Startups Weekly - A bumpy road for EV manufacturers

Friday, February 23, 2024

Welcome to Startups Weekly — your weekly recap of everything you can’t miss from the world of startups.

Rivian launched with a promise to revolutionize the way we think about trucks and SUVs but has now hit a bit of a speed bump. In a move that screams, “Oops, we might’ve gotten a bit ahead of ourselves,” the company announced it’s laying off 10% of its workforce. Why, you ask? Well, it seems the EV market is a tad more cutthroat than anticipated, with pricing pressure mounting like the suspense in a bad thriller movie. Rivian is now faced with the harsh reality that making cars is hard and making them profitable is even harder. The current round of layoffs follows the 6% of staff it laid off a year ago, and another 6% that was shown the door around 18 months ago.

The manufacturer is reportedly launching its R2 series vehicles early next month, which supposedly will improve the company’s profit margins somewhat.

As Rivian navigates these turbulent waters, one can’t help but wonder if this is just a bump in the road or a sign of more ominous clouds on the horizon. Who needs soap operas when you have the EV market?

Image Credits: Rivian

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Most interesting startup stories this week

Staying in the world of automotive, there’s been a lot of movement from the avant-garde of EV manufacturers.

Lucid Motors, in a valiant effort to make lemonade out of the lemons that were its 2023 sales figures, has decided to slash prices across its lineup of electric sedans. The move screams “Please notice us!” in a market where being the new kid on the block (Lucid was founded in 2007) is about as advantageous as a skateboard in a Formula 1 race. The base model Lucid Air Pure, previously flirting with the $80,000 mark, now bats its eyelashes at potential suitors with a more approachable $69,900 price tag. This comes on the heels of a rather humbling admission that the company only managed to deliver 6,001 cars in the entirety of 2023. The company at one point predicted it would be shipping 90,000 cars in 2024 — it looks like the real number will be a tenth of that.

It isn’t just the new kids on the block that are struggling. Founded a solid 104 years before Lucid, Ford, in a move that echoes the playground tactic of “if they can do it, so can we,” has decided to slash prices on its electric Mustang Mach-E in response to the softening demand for premium EVs. It seems the electric vehicle market is experiencing a bit of a reality check, with consumers suddenly remembering that money doesn’t grow on trees, even if those trees are saved by driving electric cars.

These price adjustments from Ford and Lucid come hot on the heels of EV industry poster child Tesla’s price reductions, suggesting that the EV market is maturing and that customers are becoming more price conscious.

A fire sale on electric motorcycles: The owner of a Florida retail shop scooped up the majority of Swedish electric motorbike brand Cake’s U.S. inventory, including all the Makka and Ösa motorbikes, accessories, and spare parts that had made their way stateside. Cake itself is cruising into bankruptcy.

Despite all their rage, they’re still just a rat in a Faraday cage: Struggling EV startup Faraday Future owes the landlord of its Los Angeles headquarters nearly $1 million after missing the last two months’ rent.

Keeping its eyes on the roads: Hivemapper, the company that’s been buzzing around the tech scene with its innovative mapping technology in an attempt to take on Google Maps, has just unveiled its latest creation: the Bee dashcam. This isn’t your ordinary dashcam: It’s designed to collect and share street-level imagery, contributing to Hivemapper’s global map.

Most interesting startup stories this week image

Image Credits: Hivemapper

Most interesting fundraising trends this week

Global investment firm Partech recently closed its second Africa fund at a whopping $300 million, doubling down on its commitment to the continent’s burgeoning tech ecosystem. The new fund aims to bridge the gap from seed to Series C funding rounds, providing a much-needed continuum of financial support for African startups. The fund’s strategy is to not only inject capital but also offer strategic guidance and access to a global network, empowering startups to scale both within Africa and internationally.

Om nom nom: Bluestein Ventures, a Chicago-based early-stage venture capital firm, has recently closed its third fund, with $45 million in capital commitments. Founded in 2014, the firm focuses on investing in consumer-facing technology across the food supply chain, including health and wellness, proprietary food tech, commerce, and digital technology.

Ready player 2: The global video game industry, despite its immense revenue surpassing that of movies and music combined, faced a challenging year in 2023 with significant layoffs and a five-year low in venture funding. However, optimism remains high among VCs for a turnaround in 2024.

That’s a big bag of moolah, you guys: Moonshot AI, a burgeoning artificial intelligence startup from China, has reportedly secured over $1 billion in a Series B funding round, setting a new record for the largest single funding round for Chinese large language model (LLM) developers. This financial boost propels Moonshot AI’s valuation to an impressive $2.5 billion.

Most interesting fundraising trends this week image

Image Credits: Carol Yepes / Getty Images

This week’s big trend: The AI train keeps rumblin’ along

OpenAI has introduced a new generative AI model named Sora, capable of creating videos from text descriptions or still images. Sora stands out by generating high-res movie-like scenes that can include multiple characters, various motions, and detailed backgrounds. This model can also extend existing video clips by filling in missing details, demonstrating a deep understanding of language and the physical world.

Sora’s capabilities extend to generating videos in a range of styles, such as photorealistic, animated, and black and white, with durations up to a minute — significantly longer than most existing text-to-video models. Despite some limitations, like occasional inaccuracies in simulating complex physics or specific cause-and-effect scenarios, Sora’s output maintains a high level of coherence, avoiding common pitfalls of “AI weirdness.” The model will likely not be released to the public.

In other OpenAI news, the U.S. Patent and Trademark Office has denied the company’s attempt to trademark “GPT,” ruling that the term is “merely descriptive” and therefore unable to be registered.

Yeah, that checks out: Dili, a platform designed to automate key investment due diligence and portfolio management steps for private equity and VC firms using AI, has raised $3.6 million in venture funding. The company aims to alleviate the burden of due diligence tasks by leveraging generative AI, specifically large language models, to streamline investor workflows.

Is there anything else AI can help you with today?: Sierra’s approach to customer service AI is focused on augmenting human agents rather than replacing them. The company believes that AI can handle routine and repetitive inquiries, freeing up human agents to focus on more complex and nuanced customer interactions. The company has raised $110 million to date.

Focusing on the XX: In a New York Times piece late last year, the Gray Lady broke down how the current boom in AI came to be. The piece went viral — not for what was reported, but instead for what it failed to mention: women. We took a look at the women who are making waves in AI.