What happened
August was a busy month for hearing updates from early-stage electric vehicle (EV) companies. Those updates brought a dose of reality to investors, and several EV maker stocks got crushed last month. Lucid Group (LCID -3.92%) led off the earnings parade on Aug. 3 and it set the tone for many others. Lucid shares dropped 15.9% for the month, according to data provided by S&P Global Market Intelligence.
Hyzon Motors (HYZN -2.56%) and Faraday Future Intelligent Electric (FFIE -1.80%) fared much worse with these stocks plunging 47% and 49.3%, respectively, in August. While Lucid highlighted some current struggles that many in the industry are facing, Hyzon and Faraday have even deeper issues with their respective businesses.
Image source: Lucid Group.
So what
Early in August Lucid slashed its projection for 2022 vehicle production by 50%. That was the second cut this year, which originally started with a plan to produce 20,000 luxury EVs in 2022. Now, after the second reduction, the company sees itself manufacturing just 6,000 to 7,000 of its sedans. The company said it is struggling with supply chain and logistics snarls.
Now what
And while Lucid ended the second quarter with $4.6 billion in cash, cash equivalents and investments, it said its balance sheet will only take it into late 2023. Another hit to the shares came toward the end of August when Lucid announced plans to raise up to another $8 billion to continue to fund its growth.
Hyzon and Faraday have even more pressing financial issues, helping to explain the outsize drop in the stocks last month. Hyzon said it would delay its quarterly report filing after it discovered "operational inefficiencies" at its European joint venture facility. It also subsequently appointed a new CEO. It now has until Oct. 14 to file that report and remain in compliance with the Nasdaq Stock Market.
Faraday shares have plunged more than 80% so far in 2022. In its recently reported second-quarter results, Faraday let investors know it needs more capital. The company stated that while it has taken steps to cut costs and preserve cash, "it will require additional funds by early September 2022 in order to continue operations."
That's not good news for investors and the stock has reacted accordingly. With many companies struggling with rising raw material prices, slowing economies, and continued supply chain glitches, investors aren't likely to risk capital with EV start-ups that are struggling to survive. That showed in August, and the selling even spread to those early-stage companies like Lucid that are slowly ramping up production. Investors shouldn't expect a comeback in these stocks until the businesses show they can sustain themselves.
