EV Market Struggles: Tesla Sales Dip and Bankruptcies
The electric vehicle (EV) sector encountered a challenging period in 2024.
Tesla, the leading company in the battery electric vehicle market, reported its first-ever sales decrease in 2024. Deliveries totaled 1.79 million vehicles, reflecting a 1.1% drop compared to 2023, according to Kelly Blue Book.
The industry also witnessed the demise of Fisker Group Inc., a company that had once held significant aspirations to compete with Tesla. Fisker filed for Chapter 11 bankruptcy on June 17, 2024, seeking to liquidate its assets. Fisker started delivering its Ocean battery-electric crossover SUV in 2023, but the vehicles and the company soon faced problems, leading to bankruptcy.
Another EV manufacturer, Via Motors’ parent company, Ideanomics Inc., filed for Chapter 11 bankruptcy on December 4, 2024, after ceasing all EV production. Ideanomics sought to sell its assets to its secured debt lender, Tillou Management & Consulting, which presented a credit bid to acquire the company. Via Motors produced a range of EVs, including box trucks, walk-in vans, service trucks, and shuttle buses.
Adding to the turmoil, Nikola Corp., a pioneering company in battery electric and hydrogen fuel cell electric semi-trucks, has also filed for Chapter 11 bankruptcy, aiming to sell its assets. Nikola’s petition was filed on February 19 in the U.S. Bankruptcy Court for the District of Delaware. The filing listed assets between $500,000 and $1 billion and debts ranging from $1 billion to $10 billion.
The company’s difficulties stemmed from significant expenses related to recalling all its BEV trucks in the third quarter of 2023 to replace defective battery packs, resulting in $44 million in losses. Nikola estimated the total impact of the recall at $56 million. According to CEO Stephen J. Girsky, the repairs took longer than projected and are now further delayed due to the Chapter 11 filing, despite the company’s expectation to complete the recall retrofits by the end of 2024.
The hydrogen fuel cell vehicle business also experienced difficulties due to the market’s early stage, production shortages, and a lack of hydrogen infrastructure, which hampered truck sales. The investment needed to create new infrastructure for vehicles would be substantial.
Nikola reported a loss of $966.3 million for the year ending December 31, 2023, and a loss of $482.2 million for the nine months ending September 30, 2024. The company currently has a $3.6 billion deficit with $47 million on hand.
The company stated that it lacked sufficient cash reserves to sustain operations and had no prospect of obtaining additional funding. Bankruptcy and the sale of company assets were deemed its best course of action.
A pre-filing marketing effort to sell the company was unsuccessful, although the company is currently discussing potential sales with three investors through the bankruptcy process and might consider selling separate business segments.
Nikola was founded in 2018 and began manufacturing BEV trucks in the first quarter of 2022 and fuel cell EVs in the third quarter of 2023 at its Coolidge, Ariz., factory. The company’s BEV trucks, which compete with Tesla’s Semi truck, have a 300-mile range, while the fuel-cell EVs can travel 500 miles.
The manufacturing facility has a production capacity of 2,400 vehicles annually. Its current inventory includes 156 BEV trucks and 103 fuel cell trucks, along with 87 trucks at dealer locations.
