(Bloomberg) -- A slowdown in the demand for electric cars has sparked off such a brutal price war that even industry behemoth Tesla Inc. is struggling to cope. But for the newer entrants in the race, it is fast turning out to be a battle for survival.

This week’s slew of lackluster quarterly results from once promising electric-vehicle startups made clear what analysts and investors have worried about for a while now: That rapidly dropping prices on EVs will hit the smaller, unprofitable carmakers the hardest. Two of the largest and most prominent in the group — Rivian Automotive Inc. and Lucid Group Inc. — reported wider-than-expected losses, after losing a staggering amount of money for every vehicle they sold.  

“There really is no room for startups in this environment as rates are too costly to finance growth and margins are not strong enough to attract private capital,” said Brian Mulberry, client portfolio manager at Zacks Investment Management. 

Rivian shares fell as much as 10% Wednesday following its results, while Lucid dropped 14% Tuesday after its numbers. The pair have been on a steady downward spiral ever since they went public in the EV heyday during the Covid-19 pandemic era. Both stocks now trade more than 90% below record highs. For the rest of the group, the picture is strikingly similar. 

The pace of growth in EV sales has been slowing since late last year, as the pool of enthusiastic buyers who are typically the first adopters of any new technology has been largely tapped out. The mainstream consumer is more wary, sensitive to the current high borrowing costs, and worried about the mundane logistics of owning an EV — such as, a nascent charging ecosystem and the fast drop in values of used EVs. Even Tesla’s Elon Musk has said that the company is currently between two major growth waves.

As a result, EV makers have engaged in a relentless price war in an effort to lure buyers, with Tesla leading the charge. Everyone’s feeling the squeeze. Tesla’s adjusted profit has slumped for three straight quarters on a year-over-year basis, and analysts estimate it will fall again in the second quarter. Still, its dominant position in the industry and massive cash pile gives it the flexibility to keep lowering prices, something the unprofitable carmakers can’t afford.

“Larger and well-funded automakers like Tesla, BMW, Mercedes and Porsche have the ability to use price against smaller rivals,” said Bloomberg Intelligence’s credit analyst Joel Levington, noting that it is becoming a growing threat for companies like Lucid and Rivian.

In fact, Levington warns, there may be dire consequences — auto bankruptcies may start to pick up.

“A pileup of electric vehicles at US dealers and staggering 32% decline in used EV prices since early 2023 suggests manufacturers that built plans around a rapid growth trajectory now have a more challenging road ahead,” Levington wrote in a note on Wednesday. According to his analysis, Fisker Inc., Lucid, Rivian and Aston Martin Lagonda Global Holdings Plc screen among the riskiest carmakers. 

The cracks have already started to spread. Fisker has paused production and said that it may file for bankruptcy, and its Austrian unit began insolvency proceedings this week. Other failures include Ohio-based Lordstown Motors Corp., the UK arm of Arrival SA, and electric-bus maker Proterra Inc.  

Read more: Fisker Delisted by NYSE as EV Maker Races to Save Itself

Zacks’ Mulberry said he expected to see some consolidation in the industry, but until that happens, “the lower end of the margin spectrum like Fisker are likely to fail under the weight of higher interest rates squeezing demand.” 

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