How to Avoid a Crash in Your New Electric Car

Fisker Inc.’s warning that it may run out of cash within 12 months absent fresh equity or debt raises a new and worrying question for car owners: What happens if the maker of your electric vehicle goes bust? Modern cars are highly sophisticated computers on wheels, reliant on expensive batteries and regular software updates to function properly.

Consumers should extend their pre-purchase homework to include an assessment of the financial health of the manufacturer and, if in doubt, consider leasing rather than buying that expensive new ride.

Amid slowing demand, high cash burn rates and price-sapping competition there have already been several high-profile EV failures but these mostly involved startups that had yet to generate meaningful revenue, such as the UK arm of Arrival SA and Ohio-based Lordstown Motors Corp.

Having sold almost 5,000 electric SUVs last year and after setting a target of around 21,000 deliveries in 2024, Fisker is holding talks with an automaker — reportedly Nissan Motor Co. — plus an existing debt holder about possible investments, which is potentially good news.

I want to emphasize I’m not implying that Fisker or any of the particular companies mentioned below will go bust. But I do think more business failures are inevitable in this sector, and I’m not just talking about western manufacturers. Of the more than 150 Chinese new-energy vehicle brands in the market today, only 25 or 30 will survive through to 2030, forecasts AlixPartners, an advisory firm.

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