An EV Startup Hit a Bump In the Road. A Warning Sign for the Sector.

Text size

Electric-truck startup Bollinger Motors said Friday it is dropping the B1 all-electric SUV and B2 all-electric-pickup truck. Bollinger isn’t a publicly traded company. But investors should pay close attention nonetheless.

“We started in 2015 with a dream to make the best trucks on the planet. The off-road capable, all-wheel-drive B1 and B2 are powerful, innovative, and distinct,” wrote CEO Robert Bollinger in a post on the company’s website. “However, today we’re postponing their development and shifting our focus to commercial trucks and fleets.”

The company will be returning $1,000 customer deposits received for B1 and B2 trucks. Bollinger will continue to work to develop class 3 to 6 trucks for commercial applications. Class 3 to 6 trucks are medium-duty trucks such as moving vans and box trucks.

Bollinger stock isn’t down. There is no stock to trade. Shares of other electric-truck startups, however, are in the red.

Shares of

Lordstown Motors

(ticker: RIDE), which is making the Endurance pickup truck, are off 1.8%, and are down 88% in the latest 12 months.

Shares of

Canoo

(GOEV),

Arrival

(ARVL) and

Workhorse Group

(WKHS) are down 2.5%, 4.3%, and 2.3%, respectively. Those shares are down 61%, 78%, and 85% over the past year, respectively. All three companies are targeting the electric-commercial-vehicle space.

Shares of

Rivian Automotive

(RIVN) are down 1.5%. Rivian stock is still very new. The company’s initial public offering was back in November. Rivian is making commercial vehicles as well as pickup trucks and SUVs.

Some of those daily declines in Bollinger’s peer group are due to the market. The

S&P 500
and

Dow Jones Industrial Average
are down 0.7% and 1%, respectively. Still, investors seem to feel a little more nervous about EV startups after Bollinger’s decision.

No B1 and B2 mean less competition for all the EV startups. That would be a good thing for the rest of the industry. But attractive EVs designed for large consumer and commercial transportation markets are relatively new and growing rapidly. The bigger issue might be how the Bollinger decision reflects just how hard it is, and how much cash it takes, to start a car company from scratch.

Between 2014 and 2019, EV leader

Tesla

(TSLA) burned through about $8 billion in cash while building its business. Tesla started to generate positive earnings and free cash flow about 16 years after its 2003 founding.

Lordstown,

Canoo
,
Arrival, and Workhorse each has roughly $1.3 billion in cash on the balance sheet. Rivian is an outlier because it has roughly $20 billion after the IPO.

The cash balance is reflected in market capitalizations. Rivian’s market capitalization is more than $70 billion. The rest have a combined market cap of roughly $7 billion.

Write to Al Root at [email protected]