By Ben Foldy 

The race is on to become the next Tesla Inc. Tens of billions are riding on the outcome.

Investors from Wall Street to the Motor City are betting that a field of electric-car startups can emulate the rise of Elon Musk, who sits at the wheel of a company that is on track to sell 500,000 battery-powered vehicles this year and turn its first-ever annual profit. His Tesla -- scheduled to join the S&P 500 next month -- is now more valuable than Toyota Motor Corp., Volkswagen AG, General Motors Co. and Ford Motor Co. combined.

It won't be a smooth journey either for investors -- which include the world's largest money manager and the world's second-largest private- equity firm -- or these industry upstarts, which face numerous obstacles. Most haven't yet successfully built or sold a car. Those that have have struggled to do so profitably. Some are still hiring a workforce or fighting accusations of fraud. One recently posted a loss of $1.6 billion.

Their fate hinges on a number of unanswered questions. Are consumers ready to buy a pricey electric vehicle other than a Tesla? Or is it a safer bet to sell workaday vans and trucks to companies? Is it smarter to build your own cars in your own factory? Or should you rely on outside contractors to produce them? Does it make more sense to focus on China, home to the world's largest electric-car market, or stay closer to home? How much pressure will they face from old giants like GM, which said this week it would spend $27 billion through 2025 on the development of electric and driverless vehicles?

At stake is the future of transportation -- and who gets to define it. There will be winners. And losers. There will be fortunes won. And lost. Here is our guide to the road ahead.

Rivian Automotive LLC, Irvine, Calif.

CEO: R.J. Scaringe


OWNERSHIP: private

CAPITAL RAISED: $5.35 billion in five funding rounds in the past two years

VALUATION: unknown

NOTABLE BACKERS: Ford, Inc., BlackRock Inc.

FIRST MODEL: Well-equipped versions of the R1T, an all-electric pickup, will start around $67,500, before tax incentives. Goes on sale in June 2021.

WHAT EXCITES INVESTORS: Rivian will sell battery-powered pickup and SUVs, targeting buyers with an outdoorsy, off-roading brand. The company also has a contract to build 100,000 electric delivery vans for investor Amazon. Rivian is retooling a former Mitsubishi Motors Corp. factory in Illinois.

WHAT COULD GIVE INVESTORS PAUSE: Rivian has to build both quality cars and its sales and service network. It plans to emulate Tesla's model and sell directly to consumers, an approach complicated by state franchise laws that protect the traditional dealership model. Then Rivian has to break into some of the toughest markets. Tesla has a commanding share of electric vehicle sales, while the Detroit auto makers dominate in pickup trucks and off-road brands.

Lucid Motors Inc., Newark, Calif.

CEO: Peter Rawlinson



CAPITAL RAISED: more than $1 billion


NOTABLE BACKERS: Public Investment Fund of Saudi Arabia

FIRST MODEL: The Lucid Air is a battery-powered luxury sedan the company says will be able to drive more than 500 miles on a single charge in some configurations. The first Airs will cost $169,000 before tax incentives when it goes on sale early next year, with less-costly versions to follow -- including an entry-level model expected to start at $77,400.

WHAT EXCITES INVESTORS: Lucid is building a factory in Arizona and aiming at the high-end luxury market. Executives hope to take on not only Tesla but Mercedes-Benz and BMW with fully-electric models. The company touts its proprietary battery and motor technology, which it says enables sports car-like performance, the ability to drive further without charging and roomier cabins in a smaller car.

WHAT COULD GIVE INVESTORS PAUSE: Challenges raising money led Lucid to delay the Air multiple times since introducing the concept in 2016. Now, other high-end auto makers like BMW, Mercedes-Benz and Porsche are rolling out their own luxury electric cars. Ultraluxury brand Bentley recently said it would sell only plug-in models by 2026, and others are poised to follow.

Lordstown Motors Corp., Lordstown, Ohio

CEO: Steve Burns



MARKET VALUATION: $4.2 billion (as of November 19)

NOTABLE BACKERS: Workhorse Group Inc., Fidelity Investments, GM

FIRST MODEL: The Endurance is a battery-electric pickup truck marketed to commercial fleet operators with a starting price of $52,500 before federal tax incentives.

WHAT EXCITES INVESTORS: Lordstown Motors took over a former GM assembly plant in Ohio planning to build battery-powered pickup trucks for commercial fleets and hoping to start production in September 2021. The company says electric vehicles operate with lower fuel and maintenance costs -- especially when compared with gas-guzzling pickup trucks -- making them appealing for businesses that use them in fleets.

