Hertz's (HTZ) CEO is stepping down after making a failed bet on electric vehicles. Bentley (VWAGY) is delaying its first EV. Fisker (FSR) shares plummeted after the EV maker halted production for six weeks. Those are just the latest in a string of downbeat headlines for the EV sector so far this year. So, what can investors expect going forward?
Autoblog Editor-in-Chief Greg Migliore tells Yahoo Finance's Akiko Fujita that the issue for automakers is that, right now, the market consists of "late-stage early adopters." It means that the market is stuck in a period where those who really wanted an EV now have them, but they're not quite mainstream yet, according to Migliore.
Smaller EV makers like Fisker, Rivian (RIVN), and Lucid (LCID) don't have the same flexibilities that larger automakers like General Motors (GM) and Ford (F) do. Migliore points to Rivian as an example of an automaker that is giving consumers "something to think about" with new, more affordable models. He also notes that these models will be built at Rivian's plant in Illinois, which helps to reduce costs. Migloire says Fisker, however, "appears to have less staying power."
Watch the video above to hear what Migliore says about the possibility of M&A activity in the sector.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Stephanie Mikulich.
Video Transcript
AKIKO FUJITA: Greg, good to talk to you today. There's been so much news here within the EV space. That seems to point to a bit of a doom and gloom adoption rates aren't as rapid as they were at several years ago.
We were just talking about Fisker the other day and how they are pausing production because of a cash crunch. What's the overall trend point to?
GREG MIGLIORE: So right now, I think we're in a state of where it's like the late stage early adopters. So a lot of the folks who were really interested in EVs, they already have them. So now, you're at that point where you're somewhere in that delta between, hey, when's the mainstream general public going to really get and understand and use EVs and all the people who essentially were really the first ones to get it they already have them.
So that's a challenging spot to be. And of course, infrastructure remains a great challenge. Just the news you were talking about with Shell, and of course, with BP, that's going to help dramatically.
Because one of the biggest challenges EV owners and users face is it's a bit of a different experience simply to power up your car. You have to seek out the charger. You have to make sure the charger might be working.
If it doesn't work, you have to go someplace else. All of that adds complexity to what is already a technology that is a little bit different for a lot of folks.
AKIKO FUJITA: Greg, what we have learned over the course of the last six months even is that you got big players like a GM or Ford that can afford to be able to pull different levers. GM getting into more hybrids as a result of what they're seeing in the market. And then you've got the upstarts like a Fisker, like a Rivian, like a Lucid who don't have that kind of flexibility. So if we're talking about a bit of a lull until the next wave begins, where does that leave those upstarts?
GREG MIGLIORE: So the upstarts historically have always been in kind of a dangerous position. I almost hate to say that. But you see that where they just they don't have as much of a room of a margin for error.
Fisker is talking about partnering with Nissan. We've heard some news in the last couple of weeks that Fisker is finances, perhaps aren't where they need to be. And upstarts always face those challenges.
Rivian is a great example of revealing a couple of really interesting new products in the last couple of weeks. The R2 and the R3, they're going to be more affordable, they're amazing looking as far as designs. Really, I think something that could give consumers something to think about.
They also mentioned, hey, they're not going to build these at a factory in Georgia. They're going to consolidate their manufacturing operations in Illinois. That's good business sense.
But it also is a situation where the company is being mindful that having multiple factories, having these large footprints might be a bit too ambitious. I'm pretty optimistic for a company like Rivian. As far as Fisker, Fisker has always been great as far as design.
I remember there was a Fisker about 10 to 15 years ago. And this is at least the second iteration of Fisker. They appear to have less staying power. But we'll see.
AKIKO FUJITA: Greg, does this open up or at least increase the possibility of M&A. I mean, you've already talked about potential for Nissan and Fisker, some kind of partnership there. What about Rivian? What about Lucid?
GREG MIGLIORE: Well, it's always a natural situation where you have these smaller companies like Lucid, like Rivian, like Fisker that have one or two compelling products, something that maybe a larger automaker, Volkswagen, General Motors, Honda might want to get that product. So I think they're always vulnerable to being picked off.
But there's also that's challenging in and of itself. Because if you say somebody were to buy Fisker, you have to deal with all the challenges that then comes with managing a smaller company that perhaps isn't as well integrated into your culture as some like an existing just standing up an existing entity. So there's challenges in that sense as well.
I think a lot of these companies are very good at developing interesting products. Vehicles that are fun to drive. They look great.
They have the range. They have the batteries. But then when it comes to mass production, selling them, and reaching like a new market that will grow their company.
That's where the challenge comes in. Lucid is a great example of a company that makes a very compelling product. They're well funded, of course. But they're also very expensive vehicles. So I kind of doubt a company like Lucid will ever be truly mainstream.
