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EV startups facing another tough quarter of high cash burn

Reuters reports the piled-on pressure on a group of companies battling to increase production while needing more choices for financing in a turbulent economy.

Reuters reports that American EV startups are expected to disclose another quarter of falling cash reserves. 

The report piles on the pressure for a group of companies battling to increase production while needing more choices for financing in a turbulent economy. As EV demand shows signs of slowing and market leader Tesla lowers prices to boost orders, these companies are seeing their market valuations diminish. 

To illustrate, according to Visible Alpha predictions, May 9, 2023, marks the start of the group’s first-quarter earnings, and Lucid is expected to announce a 36% sequential decline in cash reserves. In addition, Rivian will most likely announce on May 9 that its cash balance decreased by 8.6% to $10.78 billion from the quarter prior. 

Meanwhile, as both deliveries and output plummeted over time, Amazon, whose shares have fallen by about a quarter this year, is also anticipated to disclose a more significant loss of $1.75 billion. Last year, it reported a $1.59 billion deficit.

Additionally, Frisker and Nikola have reported they are expected to see their cash reserves respectively decline by 5% and 15%

However, Lordstown stated that the uncertainties surrounding a financial agreement with significant stakeholders Foxconn might lead it to file for bankruptcy. On May 4, 2023, the unplanned announcement of its earnings revealed that Lordstown’s cash balance decreased 11% from the previous period.

Investors have expressed considerable anxiety after some companies, notably Lucid and Rivian, stated they would no longer publish statistics on reservation numbers.

It is a “disturbing development,” according to CFRA Research analyst Garrett Nelson. “What we’ve seen is a trend of less transparency in the reservation count, but overall competition is a big problem,” the speaker continued.

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Jaelyn Campbell
Jaelyn Campbell
Jaelyn Campbell is a staff writer/reporter for CBT News. She is a recent honors cum laude graduate with a BFA in Mass Media from Valdosta State University. Jaelyn is an enthusiastic creator with more than four years of experience in corporate communications, editing, broadcasting, and writing. Her articles in The Spectator, her hometown newspaper, changed how people perceive virtual reality. She connects her readers to the facts while providing them a voice to understand the challenges of being an entrepreneur in the digital world.

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