The once-buzzing world of electric vehicle (EV) and autonomous vehicle (AV) startups has experienced a significant downturn in 2024. The year marked a turning point, with several EV startups faltering, and automakers reassessing their investment plans. This shift in the industry's trajectory is a far cry from the hype surrounding these technologies just a few years ago.

The EV buzz, which lingered at the start of 2024, has all but dissipated. EV demand, which began softening in 2023, has failed to meet expectations, prompting automakers to adjust their plans. Ford, for instance, abandoned its plan to produce an all-electric three-row SUV, opting instead for hybrid powertrains. General Motors (GM) pulled back on EV spending in 2023 and further reduced its stake in the Ultium Cells battery cell plant in Lansing, Michigan, to its joint venture partner LG Energy Solution. Stellantis and Mercedes have also paused plans for EV battery factories.

Toyota's cautious approach to EVs, which was initially criticized, now appears to be a wise move. The company's focus on gas and hybrid vehicles has allowed it to maintain a stable footing in the market. Meanwhile, EV startups have struggled to stay afloat. Arrival, once valued at over $13 billion, entered administration in the UK, with its assets being acquired by troubled EV startup Canoo. Fisker, another EV startup, faced a series of setbacks, including federal probes, layoffs, and eventual bankruptcy.

The autonomous vehicle sector has also experienced a significant reckoning. The hype surrounding AVs has given way to a more sober assessment of the technology's challenges and limitations. Apple's secretive car project, which was canceled in 2024, serves as a prime example of the industry's shift in focus. The project's demise is a significant blow, given the company's reputation for innovation and its potential to disrupt the automotive industry.

Other AV startups have also struggled to stay afloat. Ghost Autonomy, an autonomous driving software startup, shut down in February after raising $220 million. Cruise, the self-driving vehicle company backed by GM, is no longer receiving funding for its commercial robotaxi program, leaving its future uncertain. Lilium, an electric vertical takeoff and landing startup, shut down in October after running out of money, despite raising over $1 billion from investors.

The struggles faced by EV and AV startups are a testament to the industry's growing pains. The consolidation and reckoning of 2024 serve as a reminder that the road to commercialization is long and arduous. As the industry moves forward, it is likely that only the strongest and most resilient startups will survive, while others will be forced to pivot or shut down altogether.

Despite the challenges, there are still opportunities for innovation and growth in the EV and AV sectors. The interest in electric aircraft startups, for instance, remains strong, with companies like Vaeridion, Archer, and Joby Aviation securing significant investments. However, the turbulence faced by the industry in 2024 serves as a cautionary tale, highlighting the need for startups to be adaptable, resilient, and focused on delivering tangible results.