WHAT COULD GIVE INVESTORS PAUSE: Lordstown Motors says it has to hire more than 1,000 workers and retool a massive plant before entering an increasingly crowded electric truck market. Ford's F-150 truck is the bestselling vehicle in the U.S., and the company is rolling out an electric version also targeting fleet buyers in 2022.

Nikola Corp., Phoenix

CEO: Mark Russell



MARKET VALUATION: $10.1 billion (as of November 19)

NOTABLE BACKERS: German auto supplier Robert Bosch GmbH, heavy machinery giant CNH Industrial NV, hedge-fund investor Jeffrey Ubben

FIRST MODEL: The battery-powered Nikola Tre semi-truck, built with CNH Industrial's IVECO brand, is set to begin production in late 2021. No pricing information is available yet.

WHAT EXCITES INVESTORS: Nikola is targeting the commercial trucking market. It intends to make big rigs powered by electric batteries and hydrogen fuel cells, along with refueling stations and producing hydrogen fuel. Its business model emphasizes partnerships with other big, established companies to deliver on core parts of its strategy.

WHAT COULD GIVE INVESTORS PAUSE: Nikola has said its refueling network alone could cost it billions of dollars to complete, and its profit potential depends on the company being able to hit ambitious cost projections for making hydrogen. It is also reeling from a report by short seller Hindenburg Research that claimed it misled investors about its technology. Nikola called the report's accusations false and misleading. Company founder Trevor Milton departed soon after and Nikola's stock has cratered. The Justice Department and Securities and Exchange Commission have initiated inquiries.

Fisker Inc., Los Angeles, Calif.

CEO: Henrik Fisker



MARKET VALUATION: $4.7 billion (as of November 19)

NOTABLE BACKERS: Apollo Global Management Inc., Magna International Inc., Louis Bacon

FIRST MODEL: The Ocean, a compact SUV made with sustainable materials, is slated to begin production in 2022. Pricing starts at $37,500 before federal tax incentives.

WHAT EXCITES INVESTORS: Much of Fisker's manufacturing and engineering will be contracted to outside vendors. Auto-parts supplier Magna, which holds a 6% stake in the startup, will build the company's first model while Fisker focuses on the design and software. Fisker is also developing a flexible lease model that functions more like a monthly subscription. Customers will have the ability to terminate at any point and the company can re-lease the car, creating recurring revenue.

WHAT COULD GIVE INVESTORS PAUSE: This isn't Henrik Fisker's first attempt to get an electric-car startup off the ground. In 2007 he founded Fisker Automotive, an early rival to Tesla that ultimately went bankrupt. And his latest venture isn't without stumbles. The company promised a battery-technology breakthrough before ditching the effort, saying it couldn't be commercialized. Analysts say Fisker's contract-manufacturing approach is risky and other car companies have struggled with monthly-subscription plans for vehicles.

Canoo Inc., Torrance, Calif.

CEO: Ulrich Kranz


OWNERSHIP: private but expected to go public through a reverse merger known as a SPAC by the end of the year

VALUATION: $2.4 billion (valuation estimate at the time reverse merger was announced)

NOTABLE BACKERS: Daniel Hennessy, BlackRock, AFV Partners

FIRST MODEL: A microbus-like all-electric "lifestyle" vehicle the company describes as a "loft on wheels" will be called the Canoo. Pricing for the model, set to hit the road in 2022, hasn't been announced.

WHAT EXCITES INVESTORS: Canoo's technology integrates the batteries, chassis, motors and steering components. From that foundation, the company plans to make distinctive "lifestyle" vehicles for consumers available through a monthly subscription starting in 2022, and delivery vehicles starting the following year. The company has also joined with Hyundai Motor Co. to co-develop technology and expects to outsource the manufacturing of its cars.

WHAT COULD GIVE INVESTORS PAUSE: Before finding its merger partner, Canoo spent more than $300 million since inception and last year its auditor warned it was at risk as a going concern. Its first model's success depends on buyers embracing its subscription service, which is still novel in the car business. Additionally, Canoo has yet to lock-in a deal with a contract manufacturer to build its first vehicles.

NIO, Inc., Shanghai, China

CEO: William Li



MARKET VALUATION: $66 billion (as of November 19)

NOTABLE BACKERS: Chinese mobile gaming behemoth Tencent Holdings Ltd., Scottish hedge fund (and major Tesla investor) Baillie Gifford & Co., Chinese state investors

MAIN MODEL: The ES6 is a five-seat SUV with a starting price of roughly 358,000 yuan ($52,000).

WHAT EXCITES INVESTORS: NIO's stock gains outpaced Tesla's share-price surge this year, and the company's market value has eclipsed GM as of Thursday's close. Sales of its luxury electric SUVs, made and sold in China, are growing. It has also started providing subscription plans for batteries which allow users to buy cars without batteries at a lower price and swap them out for a monthly fee based on their energy needs.

