US-based electric vehicle (EV) startup Nikola has recently filed for bankruptcy protection, a move that comes as no surprise to industry insiders, who view the company as having reached an inevitable dead end.
Once a rising star in the EV sector, Nikola's market value surged to US$2.7 billion at its peak, briefly surpassing legacy automaker Ford. However, challenges in securing buyers and funding have caused Nikola's market value to plummet below US$50 million, compelling the company to seek bankruptcy protection.
Unlike traditional automakers, EV startups operate with distinct business models, supply chain strategies, and product designs. This has provided opportunities for many Taiwanese auto parts suppliers to bypass traditional Tier 1 suppliers and establish direct partnerships with emerging EV brands.
However, industry players acknowledge that order volumes from EV startups have never matched those from Tier 1 suppliers or established automakers, contributing only marginally to overall revenue. Still, for suppliers, business is business.
Multiple predicaments
As competition intensifies and more players enter the market, EV startups are facing mounting challenges: soaring R&D costs, production bottlenecks, delivery delays, and weakening end-market demand. Over the past two to three years, late payments to parts suppliers have become increasingly frequent among EV startups.
This financial strain has led many suppliers to halt shipments, trapping startups like Nikola in an inescapable deadlock. For industry observers, Nikola's downfall was not unexpected—it was merely a matter of time.
Some supply chain insiders believe that the EV market tends toward a "winner-takes-all" scenario, where disruptive products and innovative thinking are essential for survival. While traditional automakers transitioning to EVs carry legacy design philosophies, pure EV manufacturers often embrace entirely different approaches.
In times of economic growth, startups find it easier to attract funding. However, the current market climate presents a true test of their financial resilience. Even industry leader Tesla, despite its early-mover advantage, once faced severe production hurdles and funding crises.
For established automakers and their partners, EV development remains a secondary pursuit as traditional car sales continue to serve as reliable revenue streams.
Rivian's diverging path: Growth amid challenges
Meanwhile, another American EV startup, Rivian Automotive, has experienced a starkly different trajectory from Nikola. In the fourth quarter of 2024, Rivian reported revenue of US$1.7 billion, marking a 32 percent year-over-year increase and achieving a positive gross margin for the first time.
The company produced over 12,000 units and delivered more than 14,000 units in the fourth quarter of 2024. For the full year, production approached 50,000 units, with deliveries reaching around 52,000 units. However, Rivian anticipates delivering between 46,000 and 51,000 units in 2025, and projects a net loss between US$1.7 billion and US$1.9 billion, reflecting the ongoing uncertainty surrounding EV demand and regulatory conditions.
Despite these challenges, Rivian benefits from solid backing. Amazon holds nearly a 16 percent stake and has plans to deploy 100,000 electric delivery vans by 2030. Furthermore, in November 2024, Volkswagen and Rivian established a joint venture, with a US$4 billion investment scheduled by 2026.
If these milestones progress as planned, Rivian should remain financially stable in the short term. However, its ability to further ramp up production and accelerate deliveries could be the deciding factor for its long-term success.
Article edited by Jerry Chen
