's manufacturing facility and will build the vehicle for the EV company. The asset sale provided Lordstown needed capital, and the two companies intend to expand their joint venture for future product collaboration.
QuantumScape is seemingly the furthest from bringing in any potential revenue, as its battery technology is still in the testing stage of development. The company is more than a year away from any potential commercialization. But if the solid-state technology does provide EV makers with a more efficient and safer battery, it has plenty of potential. Each of these companies is still very speculative with no certainty of success, or even survival. Faraday's new filing reinforced that today, and these EV names are all dropping similarly.
