Skip to main content
Sister Publication Links
  • Automotive News
  • Automobilwoche
  • Automotive News Canada
  • Automotive News China
Subscribe
  • Subscribe
  • Newsletters
  • Login
  • HOME
    • Latest news
    • Automakers
    • Suppliers
    • New Product
    • Environment/Emissions
    • Sales By Market
    • On The Move
    • Auto Shows
    • Munich Auto Show
    • Geneva Auto Show
    • Paris Auto Show
    • Beijing Auto Show
    • Shanghai Auto Show
  • Features
    • Long Read
    • Interview of the Month
    • Focus on Electrification
    • Focus on Technology
    • Segment Analysis
    • Cars & Concepts
    • Supplier Spotlight
    • Europe By The Numbers
  • Opinion
    • Blogs
    • Commentary
    • Guest columnists
  • Photos
    • Photo Galleries
    • Geneva Photo Gallery
    • Beijing Photo Gallery
    • Frankfurt Photo Gallery
    • Paris Photo Gallery
    • Shanghai Photo Gallery
  • Podcasts
  • Car Cutaways
  • Resource Center
  • EVENTS
    • ANE Congress
    • ANE Rising Stars
    • ANE Eurostars
  • More
    • Publishing Partners
    • Social Media
    • Contact Us
    • Media Kit
    • About Us
    • Capgemini: All or nothing: Why circular business models require a holistic approach
    • Capgemini: Invent Head on automotive takeaways from CES 2023
    • Capgemini: Securing the industry's future through a radical rethink
    • Capgemini: Succeeding with the automated driving journey through AI
    • Capgemini: The circular economy is spurring new thinking on EV batteries
    • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
    • HEXAGON: Plugging into data is the only way to make winning EVs
    • PUBLICIS SAPIENT: The power of post-purchase: How automakers can maximize customer lifetime value
    • TOYOTA EUROPE: Toyota Motor Europe's next-gen C-HR: sensory innovations revealed by Vehicle UX leader
    • TUV Rheinland: Ideas, services and certifications for smart mobility
    • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
    • Toyota Europe
    • UFI Filters
    • SENSEAUTO: Driving the future of mobility with SenseAuto: The AGI power behind the wheel
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter
MENU
Breadcrumb
  1. Home
  2. Focus on Electrification
August 09, 2022 04:23 AM

How electric van startups are burning cash in race to deliver vehicles

Boosted by investor hunger to create the next Tesla, commercial EV makers have raised hundreds of millions of dollars as they seek to emulate Elon Musk's success.

Reuters
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    REE engineering center Nuneaton
    REUTERS

    A prototype van with 'corner' in-wheel motors developed by REE Automotive for electric delivery vans is pictured on the test track at the electric chassis maker's engineering center in Nuneaton, England.

    NUNEATON, England -- A handful of commercial electric vehicle startups are burning through cash fast, racing to bring vans or trucks to market before the funds run out or customers choose to buy from legacy automakers such as Ford or General Motors.

    Boosted by investor hunger to create the next Tesla, a clutch of commercial EV makers on both sides of the Atlantic have gone public via reverse mergers with special-purpose acquisition companies (SPACs), raising hundreds of millions of dollars as they sought to emulate Elon Musk's success.

    These include Arrival, Canoo, Lordstown Motors, Electric Last Mile Solutions (ELMS) and REE Automotive Holding.

    But investors have soured on EV startups and their ability to compete with legacy carmakers, sending their shares to a fraction of their peak prices. This has raised the pressure to produce working vehicles fast if they want to raise fresh funds in an industry where launching a single vehicle can cost $1 billion.

    "It's vitally important at this stage to get vehicles into customers' hands," said Daniel Barel, CEO of Israeli electric chassis maker REE Automotive, which has run vehicle tests with customers near Detroit and will unveil a UK prototype van this week. "Only then can they make a real decision to buy."

    REE's chassis use "corners" or standalone in-wheel electric motors, with brakes and steering housed in all or some of the wheels of an EV that do not need axles or powertrains, freeing up more space inside a van.

