The bankruptcy of Lordstown Motors Corp. could herald further disruption in the electric-vehicle market, according to Louis Navellier, chair and chief investment officer at money-management firm Navellier & Associates.
On Tuesday, Lordstown Motors
RIDE,
said it is filing for chapter 11 bankruptcy protection and suing former partner Foxconn.
Shares of electric-vehicle giant Tesla Inc.
TSLA,
rose 2.9% Tuesday, while EV makers Rivian Automotive Inc.
RIVN,
and Fisker Inc.
FSR,
rose 2% and 2.8%, respectively. Lucid Group Inc.
LCID,
shares climbed 9.1%, just days after hitting a record low, but Nikola Corp.
NKLA,
fell 2.6%.
Related: Lordstown Motors files for bankruptcy protection and sues Foxconn
“There’s going to be a shakeout in EVs, because no one is making money except for Tesla and BYD in China,” Navellier told MarketWatch.
Set against this backdrop, the investor sees Rivian as particularly vulnerable, noting that the EV maker is still burning money. “I believe that they won’t get to their economies of scale fast enough, but I hope that I am wrong,” he added.
Last year, investment-research firm New Constructs added Rivian to its list of “zombie” companies, citing cash as a potential problem for the carmaker. Rivian’s stock has fallen 25.5% this year.
Related: EV maker stocks rise in face of Lordstown bankruptcy
Rivian is not alone when it comes to cash burn, according to Navellier. “Look at Lucid. Even with brilliant engineering, they are burning tons of money,” he said, but he acknowledged Lucid’s recent “reprieve” in the shape of a $1.8 billion stock purchase by the Saudi Public Investment Fund. Lucid has also forged a $232 million supply pact with Aston Martin Lagonda Global Holdings PLC
AML,
EV maker Fisker, meanwhile, must avoid fallout from a recent recall, according to Navellier. Last month, Jaguar Land Rover North America recalled over 6,000 Jaguar I-Pace vehicles built at an assembly plant in Graz, Austria, since June 5, 2018. “Vehicles have experienced thermal overload which may show as smoke or fire, that may occur underneath the vehicle where high voltage traction battery is located,” the U.S. National Highway Traffic Safety Administration said in a report.
Related: Rivian buys mapping app Iternio, which plans routes, finds EV charging stations
Fisker also has a manufacturing partnership with Magna International Inc.
MGA,
to produce vehicles at the Graz factory, so they must ensure that any issues are not duplicated, according to Navellier.
The investor, who has Panasonic Holdings Corp.
6752,
Volkswagen Group
VOW,
and Porsche
P911,
in his portfolio, is closely monitoring developments in solid-state battery technology. “At the high end, whoever perfects solid state will win,” he said.
Navellier expects that the first solid-state batteries for electric vehicles will be built by Panasonic via Toyota
7203,
but he said it could be years before the technology is widely available. “We probably won’t have solid state at mass availability until 2030,” he said.
Related: Tesla’s Cybertruck delayed again. When will we see it?
He also expects that Tesla’s eagerly anticipated Cybertruck will be a big hit in the EV market. “It’s designed for the zombie apocalypse,” he quipped, adding, “I do think that Tesla is a serious player.”
Earlier this year, Tesla CEO Elon Musk said that mass production of the Cybertruck wouldn’t start until 2024.
Sean Tucker contributed.
This story originally appeared on Marketwatch
