Yahoo Finance Live anchors discuss reports that EV makers Lucid and Nikola are looking to raise additional funds amid rising costs and inflation.
BRIAN SOZZI: Let's get [? on ?] to some EVs, another top we know very well here. Electric vehicle makers Lucid and Nikola are moving to raise additional funds, as both companies aim to boost production amid sharply rising battery costs and new federal regulations that limit incentives for EV buyers. Full disclosure, Brad-- any time I got an email regarding Nikola, I just delete it because it's still unsure to me that they are even a real company.
So I want to focus in on Lucid because I do view them as a real company. They might raise up to $8 billion over the next three years.
BRAD SMITH: It was the Nikola thing.
BRIAN SOZZI: Over the next-- I know. I know. I know. You never know what's coming. But look, they-- it's important to know that Lucid ended their most recent quarter with about $3 billion in cash. So right now, they all look to be well positioned. But here's a company with cars that are getting critically acclaimed.
And to probably meet some of the demand-- they are seeing for autos that are well over $100,000 [? a ?] [? year-- ?] they probably do need to raise money. I don't know why the market would be surprised by this. But still, looks like they need some more cash.
BRAD SMITH: Well, I mean, think about where they ended this most recent quarter and what they had actually laid out. And they reported-- we were just taking a look at the revenue-- of about $97.3 million on deliveries of 679 vehicles. But it's really what the company had to say.
They said that their Q2 revenue, even with all of that in mind, they continue to have a strong balance sheet closing the quarter, with $4.6 billion in cash, cash-equivalents investments. They believe that's sufficient. This says otherwise. This says that they are going to need to take on more cash, and you're seeing the shares react to that, particularly on this additional dilution, to whatever extent that may be.
It's not necessarily clear what they may, in this potential shelf or this universal shelf registration, what type of shares that this would be or what type of offering that this would be. It could be common stock. It could include preferred stock as well. And so all of this is basically just rounded out within the shelf registration, and it gives them the opportunity, once they so do decide, to actually move forward with any type of offering, to have it classified as one of those different mechanisms or the other.
BRIAN SOZZI: This is Lucid, I would say, Brad-- before we head off to break-- getting ready to go to battle with Tesla. And outside of Lucid, you know, just anecdotally, I'm starting to see a lot more Polestars on the road. And a lot of-- I think the market has really brushed aside all these coming challenges-- from a GM, Ford, Lucid, Polestar to Tesla-- but it's something that they might want to start paying attention because that moment is right now. This competition is coming, and it's coming in a big way.