NUNEATON, England, Aug 9 (Reuters) - A handful of commercial
electric vehicle (EV) startups are burning through cash fast,
racing to bring vans or trucks to market before the funds run
out or customers choose to buy from legacy automakers like Ford
Motor Co or General Motors Co .
Boosted by investor hunger to create the next Tesla Inc
, a clutch of commercial EV makers on both sides of the
Atlantic have gone public via reverse mergers with
special-purpose acquisition companies (SPACs), raising hundreds
of millions of dollars as they sought to emulate Elon Musk's
success. These include Arrival Inc, Canoo Inc,
Lordstown Motors Corp, Electric Last Mile Solutions Inc
(ELMS) and REE Automotive Holding Inc.
But investors have soured on EV startups and their ability
to compete with legacy carmakers, sending their shares to a
fraction of their peak prices. This has raised the pressure to
produce working vehicles fast if they want to raise fresh funds
in an industry where launching a single vehicle can cost $1
"It's vitally important at this stage to get vehicles into
customers' hands," said Daniel Barel, chief executive of Israeli
electric chassis maker REE Automotive, which has run vehicle
tests with customers near Detroit and will unveil a UK prototype
van this week. "Only then can they make a real decision to buy."
REE's chassis use "corners" or standalone in-wheel electric
motors, with brakes and steering housed in all or some of the
wheels of an EV that do not need axles or powertrains, freeing
up more space inside a van.
To get to market faster, REE has tapped legacy suppliers
like American Axle for electric motors and Italy's
Brembo for brakes. Companies like EAVX and Morgan
Olson, units of commercial vehicle body maker JB Poindexter &
Co, will provide standardized bodies for REE's U.S. trucks.
"We want to keep true to what we're about and let others
bring their expertise in for the rest," said vice president for
engineering Peter Dow at REE's engineering center in Nuneaton,
The clock is ticking.
REE's shares are almost 90% below their July 2021 debut. The
company had $239 million in cash at the end of March and expects
to invest up to $120 million in 2022 to scale up for production
"We're on track, we're on budget, we've got everything we
need to take it to the market," CEO Barel said while
demonstrating a test vehicle near Detroit, adding that REE has
enough cash to last beyond the end of 2023.
Others have already struggled, however.
ELMS filed for bankruptcy liquidation in June, citing
insufficient funding, while Lordstown had to sell assets to
Taiwanese contract manufacturer Foxconn.
In May, Canoo disclosed "substantial doubt" about its
ability to continue as a going concern, but recently received a
boost when Walmart Inc ordered 4,500 vehicles.
Obtaining more cash could be tough.
"The market right now is not an ideal market to raise
capital," said Dakota Semler, CEO of Los Angeles-based Xos Inc
, which already has 200 electric trucks operating on U.S.
roads for customers including Amazon.com Inc delivery
Xos had $132.7 million in cash at the end of March and can
raise $125 million more via a share purchase deal with a unit of
U.S. investment firm Yorkville Advisors.
'TOUGH AT THE MOMENT'
Legacy automakers are turning up the heat.
FedEx Corp has 150 BrightDrop electric trucks
running deliveries around Los Angeles.
"It feels like you're in the future now," FedEx driver
Nelson Granados, 28, told a Reuters reporter as he made
deliveries during a ride-along in a BrightDrop EV.
FedEx has ordered 2,500 BrightDrop trucks, spurred by a
combination of the 18-month-old company's technology and GM's
manufacturing muscle, FedEx's chief sustainability officer,
Mitch Jackson, told Reuters
Potential new entrants have taken note.
British EV startup Bedeo makes electric powertrains for vans
for world No. 4 automaker Stellantis NV and said
earlier this year it was talking to investors about building its
Despite its track record - vehicles with Bedeo powertrains
have clocked over 50 million km (31 million miles) - executives
say investors are now wary of competing with the likes of Ford's
electric Transit van.
"A large-scale capital raise is tough at the moment," said
Andrew Whitehead, CEO of Bedeo unit Protean Electric.
Bedeo CEO Osman Boyner said the company will instead start
converting existing diesel vans later this year using Protean's
in-wheel electric motors so they can run in electric mode in
cities with low-emission zones and diesel on longer journeys.
Bedeo is also talking to legacy automakers about producing
small, specialized production runs of 5,000 or so vans for them.
"Big automakers don't want to do that in-house," Boyner
said. "Those numbers are too small for them, but they're big
numbers for companies like us."
'LESS FAVOURABLE TERMS'
EV startups are cutting back.
Rivian said earlier this year that its $16 billion in cash
as of the end of March was enough to fund its second U.S. plant
for $5 billion, targeted to open in 2025, but it announced in
late July that it would cut its workforce by 6% to reduce costs.
Amazon has ordered 100,000 vans from Rivian, whose stock has
fallen more than 80% from a peak hit shortly after its November
2021 initial public offering.
UK electric van and bus maker Arrival also plans to cut
Arrival had $500 million in cash in mid-July, almost 45%
down from roughly $905 million at the end of 2021. Its stock is
almost 93% below its March 2021 debut.
Chief Financial Officer John Wozniak said in a statement
that restructuring will fund Arrival's operations until late
The startup has begun phased trials with United Parcel
Service Inc, which has ordered up to 10,000 Arrival
"We believe that we will continue to access funding from a
number of different sources," Wozniak said. "However, the terms
may be less favorable and the amount and timing remains
uncertain, which is why the company announced the measures it is
taking to preserve cash."
Startups that avoided going public via SPAC mergers are now
waiting for the market to improve.
In February Stockholm-based Volta Trucks raised 230 million
euros ($235 million) in funding to ramp up electric truck
Spokesman Duncan Forrester said Volta has prototype trucks
in customers' hands and is on track for series production in
early 2023. It has an order book of more than 6,500 trucks
valued at around 1.4 billion euros.
Later in 2023, Volta will look to raise funds, either
through fresh fundraising or an initial public offering.
"From an investor perspective, that will be a different
conversation because we'll be able to demonstrate a track record
of bringing vehicles to market," Forrester said.
($1 = 0.9770 euro)
(Reporting by Nick Carey in Nuneaton, England, Lisa Baertlein
in Los Angeles and Ben Klayman in Detroit
Editing by Matthew Lewis)