Electric vehicle stocks have been mixed this year, with Chinese brands like XPeng, BYD, and Li Auto doing well. American brands like Tesla, Rivian, and Lucid remained under pressure as their growth slows. This article explores how EV companies like Mullen Automotive (MULN), Polestar (PSNY), and Faraday Future (FFIE) are fairing this year.
Mullen Automotive (MULN)
Mullen Automotive is an electric vehicle company that operates in the United States. It is a fallen angel whose stock has crashed by almost 100% and its market cap dropping below $1 million.
Mullen’s business has struggled because of weak demand and balance sheet. The most recent results showed that its revenue for the three months to December stood at $2.9 million. This happened as the company invoiced for 58 vehicles valued at $4.4 million and then received $6 million.
The company has a long record of deferring its revenue until invoices are paid and the return cause has been nullified.
Mullen Automotive is burning millions of dollars. Its net loss in the fourth quarter stood at over $114 million. Most of these losses, or $91 million, were non-cash expenses.
A company losing all that money can survive and thrive only if it has a solid balance sheet. Unfortunately for Mullen, it has one of the worst balance sheets in the US. It ended the quarter with just $2.7 million in cash, including restricted cash. Worse, it has a working capital of minus $186.2 million. Therefore, it is hard to imagine how the company continues as a viable going concern over time.
Read more: Mullen Automotive stock has imploded: can MULN recover?
Faraday Future (FFIE)
Faraday Future is another struggling EV stock that has existential challenges. Its stock has crashed by over 73% in the last 12 months, giving it a market cap of over $100 million.
Faraday Future is working on revamping its business. Last year, it launched a software business that will see it sell its software to Chinese companies. It also launched Faraday X, a brand that targets the mass market. Its goal is to start manufacturing the vehicle by the end of the year.
The challenge, however, is that Faraday’s balance sheet is not as supportive as Mullen Automotive. It raised $30 million in the third quarter and $41 million this week. These funds are not enough for a company that is losing over $25 million a quarter. Therefore, there is a risk that Faraday will go bankrupt this year or soon.
Polestar (PSNY)
Polestar stock price has moved sideways in the past few months. It has remained between the key support and resistance levels at $0.9865 and $1.25 in this period. The current price is about 43% below the highest point in 2024.
Polestar’s business is also struggling as its unit sales continue falling. It sold 12,548 vehicles in the third quarter, down by 8% from the same period a year earlier. Its revenue dropped by 10% to $551 million, leading to a net loss of $323 million.
Polestar’s performance is notable since many EV companies, especially those focusing on the Chinese market, are seeing a double-digit growth rate. The company attributed its slowdown weaker sales of its Polestar 2 brand and higher discounts. It also experienced a drop in gross margins.
Worse, Polestar’s balance sheet is not supportive. It incinerated $450 million in the last quarter, leaving it with $501 million in cash. To address that, it secured a $800 million term facility and is raising $400 million more. Some of these funds will be used to pay other loans. The company also announced a new CEO to lead its turnaround.
Read more: Are Polestar and Lotus Technology stocks good contrarian buys?
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