It’s been a rough few months for electric vehicle startups Lucid and Nikola, which are in the process of merging their operations into one company. The first sign of trouble came when both companies delayed the release of their vehicles, the Lucid Air and Nikola One, from 2018 to 2020 and 2019 respectively. Now, a new report from Reuters shows that both companies are in the midst of major cash crunches that could mean the end of these two high-profile startups before they ever put any products on the road.
Lucid Group and Nikola, two manufacturers of electric vehicles, are attempting to raise more money as both businesses seek to increase production in the face of drastically rising battery costs and new government laws that restrict incentives for EV consumers.
In a regulatory filing on Tuesday, Nikola stated that it intends to sell up to $400 million worth of additional stock in a “at-the-market” offering, which refers to the sale of the shares at current market rates.
During its second-quarter earnings conference, the Arizona-based producer of electric heavy vehicles informed investors that it anticipated raising extra cash in order to advance the $144 million acquisition of battery pack supplier Romeo Power and scale up production of its Tre electric semitrucks.
At the end of June, Nikola still had $529 million in cash on hand and had $312 million more accessible under an active equity line with Tumim Stone Capital.
Separately, late on Monday, Lucid Group submitted a “shelf registration” to issue up to $8 billion in new stock over the following three years. The business has the freedom to issue the stock as needed thanks to a shelf registration.
In a statement, Lucid stated that company has no immediate intentions to sell any further stock and that its shelf registration is designed to “give greater flexibility” to raise additional funds in the future.
As of the conclusion of the second quarter, Lucid had $4.6 billion in cash on hand, which was sufficient to cover all of its operating costs as well as future capital expenditures.