Lordstown Motors files for bankruptcy: Why there could be more consolidation in the EV space
Lordstown Motors has filed for bankruptcy, but does that indicate future consolidation for the rest of the EV industry? Autoblog Editor-in-Chief Greg Migliore explains what Lordstown Motors' failure tells investors about the future of the EV industry.
Video Transcript
AKIKO FUJITA: Well, sticking with the EV space, today we've seen some winners and some losers. Lordstown files for bankruptcy and Ford announces layoffs. Tesla, meanwhile, continues to win as Volvo joins its ever-growing network of superchargers following suit of major manufacturers.
With more insight, let's bring in Greg Migliore, the editor in chief of Autoblog. Greg, let's start with the Lordstown story because, you know, this is a pretty short run, even for a startup. Founded in 2018, filing for bankruptcy five years later. How much of this is specific to Lordstown? How much of this is a symptom of what's to come in the EV space?
GREG MIGLIORE: Well, I think this is really indicative of how, you know, startups can basically fare if they don't have the capital that's required to maintain the momentum. You know, there's an old saying in the car business that you need billions, not millions. Lordstown barely had millions. You know, they were trying to get that $170 million investment from Foxconn, and that was like lifeblood. $170 million is like change of the seat cushions for Ford or Tesla or Toyota, so they just-- they didn't have the capital that they needed to make a long term go of it.
So we'll see. I mean, I think there's a lot of startups out there that do have compelling products. They just need to have the business case. They need to have that customer niche to have that staying power. And as you can see, Lordstown didn't really have it at this point.
SEANA SMITH: Greg, do you think Lordstown has some assets that some of the larger players within the space would be attracted to, would be interested in?
GREG MIGLIORE: They have an electric truck that is fully formed. I've driven it. I'm one of the few people who have and maybe ever will. We'll see. It's a decent truck. It has a respectable electric range. It's capable. It's marketed at more of like a work segment. So they did have a defined plan. They just weren't really able to execute it.
If you were looking to have like a turnkey operation with a factory, depending on how the potential litigation with Foxconn works out, you know, it's all right there. Like if you walked in with, say, $1 billion or something, maybe you could, you know, get this off the ground and you wouldn't have to do the product development or some of the testing because Lordstown has already done that for you.
AKIKO FUJITA: To what extent are we likely to see more consolidation in this space? I mean Lordstown, sure, to Seana's point, we have seen them raising the red flag for a while. No real surprises here. But what about some other names that, at least from an investor standpoint, haven't necessarily gotten sort of the support and there's a lot of concerns around just liquidity?
GREG MIGLIORE: Yeah. I mean, I think when you look at Lucid, Rivian, Fisker, these are all like newer companies that have, you know, much less capital to work with than the traditional automakers. I think they're all companies that you're going to want to watch. You're going to see-- you know, potentially we could see some M&A there, which I think could make some sense.
A lot of these companies-- like Rivian has two products. Lucid has one. You know, it would make sense for perhaps an existing automaker to reach out and maybe augment their portfolio by perhaps snapping up one of them. I mean, that could be a good strategic play. So I think we are going to see, in the next-- you know, as the decade rolls on, some consolidation, some mergers and acquisitions. I think some of these companies just organically, you know, will probably go the path of Lordstown as well.
SEANA SMITH: Greg, what do you think this means or does it mean anything just in terms of EV adoption, the fact that if you have a name like Lordstown, some of the other smaller players within this space struggling to survive, is it going to have any impact, do you think, on getting more EVs on the road?
GREG MIGLIORE: You know, in this case, I don't think you want to read too much into it. I think Lordstown was a fairly niche company. They had a-- like, again, they were like a work truck company, if you will. So I think are they a sign for what other, you know, startups could happen to them? Potentially.
But at the end of the day, you know, Ford, General Motors, Tesla, Toyota, you name it, they're investing heavily in electric vehicles, and consumers are going to have a lot of choices out there. They're going to have a lot of different options, a lot of different dealerships. So they're going to have options. You know, if you're a consumer, you're probably actually not thinking of a startup because many of them are actually expensive or sort of narrow use cases. You know, I think the mainstream automakers and Tesla will have far more options going forward.
AKIKO FUJITA: I mean, that raises the question, you know, how much of this, in terms of adoption, is about the car itself? How much of it is about the range anxiety and having the infrastructure in place? There's a new study out that points to just where the adoption is happening. Some interesting numbers though here from ISeeCars.com pointing to Hawaii, Oregon, Vermont, Washington, and California seeing the lowest growth in EV-- in EV growth, we should say.
So California, take that as an example because we have seen massive adoption there, we're still talking just over 15%. Nationally about 10% roughly, maybe a little under. I mean, is that kind of the tipping point? In other words, it's easy to get to maybe a 20%, but getting beyond that is an even bigger hurdle.
GREG MIGLIORE: Yeah. I think that's fair to say. I think what we're looking at right now is the products are there. They exist. There's a lot of great EVs. I've driven many of them. Right now, the next part of the equation really is the infrastructure, you know? How easy is it going to be to charge your EV?
Where can you do it? What kind of plug will you be using? That's like the next great, you know, unknown, if you will. And you know, you're seeing different companies are doing deals with Tesla now to get on the supercharger network and things like that that make it easier for consumers. That's really the next big part of the equation. It really is the network.
AKIKO FUJITA: Is it about the fast chargers though? Is that necessary as opposed to level two chargers we see a lot of? Or does it need to be even more ubiquitous? Do we need to have something like wireless charging in order for drivers on the sidelines to feel comfortable switching over?
GREG MIGLIORE: So, I mean, not to be a cop out, but it's all of the above. I mean, it really has to be a situation where, when you pull into like a charging station, it's accessible, it just works, and that it's quick. You know, you really need to have whatever your EV may be, it has to be capable of fast charging, and most of the new ones are. And you need to be able to do that at whatever roadside place you're going to. It's got to be basically like filling up your car with gas.
And I think are we going to get there in the next, you know, 10 years? Maybe. I don't think it's going to necessarily be like a two or three year thing just because there's so many challenges to getting above, like you said, that 10%, 15%, 20%. Like right now there is enough infrastructure to service the people who are early adopters, who are really into electrics. But once you get beyond that, you know, there's millions of people in this country, and you need to have a lot of options, and it all needs to work. And I think that's a really big challenge right now.
SEANA SMITH: Yeah, range anxiety, lack of infrastructure I think keeping a lot of people on the sidelines when it comes to EVs. All right, Greg Migliore, great to have you. Editor in chief of Autoblog.
Source: finance.yahoo.com