Other than Tesla, none of the pure-play EV Auto OEMs are going to survive. Tesla is with us only through the courtesy of fiscal subsidies and monetary excess (ZIRP, QE, the Fed’s Covid-related stimulus activities including its various credit facilities, ETF purchases and monetization of the CARES Act). Without that fiscal and monetary excess, the Tesla / EV bubble would not have occurred.
Therefore, I am not sure why the WSJ and other “newsworthy” publications waste time on Rivian (RIVN), Nio (NIO) and other pure-play EV companies. Capital raising is the primary business model for the EV pure-play companies. If the Fed was serious about shrinking the money supply, it would already be game over for the EV lot (ditto for crypto as a speculation vehicle).
GM (GM), Ford (F), and the other established Auto OEMs only continue to have a go at the EV game because:
- They are able to subsidize EV development and production with the support of their traditional internal combustion engine business and;
- They hope to capture some of Tesla’s outrageous, EV-driven valuation.
If the Fed truly maintains rates at an elevated level through 2025, those EV appendages too shall dry up and blow away as capital becomes increasingly scarce. Striking deals with Tesla for charging network access is not sufficient to save the day for the speculative EV lot.