Electric vehicle startup Slate Auto expects to defy challenging market conditions and avoid the losses its peers have seen by profitably selling a highly customizable EV that starts at just under $25,000, with every vehicle produced expected to be gross margin positive.

Market Context

The announcement comes as other recent EV startups have struggled financially. Automakers such as Lordstown Motors and Fisker Automotive went bankrupt, while Rivian Automotive and Lucid Motors have reported billions of dollars in annual losses and both recently announced layoffs. Slate's $24,950 entry point undercuts competitors significantly—the average new vehicle sold costs roughly double that figure according to Cox Automotive data.

Analysis

"It's an ambitious goal," CEO Peter Faricy told CNBC during an interview at the company's new design studio outside of Los Angeles. "No other automotive company has been able to do that before." The former Amazon Marketplace vice president, appointed to lead the automaker in March, said the company can succeed where others have failed because of its simplistic product, customer-focused business strategy and break-even point of roughly 80,000 vehicles a year—just over half of the 150,000-unit production capacity planned at its Warsaw, Indiana assembly plant.

The company's flagship two-seat electric pickup truck is deliberately basic: speakers are optional and it has crank windows. The vehicle can be converted into a five-passenger sport utility vehicle for an additional $5,000. Slate-estimated range comes in at 205 miles with 181 horsepower and 195 foot-pounds of torque—modest compared to pricier electric pickups but competitive in the budget EV segment.

Slate has received more than 180,000 reservations requiring refundable $50 deposits, with preorders opening Wednesday featuring $300 nonrefundable down payments. President Chris Barman said current expectations are for the SUV variant to represent 60% of sales despite the pickup being the base model at roughly $25,000.

Key Numbers

- Starting price: $24,950 for two-seat electric pickup truck

- SUV conversion cost: additional $5,000

- Break-even production volume: approximately 80,000 vehicles per year

- Planned production capacity: 150,000 units annually in Warsaw, Indiana

- Total capital raised: more than $1.3 billion through three financing rounds

- Vehicle reservations: over 180,000

- EV range: 205 miles per charge

- Horsepower: 181 hp with 195 lb-ft of torque

What to Watch

Slate is continuing to build out its Indiana facility while producing prototype vehicles, aiming for normal production processes by August. The company must still complete required federal vehicle validation and certification for range, safety and other aspects before deliveries begin in the fourth quarter. CEO Faricy declined to discuss capital runway but confirmed the company continues to opportunistically raise funding as it prepares for consumer production.

Regarding going public, Faricy said 2027 is "probably too soon" and that the company will want to ensure successful launch and scaling first. The direct-to-consumer sales model mirrors strategies employed by Tesla and Rivian, which Faricy believes will lead to lower costs and better control over customer experience.