The Supply Chain Matters blog provides an updated news capsule follow-up relative to supply chain management and industry developments that we have shared previously on this blog.

Included in this update are updates involving Fisker, Lucid Group, Volkswagen and BYD.

 

Fisker Obtains Conditional Added Financing

Earlier this month we highlighted that electric vehicle company Fisker had issued a going concern warning amid continued production and supply chain challenges.

In conjunction with the reporting of 2023 financial performance, the California based EV maker announced that the company would lay off upwards of 15 percent of its current staffing, amid cash and ongoing business and supply chain related challenges.

The company additionally issued a formal going concern warning, in essence warning that the company’s ability to continue operating as a business over the next twelve months is dependent on critical milestones including an added cash infusion. The company reported a cash balance of slightly over $325 million at the end of 2023.

Last week the EV start-up announced that it has secured $150 million in needed financing by issuing $166 million worth of notes to an existing investor. This funding is reportedly contingent on preconditions which include a delayed filing of its 2023 annual report with regulators and continued negotiations with an established auto maker on a joint manufacturing agreement related to North America based production. This auto maker reported that overall cash balance had fallen to slightly over $89 million on March 15.

Fisker has further agreed to pause production operations for a period of six weeks as talks continue about finding a larger partner.

 

Lucid Secures Needed Added Funding

Luxury EV auto maker Lucid Motors reported both Q4 and 2023 financial and operational performance that disappointed investors. Operating losses amounted to $736.9 million in Q4 compared to $749.8 million loss in the same year ago period. Annual operating loss in 2023 amounted to $3.2 billion, compared to $2.6 billion reported for 2022. For the full year, the luxury EV auto maker produced 8,428 vehicles, compared to 7,180 vehicles produced in 2022.

This start-up’s uniqueness is a vertically integrated supply network and production capability, one that is capital intensive.

 

The company’s forecasted outlook for production levels in 2024 was upwards of 9,000 vehicles, and industry watchers indicated that added financing would be needed in order for the luxury auto maker to be able to grow sales and global wide production needs.

This week an announcement was released indicating the company has entered into an agreement with its majority stockholder, Ayar Third Investment Company, an affiliate of Saudi Arabia’s Public Investment Fund, to purchase $1.0 billion of newly created series of convertible preferred stock via private placement, subject to customary closing conditions. Lucid reportedly intends to utilize the net proceeds from the private placement for general corporate purposes, which may include, among other things, capital expenditures and working capital.

 

UAW Turns its Sights on Volkswagen U.S. Workers

After securing new ratified labor agreements among three major U.S. automakers, the United Auto Workers (UAW) vowed to turn its attention to other branded auto makers with production operations. Our research arm’s published advisory, 2024 Predictions for Industry and Global Supply Chains has predicted added activism among various industries including the automotive sector.

This week, the U.S. National Labor Relations Board (NLRB) announced that European headquartered Volkswagen and the UAW have agreed to hold a vote on the union’s bid to organize the automaker’s plant in Chattanooga, Tennessee. The voting is currently scheduled for the period of April 17 to 19.

According to reporting by Axios, factories across the U.S. southern region have historically been extremely difficult places for union organizers to gain a foothold. The UAW has fallen short in two prior votes to organize the Chattanooga facility — in 2014 and 2019, both times by narrow margins.

Volkswagen has reportedly agreed to remain neutral during the campaign. However, the company has indicated that “neutral doesn’t mean silent,” adding that the company would call out any “misinformation” brought forth in organizing campaign.

Reportedly, the stakes in this election are again high, as the UAW has aims to target automakers Tesla, Toyota, Mercedes-Benz and Hyundai in their U.S. production based facilities.

 

BYD Challenged by Global Logistics Transit and Handling Challenges

Global based business media has extensively reported how China based EV producer BYD has managed to overtake Tesla in China domestic EV sales leadership, and in added efforts to target the European EV market as a prime competitor to existing providers in that market.

However, The Wall Street Journal reported that, Having Overtaken Tesla, BYD is Running Into Problems Overseas. (Paid subscription).

This report indicates that muted EV market demand across Europe coupled with inexperience in global logistics and vehicle preparation have provided added challenges.

Reportedly, internal concerns involve the number of additional fixes or vehicle repairs required once the vehicles reach their export destinations and can be sold to consumers. While fixes are common among exported vehicles, BYD’s inexperience has reportedly led to mold appearance within vehicles along with dings and dents.

Additionally reported was at the end of 2023, upwards of 10,000 BYD cars were parked in warehouses across Europe and the certificates that authorized sale within the EU are set to expire in a short time.

© Copyright 2024, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.