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EV bankruptcy marks beginning of the end

Megan Hernbroth
Jun 21, 2022
Illustration of an electric vehicle and a charging station at the edge of a cliff.

Illustration: Gabriella Turrisi/Axios

Last week's bankruptcy filing by EV maker Electric Last Mile Solutions is marking the beginning of the end for fledgling EV makers.

Why it matters: Tesla may be the only true EV native well-capitalized enough to withstand market turbulence.

Flashback: The 2008 recession saw traditional vehicle makers Hummer and Saturn go bankrupt without any buyers. GM also went broke, and was subsequently bailed out by U.S. taxpayers.

  • The same could happen to the slew of new EV upstarts that don't have roots in the traditional car industry.

State of play: Prior to ELMS filing for Chapter 7, which indicates there's nothing left to salvage, the company had indicated it was expecting to run out of money in June.

  • Canoo, another EV maker, similarly issued a going concern notice in May but hasn't filed for bankruptcy.
  • Rivian's two largest backers, Amazon and Ford, cited their investments in the EV maker as cause for some quarterly losses and unceremoniously dumped shares in the company once the lockup period expired.

What they're saying: "I don't think there's room for any significant new competitors in the car industry. The big guys will move into the electric vehicles and Tesla's maybe big enough to survive," financial advisor Van Conway tells Axios. A self-heralded car enthusiast and "Detroiter," Conway specializes in company restructuring and bankruptcies.

The intrigue: Conway expects a wave of shareholder litigation to hit ELMS following its filing.

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