What are EV start-ups doing to ride out weak demand?

US electric vehicle (EV) start-ups are turning to cheaper models, slamming the brakes on production ramp-up plans and laying off employees to navigate a slump in demand due to steep borrowing costs and high repair expenses for the vehicles.

Fisker filed for bankruptcy protection on Monday, becoming the latest EV start-up to succumb to fundraising difficulties, production hurdles and challenges with distribution.

Here's how EV start-ups are trying to steer through demand weakness:

Fisker

Fisker is looking to sell its assets and restructure debt, hurt by rapid cash burn to deliver its Ocean SUVs in the US and Europe.

The Ocean SUV is being investigated by the US National Highway Traffic Safety Administration for safety-related incidents.

The company recalled more than 18,000 cars in North America and Europe earlier this month due to faulty software and noncompliance with safety standards.

Fisker issued a going-concern warning in March and said it would lay off 15% of its staff and pause investments on future projects until it secures a partnership with a manufacturer.

Reuters reported Nissan is in advanced talks to invest in the start-up in a deal that could provide the Japanese carmaker with access to an EV truck while giving the struggling company a financial lifeline.

Demand has been weak for Fisker's flagship Ocean electric SUV. Despite producing more than 10,000 vehicles in 2023, the company delivered only about 4,700.

The company ended 2023 with cash and cash equivalents of $325.5m (R5.85bn) compared with $736.5m (R13.24bn) in 2022.

Rivian

Earlier in June, Rivian announced the second generation of its R1T pickup truck and R1S SUV with new drive units and other components to boost efficiency and reduce costs.

In March, Rivian introduced its smaller, less expensive electric R2 SUVs and R3 crossovers with plans to start producing the R2 at its US factory to hasten deliveries in the first half of 2026.

The move came weeks after the company said it was planning a weeks-long production shut down this year to upgrade its factories and cut costs.

The company expects to produce 57,000 vehicles in 2024, well below estimates of 81,700 units. That is also far below the estimated 1.8-million vehicles Tesla delivered in 2023.

After shying away from cutting the price of its vehicles last year, Rivian in February introduced lower-range options for its existing cars that are $3,100 (R55,746) cheaper.

The start-up has focused on reducing its cash burn by renegotiating supply contracts and building some components in-house. Rivian posted cash and cash equivalents of $5.98bn (R107.53bn) for the first quarter, compared with $7.86bn (R141.34bn) in the fourth quarter.

Lucid

Lucid said it will reduce its workforce in the US by 6% in May as slower than expected growth in demand for EVs hampers its path to profitability.

Lucid, backed by Saudi Arabia's Public Investment Fund as its largest investor, with a stake of more than 60%, is to start production of a more affordable mid-size car in late-2026 and its Gravity SUV this year to attract a larger customer base.

The company has missed analysts' expectations for revenue for six straight quarters. It has slashed the price of the Lucid Air Pure to $69,900 (R1,256,980) and is including two years of free scheduled maintenance and charging allowance as an incentive.

Lucid in November unveiled its Gravity SUV that will start at under $80,000 (R1,438,604) and is expected to go into production late this year.

The company said it aims to start producing a cheaper midsize vehicle in late 2026 to compete with Tesla's Model 3 and Model Y vehicles, with a price point of about $50,000 (R899,127).

Lucid ended the first quarter with cash and cash-equivalents of $2.17bn (R39.02bn) compared with $1.37bn (R24.64bn) in the fourth quarter of last year.

Nikola

Nikola is pivoting to big rigs powered by hydrogen, after some of its battery-electric trucks caught fire in August and forced a recall.

The company expects up to $170m (R3.05bn) in truck revenue for 2024 with a target to sell 450 units this year, including its hydrogen fuel cell electric trucks.

Nikola's cash and cash equivalents at the end of the first quarter stood at $345.6m (R6.21bn), down from $464.7m (R8.36bn) in December.