EV Industry Struggles Multiply as Sales Continue to Stall

The precipitous drop in demand for electric vehicles continues to inflict pain on the automotive sector in the form of bankruptcies, workforce reductions, sagging profits, and abandoned factory and development projects. Some EV manufacturers and industry analysts are expressing hope that the market’s struggles are simply a short-term setback and that a turnaround could occur over the next few years. For now, though, consumers remain wary of high sticker prices and the challenges of keeping the vehicles charged.

EV manufacturer Fisker Group Inc. announced in June that it had filed for Chapter 11 bankruptcy protection in Delaware. Fisker produced the troubled Ocean SUV, and it was one of several EV start-ups that entered the market by merging with special purpose acquisition companies in 2020 and 2021. “Like other companies in the electric vehicle industry, we have faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently,” Fisker said in a statement.

Fisker is the second EV startup to file for bankruptcy in the last year, following the June 2023 announcement from Lordstown Motors Corp. that it had filed for Chapter 11 bankruptcy protection. The announcement came just weeks after Lordstown warned that it was “in danger of failing” because of a dispute over an investment agreement with electronics company Foxconn.

Lordstown said it planned to sell its Endurance EV and related assets. Moreover, the auto manufacturer said it intended to file a lawsuit against Foxconn for “fraud and willful and consistent failure to live up to its commercial and financial commitments.” At the time, restructuring under Chapter 11 would have aided the sale process of the Endurance model and improved the timing of its lawsuit against Foxconn, according to Lordstown.

In more bad EV news, Volkswagen shares fell following a June 24 announcement that it would invest up to $5 billion as part of a joint venture with EV manufacturer Rivian Automotive to develop vehicle software. VW is expected to get access to Rivian’s EV technology when the venture is finalized.

Meanwhile, Chinese EVs are everywhere all at once, surfacing in several developing markets such as Brazil, Mexico and Southeast Asia. The U.S. and its partners in Europe are working to stunt that growth with tariffs and trade barriers, but Chinese automakers may already dominate many of these markets. According to data from technology intelligence firm ABI Research, Chinese carmakers accounted for 88% of the EV market in Brazil and 70% in Thailand during the first quarter of 2024. China’s largest EV company, BYD, accounted for 71% and 45% of EV sales in those markets, respectively, during the same period.

The Biden administration’s new 100% tariffs on Chinese EVs could hamper the competition. Speaking at a conference in Paris in May, Tesla CEO Elon Musk made clear he does not support the new U.S. tariffs.

“Neither Tesla nor I asked for these tariffs,” he said. “Tesla competes quite well in the market in China with no tariffs and no deferential support. I’m in favor of no tariffs.”

That may be true for Tesla, but it sounds like other U.S.-based EV makers can use all the help they can get.