What happened
In a race to the bottom, the smaller entrants often get left behind. That was the dynamic behind the nearly 2% decline of Fisker (FSRN -0.90%), a maker of electric vehicles (EVs) on Wednesday. That fall wasn't in line with the basically flat performance of the S&P 500 index on the day.
So what
That morning, the behemoth and trendsetter of the EV industry, Tesla (TSLA -0.40%), announced its latest in a series of price cuts.
The company is reducing the price of its Model Y long range and performance versions by $3,000 apiece. It's also slicing the cost of its rear-wheel drive Model 3 by $2,000. This marks the sixth -- yes, the sixth -- time this young year it has adjusted its prices downward.
When the leader trims prices, this puts pressure on the followers. Ever an up-and-coming niche EV manufacturer, Fisker has yet to roll out its foundational Ocean SUV to the market. More attractive price points from Tesla (which, by the way, has a hit SUV in the Model X) will likely necessitate reductions it can ill afford in its present stage.
Now what
Certain pundits are already sounding the alarm for the "alt-Teslas." In a new research note published Wednesday morning, Global Equities Research's Trip Chowdhry wrote that the incumbent's ever-growing scale and its operating efficiency will dwarf those of the smaller competitors. In fact, he went as far as to write he thinks Fisker and fellow EV makers Rivian and Lucid even face the risk of going bankrupt.