    REUTERS

    REE Automotive's 'corner' in-wheel motors at the company's Nuneaton engineering center.

    To get to market faster, REE has tapped legacy suppliers like American Axle for electric motors and Italy's Brembo for brakes. Companies including EAVX and Morgan Olson, units of commercial vehicle body maker JB Poindexter & Co, will provide standardized bodies for REE's U.S. trucks.

    "We want to keep true to what we're about and let others bring their expertise in for the rest," said vice president for engineering Peter Dow at REE's engineering center in Nuneaton, England.

    The clock is ticking.

    REE's shares are almost 90 percent below their July 2021 debut. The company had $239 million in cash at the end of March and expects to invest up to $120 million in 2022 to scale up for production in 2023.

    "We are on track, we are on budget, we have got everything we need to take it to the market," Barel said while demonstrating a test vehicle near Detroit, adding that REE has enough cash to last beyond the end of 2023.

    General Motors has launched a commercial electric vehicle business called BrightDrop.

    Others have already struggled, however.

    ELMS filed for bankruptcy liquidation in June, citing insufficient funding, while Lordstown had to sell assets to Taiwanese contract manufacturer Foxconn.

    In May, Canoo disclosed "substantial doubt" about its ability to continue as a going concern, but recently received a boost when Walmart ordered 4,500 vehicles.

    Obtaining more cash could be tough.

    "The market right now is not an ideal market to raise capital," said Dakota Semler, CEO of Los Angeles-based Xos, which already has 200 electric trucks operating on U.S. roads for customers including Amazon delivery contractors.

    Xos had $132.7 million in cash at the end of March and can raise $125 million more via a share purchase deal with a unit of U.S. investment firm Yorkville Advisors.

    Legacy automakers are turning up the heat.

    FedEx has 150 electric trucks from GM's Brightdrop brand running deliveries around Los Angeles. "It feels like you're in the future now," FedEx driver Nelson Granados, 28, told a Reuters reporter as he made deliveries during a ride-along in a BrightDrop EV.

    FedEx has ordered 2,500 BrightDrop trucks, spurred by a combination of the 18-month-old company's technology and GM's manufacturing muscle, FedEx's chief sustainability officer, Mitch Jackson, told Reuters

    Potential new entrants have taken note.

    British EV startup Bedeo makes electric powertrains for vans for Stellantis and said earlier this year it was talking to investors about building its own vans.

    Despite its track record - vehicles with Bedeo powertrains have clocked over 50 million km (31 million miles) - executives say investors are now wary of competing with the likes of Ford's electric Transit van.

    "A large-scale capital raise is tough at the moment," said Andrew Whitehead, CEO of Bedeo unit Protean Electric.

    Bedeo CEO Osman Boyner said the company will instead start converting existing diesel vans later this year using Protean's in-wheel electric motors so they can run in electric mode in cities with low-emission zones and diesel on longer journeys.

    Bedeo is also talking to legacy automakers about producing small, specialized production runs of 5,000 or so vans for them.
    "Big automakers don't want to do that in-house," Boyner said. "Those numbers are too small for them, but they're big numbers for companies like us."

    EV startups are cutting back.

    Rivian said earlier this year that its $16 billion in cash as of the end of March was enough to fund its second U.S. plant for $5 billion, targeted to open in 2025, but it announced in late July that it would cut its workforce by 6 percent to reduce costs.

    Amazon has ordered 100,000 vans from Rivian, whose stock has fallen more than 80 percent from a peak hit shortly after its November 2021 initial public offering.

    UK electric van and bus maker Arrival also plans to cut costs.

    Arrival had $500 million in cash in mid-July, almost 45 percent down from roughly $905 million at the end of 2021. Its stock is almost 93 percent below its March 2021 debut.

    Chief Financial Officer John Wozniak said in a statement that restructuring will fund Arrival's operations until late 2023.

    The startup has begun phased trials with United Parcel Service, which has ordered up to 10,000 Arrival vans.

    "We believe that we will continue to access funding from a number of different sources," Wozniak said. "However, the terms may be less favourable and the amount and timing remains uncertain, which is why the company announced the measures it is taking to preserve cash."

