EV Startups Crash and Burn in Market Meltdown

Several high-profile companies, including electric SUV maker Fisker and bus manufacturer Arrival, filed for bankruptcy earlier this year.

Swedish-based battery maker Northvolt became the latest casualty last week, filing for Chapter 11 after BMW canceled a key order.

At least a dozen other startups, specializing in electric vehicles or batteries, are at risk of running out of cash by next summer, according to a Wall Street Journal analysis of their most recent filings.

Even shares of more stable startups, such as Rivian Automotive and Lucid Group LCID -4.39%

decrease; red down pointing triangle, are down nearly 50% this year as they face an increasingly challenging outlook. Rivian this week got conditional approval for a government loan of up to $6.6 billion to boost production capacity, but investors are still worried about costs and the prospect that the electric-truck maker might not get the money if it doesn’t complete the deal by Inauguration Day.

Many of these young companies have been hammered by cooling demand for electric cars, rising costs and supply-chain obstacles that have hindered their ability to put out new products quickly. Collapsing stock prices have vaporized billions of dollars in market value.

A Journal analysis of 54 publicly traded EV and battery startups shows an increasingly dire financial situation. Seven companies have already filed for bankruptcy. Of 36 operational companies with sufficient data for analysis, three-quarters are losing money and 13 are projected to run out of cash by next summer.

Oth…  er startups with U.S. government support are also faltering. Li-Cycle Holdings, a firm that has promised to turn recycled batteries into useful materials, has an approved $475 million government loan to help build out a plant in Rochester, N.Y.

But at the end of September, it only had enough cash on hand to sustain operations for about six months. The Canadian firm, backed financially by miner Glencore, has paused construction on the factory due to ballooning costs.

“A lot of these management teams go into it thinking they’re going into the next Tesla, but that proves to be more the exception than the rule,” said Brian Dobson, a managing director at brokerage Clear Street who has followed the sector closely.