EV disruptors hit industry speed bumps that have plagued legacy automakers for years

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The slumping stock market and rising interest rates have made it tougher for new companies to raise fresh capital from investors. That intensifies pressure to start building and selling vehicles, and to slash expenses.

DETROIT -- Electric vehicle startups that promised to disrupt the automotive industry by using a software- and technology-heavy approach are now scrambling to cut costs amid the type of industry slowdown that has bedeviled Detroit automakers over the years.

"Like every company that is burning money, you need to make the right adjustments so that you can get to the other side of the desert," said Evangelos Simoudis, a Silicon Valley venture capital investor and industry adviser. Arrival said its US$500 million in cash on hand would last until late 2023 with the proposed cuts. The question is whether that will be enough.

"This means some startups will have a little bit more difficulty to develop by themselves," he said during an awards presentation to startups with whom the carmaker works. The staff cuts and restructuring in the new EV industry reflect challenges common to all automakers, and some that are unique to small companies in a capital-intensive industry where even global economies of scale sometimes are not enough to assure profitability.

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