    Startups that avoided going public via SPAC mergers are now waiting for the market to improve.

    In February Stockholm-based Volta Trucks raised 230 million euros ($235 million) in funding to ramp up electric truck production.

    Spokesman Duncan Forrester said Volta has prototype trucks in customers' hands and is on track for series production in early 2023.

    It has an order book of more than 6,500 trucks valued at around 1.4 billion euros. Later in 2023, Volta will look to raise funds, either through fresh fundraising or an initial public offering.

    "From an investor perspective, that will be a different conversation because we will be able to demonstrate a track record of bringing vehicles to market," Forrester said.

    RECOMMENDED FOR YOU
    Mercedes applies for tax relief for projects at two U.S. plants
    Recommended for You
    VANCE.jpg
    Mercedes applies for tax relief for projects at two U.S. plants
    Stellantis Vauxhall electric van Ellesmere Port 2023
    Urgent action needed on post-Brexit trade rules for EVs, lobby group ACEA says
    Stefan Hartung Bosch 202 Eurostar
    2023 Eurostar winner Stefan Hartung of Bosch
    Dr. Kai Yu, Founder and CEO of Horizon Robotics
    Sponsored Content: Interview with Dr. Yu Kai, Founder and CEO of Horizon Robotics
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up and get the best of Automotive News Europe delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    SUBSCRIBE TODAY

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    SUBSCRIBE NOW
    Connect with Us
    • Twitter
    • Facebook
    • LinkedIn
    • Instagram

    Founded in 1996, Automotive News Europe is the preferred information source for decision-makers and opinion leaders operating in Europe.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI  48207-2997
    Tel: +1 877-812-1584

    Email Us

    ISSN 2643-6590 (print)
    ISSN 2643-6604 (online)

     

    Resources
    • About us
    • Contact Us
    • Advertise with us
    • Advertise with Us
    • Ad Choices
    • Sitemap
    Awards
    • Rising Stars
    • Eurostars
    • Leading Women
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Europe
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
      • Latest news
      • Automakers
      • Suppliers
      • New Product
      • Environment/Emissions
      • Sales By Market
      • On The Move
      • Auto Shows
        • Munich Auto Show
        • Geneva Auto Show
        • Paris Auto Show
        • Beijing Auto Show
        • Shanghai Auto Show
    • Features
      • Long Read
      • Interview of the Month
      • Focus on Electrification
      • Focus on Technology
      • Segment Analysis
      • Cars & Concepts
      • Supplier Spotlight
      • Europe By The Numbers
    • Opinion
      • Blogs
      • Commentary
      • Guest columnists
    • Photos
      • Photo Galleries
      • Geneva Photo Gallery
      • Beijing Photo Gallery
      • Frankfurt Photo Gallery
      • Paris Photo Gallery
      • Shanghai Photo Gallery
    • Podcasts
    • Car Cutaways
    • Resource Center
    • EVENTS
      • ANE Congress
      • ANE Rising Stars
      • ANE Eurostars
    • More
      • Publishing Partners
        • Capgemini: All or nothing: Why circular business models require a holistic approach
        • Capgemini: Invent Head on automotive takeaways from CES 2023
        • Capgemini: Securing the industry's future through a radical rethink
        • Capgemini: Succeeding with the automated driving journey through AI
        • Capgemini: The circular economy is spurring new thinking on EV batteries
        • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
        • HEXAGON: Plugging into data is the only way to make winning EVs
        • PUBLICIS SAPIENT: The power of post-purchase: How automakers can maximize customer lifetime value
        • TOYOTA EUROPE: Toyota Motor Europe's next-gen C-HR: sensory innovations revealed by Vehicle UX leader
        • TUV Rheinland: Ideas, services and certifications for smart mobility
        • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
        • Toyota Europe
        • UFI Filters
        • SENSEAUTO: Driving the future of mobility with SenseAuto: The AGI power behind the wheel
      • Social Media
        • Facebook
        • Instagram
        • LinkedIn
        • Twitter
      • Contact Us
      • Media Kit
      • About Us