Over the years, we’ve heard a large number of companies referred to as the next Tesla (NASDAQ:TSLA). There’s no doubt that Elon Musk has transformed the vehicle industry. A lot of companies and founders seek to follow in Musk’s footsteps and build their own electric vehicle (EV) empires.
However, as with any new industry, there will be a lot of smaller participants who simply can’t keep up with the big dogs. And we’re already seeing a substantial winnowing of the field. These are some of the current crop of EV companies that had high hopes but appear unlikely to make it into the top tier of the EV space.
Workhorse (NASDAQ:WKHS) is an embattled EV company, barely hanging on for life right now. The EV sector is generating potential bankruptcies at a high rate, which isn’t too surprising. In the early days of a fast-evolving industry, many smaller players end up unable to keep up as the sector consolidates.
Notably, Lordstown Motors (OTCMKTS:RIDEQ) filed for bankruptcy earlier this year. That is interesting because Workhorse spun off Lordstown years ago in hopes of generating further shareholder value. Instead, it appears shareholders may get wiped out altogether.
Lordstown is already in bankruptcy, and its former parent — Workhorse — is now seeing its own WKHS stock selling for less than 50 cents a pop. Workhorse’s vehicle business failed to generate meaningful commercial revenues. The company is now going for a longshot pivot to a drone business, but if that doesn’t show immediate results, Workhorse could follow Lordstown’s path into bankruptcy.
Arcimoto (NASDAQ:FUV) is an Oregon-based EV company commercializing a two-person, three-wheeled electric vehicle. It dubs its product as the Fun Utility Vehicle, which leads to the acronym FUV. That also doubles as its ticker symbol.
However, FUV stock hasn’t brought much fun to its shareholders. In fact, FUV stock has fallen from a (split-adjusted) peak of more than $600 to less than $1 per share today.
The company resorted to huge amounts of share dilution to keep the lights on. Given that the company is only generating about $6 million in annual revenues, it requires a lot of outside funding to remain solvent. While the Fun Utility Vehicle may someday be a decent vehicle serving a small niche of the EV market, it seems increasingly clear that Arcimoto won’t become a major player in the EV arena.
ElectraMeccanica Vehicles (SOLO)
ElectraMeccanica Vehicles (NASDAQ:SOLO) always faced an uphill climb.
The company is attempting to commercialize a three-wheeled one-person electric vehicle. Analysts were skeptical that there would be much market demand for a fairly expensive EV that carried just one person. It didn’t seem like a great fit for the American vehicle market.
In any case, ElectraMeccanica’s already questionable business model ran into a huge setback earlier this year. That came when management recalled the SOLO G2 and G3 vehicles from the model years 2019, 2021, 2022 and 2023 due to a safety defect. That cost the company credibility and momentum at a time when it was already running large losses and needing to raise cash.
ElectraMeccanica attempted to pivot with a planned merger with a United Kingdom truck company, Tevva. However, ElectaMeccanica later scrapped that deal. With limited consumer interest in its SOLO vehicles, a worrisome recall and its M&A plans falling through, SOLO stock appears to be caught on a dead-end street.
On the date of publication, Ian Bezek did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.