WHAT COULD GIVE INVESTORS PAUSE: Despite a strong 2020, NIO's future seemed in doubt last year. It posted a net loss of $1.6 billion in 2019 and laid off roughly a fifth of its employees. It got a 7 billion yuan (roughly $1 billion) lifeline from Chinese state investors this spring, but it will need to boost sales and margins to remain competitive with Tesla, which opened its Chinese factory last year.

Li Auto, Inc., Beijing, China

CEO: Li Xiang



MARKET VALUATION: $30.7 billion (as of November 19)

NOTABLE BACKERS: Chinese e-commerce heavyweight Meituan Dianping, TikTok creator ByteDance Ltd., BlackRock

MAIN MODEL: The Li ONE is a plug-in hybrid luxury SUV that uses a small gasoline engine to generate power for lithium-ion batteries and lists for around 328,000 yuan ($49,500).

WHAT EXCITES INVESTORS: Li Auto can appeal to drivers in parts of China where charging stations are less plentiful while still qualifying for some state subsidies. Li's hybrids require smaller and cheaper battery packs, saving the company on costs.

WHAT COULD GIVE INVESTORS PAUSE: Li's focus on hybrids may help it alleviate drivers' worries about charging in the short-term, but analysts say the company will need to successfully manage an eventual transition to an all-electric future over the longer term. Hybrids also don't get the same favored treatment that pure battery-electric vehicles do from some local governments.

XPeng, Inc., Guangzhou, China

CEO: He Xiaopeng



MARKET VALUATION: $35.3 billion (as of November 19)

MAJOR BACKERS: Chinese e-commerce giant Alibaba Group Holding Ltd., Chinese phone company Xiaomi Corp., Qatar Investment Authority

MAIN MODEL: The P7 is a battery-electric sedan that starts at 250,000 yuan ($37,000).

WHAT EXCITES INVESTORS: Xpeng makes SUVs and sedans that undercut Tesla's Chinese models on price. The company is also developing its own autonomous-driving software and has an in-car operating system with its own network of apps. Like its Chinese competitors, the company has a deep-pocketed tech backer in Jack Ma's Alibaba.

WHAT COULD GIVE INVESTORS PAUSE: The Chinese government has helped stimulate electric-car demand with subsidies that are expected to be fully phased out by 2022. XPeng's software focus is both capital-intensive and highly competitive, and the company has warned in filings its efforts could be hindered by further deterioration of the U.S.-China relationship.

Faraday & Future, Inc., Los Angeles, Calif.

CEO: Carsten Breitfeld


OWNERSHIP: private

VALUATION: unknown

MAJOR BACKERS: Birch Lake Holdings LP, ATW Partners

FIRST MODEL: The FF91 is a luxury SUV with over 1,000 horsepower and more than 300 miles of range. The company says it can deliver the SUV nine months after raising more funds. Pricing is expected to start at more than $100,000.

WHAT EXCITES INVESTORS: Faraday has tried for years to develop a luxury SUV that will compete directly with Tesla. The company recently secured a bridge loan of $45 million as the company looks to raise more funding to make the FF91. Mr. Breitfeld is known in the auto industry for his development of BMW's i8 hybrid sports car.

WHAT COULD GIVE INVESTORS PAUSE: Faraday Future has spent more than $2 billion and has yet to sell a single vehicle, after originally targeting 2017 to bring its first model to market. Founder Jia Yueting declared personal bankruptcy last year from personal debts in China and the company is still looking to raise the funds needed to start production.

Arrival Ltd., London, UK

CEO: Denis Sverdlov


OWNERSHIP: private but expected to go public through a reverse merger known as a SPAC by end of the year

VALUATION: $5.4 billion (valuation estimate at the time reverse merger was announced)

MAJOR BACKERS: Hyundai Motor Co., Kia Motors Corp., BlackRock, United Parcel Service Inc.

MAIN MODEL: an electric passenger bus expected in the fourth quarter of 2021

WHAT EXCITES INVESTORS: Arrival plans to build electric buses for urban transit or delivery vans at smaller, automation-intensive assembly plants the company calls microfactories. The factories, it says, can be built for tens of millions of dollars, far less than a conventional assembly plant. The company has an order from UPS for 10,000 vans.

WHAT COULD GIVE INVESTORS PAUSE: Many of its prospective customers -- cities and transit authorities -- are in fiscal trouble due to the pandemic and dropping urban transportation ridership. Arrival also faces a strong set of existing competitors due to widespread acceptance of electric buses in certain parts of the world. Most new buses sold in China are already electric, analysts say.

Write to Ben Foldy at


(END) Dow Jones Newswires

November 20, 2020 10:14 ET (15:14 GMT)

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