In 2023, the EV market is no longer about startups. Instead, the race to shift to electric vehicles has morphed into a competition between the world’s largest automotive companies and a host of smaller rivals that have gone public. The latter are often deeply unprofitable.

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In fact, this set of smaller EV companies is bleeding so much cash that there’s a row going on at the moment between China and other economies over subsidies and fair competition.

Subsidies are just part of the issue, though. There’s lots of talk about how central China is to the global battery supply chain and if new laws could shake up the present dynamic. Much as food security has long been a priority for countries, joined by semiconductors in recent years, nations and economic blocs also want to ensure that their ability to manufacture green (or greener) technologies can meet their needs.

The stakes are more focused for EV companies simply trying to scale production and prove to investors that they are viable, long-term businesses. They need to scale manufacturing to sell more cars, which will in turn increase manufacturing and research cost efficiencies, and all that will hopefully snowball into a bottom line that’s not deep in the red all the time. So it makes sense that we often see high levels of spending, and massive losses, at EV companies that are ramping up production.

The New York Times recently reported that Nio, a Chinese EV company also listed in the U.S., is losing around $35,000 per car. It’s hardly alone in losing so much money. U.S.-based Rivian in August said it delivered 12,640 cars in the second quarter of 2023, which resulted in revenue of $1.12 billion, gross loss of $412 million, operating loss of $1.29 billion and a free cash flow deficit of $1.62 billion. Gross margin came in at -37%.


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