Lordstown Motors (RIDE) and Fisker Motors (FSR) sharesare two new EV companies aimed at capturing a growing global appetite for sustainable mobility. Both companies have a lot in common as early-stage companies and have recently been listed on the stock market through the newly popularized SPAC route.
Founded in 2018, by CEO Steve Burns, Lordstown Motors is a spin-off from Burns’ flagship Workhorse Motors, which is an OEM manufacturer. After being stuck in consideration for a large USPS contract, Workhorse Group ran into major financial issues leading to Burns’ spinning off Lordstown Motors for EV production and easier fundraising. In August, Lordstown announced that it will be undergoing a reverse-merger with DiamondPeak Holdings and henceforth will trade under the RIDE ticker. Lordstown has a strategic partnership with GM. Lordstown has raised $675 million from its listing.
In 2016, Henrik Fisker re-founded Fisker Motors after filing for bankruptcy in 2012 as the market for EVs had matured a lot over the last decade and companies like Tesla had started doing well. The company’s first vehicle will be an SUV called the Ocean, which is being marketed as the most sustainable vehicle in the world. In October, Fisker completed a reverse-merger with Spartan Energy Acquisition Company and is now trading under the FSR ticker. Fisker has raised about $1 billion from its listing.
Both Lordstown and Fisker are directly aiming for the biggest and hence most competitive market. While Lordstown is going for the pickup truck segment, which is America’s most popular vehicle, Fisker is going for the SUV segment which is also nearly as popular as pickups in the US and definitely the most popular vehicle class in the world right now. However, there are some key differences in the way they intend to bring their products to market.
Lordstown Motors is aiming to capture market share in the EV pickup space, which is going to be a tall order given stiff competition from the likes of Tesla Cybertruck, Rivian R1, Ford F150, and the new GM Hummer. Lordstown will build their pickup, the Endurance, at an old GM plant in Ohio which they acquired last year after some help from GM. The company plans to use the proceeds from its listing to prepare its 6.2 million sq ft plant for mass production of its Endurance. The company expects CAPEX of $450 million on the plant, while the remaining $225 million will be used for admin, R&D, and other expenses. Lordstown wants to focus on commercial sales, like car rental companies, corporates, etc. as that market has fewer overheads. The company plans to price the Endurance at $52000 and claim to have a backlog of 40000 orders, translating to potential revenues of over $2 billion.
Like Lordstown, Fisker also wants to compete in an ultra-competitive segment, that too at the lower end of the price range, where competition is even tougher. The company claims that their Ocean SUV will cost just $38000, putting it in direct competition with the Model 3, the current highest-selling EV in the world.
However, unlike Lordstown, Fisker has no plans to get into production of the Ocean themselves, as the company claims that vertical integration in EVs is too capital-intensive and a reason for the failure of auto-startups. Instead, the company has partnered with Magna Inc., a major auto equipment manufacturer to outsource manufacturing and only focus on the design and engineering of its products.
As a new company, Lordstown is still at least a year away from generating any revenues. Lordstown expects to commence deliveries by late 2021. The company recently published revenues and earnings guidance for the next 3 years. The company hopes to deliver 2000 vehicles by end of next year and net revenues of $118 million, followed by deliveries of 31600 vehicles in 2022 and revenues of $1.69 billion. The company projects an EBITDA loss of $115 million in 2021 followed by a $10 million profit in 2022 and $298 profit million in 2023.
Like Lordstown, Fisker expects no revenues till the end of the next two years and hopes to commence deliveries by end of 2022. The company has cancellable deposits for 33000 vehicles, translating to revenues of over $1.25 billion. However, no guidance or delivery schedule has been put out by the company.
Who is the winner?
Given the long road ahead to mass production and deliveries, both companies are very risky investments as the EV space is notoriously hard to engineer, mass-produce, and is most-prone to delays. However, given that Lordstown has its own plant, management have experience as OEM manufacturer and the company has been much more forthcoming with their revenue and delivery projections, it represents the better option for investors.