In the highly competitive electric vehicle (EV) market, Rivian and Lucid are gearing up to release their third-quarter earnings reports, shedding light on the challenges faced by EV startups. As the adoption of EVs slows in Europe and the U.S., industry leader Tesla plans to make a strategic move by building an affordable electric car in Germany, according to Reuters.

Rivian, known for its premium electric vehicles, is expected to narrow its net losses to $1.34 per share compared to $1.57 per share in the previous year, as reported by analysts. The company is also predicted to experience a remarkable 146% surge in revenue year over year, reaching $1.321 billion. Rivian's upcoming earnings report will mark the fifth consecutive quarter of reduced year-over-year losses, demonstrating its progress in the market. With 16,304 electric vehicles produced and 15,564 deliveries in the third quarter alone, Rivian is bolstering its position. The company produces the R1S SUV, R1T truck, and commercial delivery vans, most notably servicing Amazon. The average selling price for Rivian's vehicles is approximately $85,000. In August, the company raised its full-year production guidance to 52,000 electric vehicles, emphasizing its ambitious growth goals.

Despite a positive outlook for Rivian, its stock performance has been modest. Shares of Rivian rose by 1.5% to $17.45 in afternoon trade, recovering from earlier losses. However, the stock remains below the 50-day and 200-day moving averages, as it experienced a significant decline of over one-third in value during October. The fear of a global EV slowdown, compounded by warnings from auto giants like Tesla, has put pressure on Rivian's stock performance.

Meanwhile, Lucid, renowned for its luxury Air electric sedan, also expects improved financial results. Analysts project a narrower net loss of 36 cents per share compared to 40 cents per share in the previous year. However, the company's revenue is anticipated to decline by 5%, reaching $185.1 million year over year. Lucid, despite multiple price cuts following Tesla's Model S and X reductions, is facing a slump in sales after registering triple- and double-digit gains in previous quarters. Additionally, the company reportedly incurs significant losses on each EV it produces.

Lucid has already reported producing 1,550 electric vehicles and delivering 1,457 in the third quarter. The average selling price for Lucid's EVs is approximately $100,000. As of now, Lucid's shares have declined by 0.5% to $4.30 and remain close to all-time lows, underscoring the challenges faced by startup EV companies.

The struggles faced by startup EV companies are evident, as several, including Lucid and Fisker, now trade as penny stocks, falling below the $5 price level after initially soaring during their debuts. This collapse highlights the execution risks encountered by young companies operating in the capital-intensive business of manufacturing electric vehicles.

In the midst of these developments, attention shifts to Tesla and its future plans. CEO Elon Musk reportedly shared with German factory workers that the company intends to produce a 25,000-euro ($26,838) EV in Germany. While details around production timelines are currently unavailable, this move indicates Tesla's strategic focus on the mass market. Additionally, the company has plans to build a more affordable next-generation EV in a yet-to-be-constructed factory in Mexico, leveraging low wages and potential U.S. IRA tax credits of up to $7,500. Tesla's decisions and market moves will undoubtedly impact its startup rivals.

As investors eagerly await the earnings reports of Rivian and Lucid, the industry as a whole grapples with a slowdown in EV adoption and increasing competition. The financial results of these two prominent EV startups will shed light on their ability to navigate the challenges presented in the evolving market landscape.