EV stocks slump into 2023 as investors eye profitability over green energy dreams
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The electric vehicle sector was part of a broad sell-off in growth and tech stocks on Thursday as investors continue to take a more defensive position into 2023.
There is also growing anxiety over the shift in the balance of supply-demand for electric vehicles and the resulting impact on profitability.
Morgan Stanley said it would expect FY23 to feature repeated price cuts from Tesla in all regions and EV players globally. "Some of these price cuts will be funded by falling input prices. But not all of them. Teslaâs lead to competition may widen but EV margins are likely to go down," warned analyst Adam Jonas. Of course, higher interest rates and inflation costs are also anticipated to clip margins for the auto sector as a whole.
Some of the biggest EV-related decliners in early trading on Thursday were Electrameccanica (SOLO) -14.94%, Lightning eMotors (ZEV) -12.27%, REE Automotive (REE) -12.08%, Arrival (ARVL) -10.14%, Cenntro Electric Group (CENN) -10.05%, Beam Global(BEEM) -9.89%, AEye (LIDR) -9.35%, Faraday Future Intelligent (FFIE) -9.10%, TuSimple (TSP) -8.80%, ChargePoint Holdings (CHPT) -8.05%, (PEV) -7.97%, Blink Charging (BLNK) -7.90%, Canoo (GOEV) -7.44%, XPeng (XPEV) -5.95%, Workhorse Group (WKHS) -5.20%, and Rivian Automotive (RIVN) -4.55%. Some of those stocks etched new 52-week lows, while others are showing YTD losses of over 80%.
What about the mother ship of the EV sector? Shares of Tesla (NASDAQ:TSLA) showed a 5.82% drop at 10:57 a.m. and swapped hands early in the session at a 25-month low.
If profitability is a central theme with investors in 2023, watch for automakers with the highest EBITDA margins to perhaps fare better than others. At last check - Ferrari (RACE), Tesla (TSLA), Mercedes-Benz Group (OTCPK:MBGAF), BMW (OTCPK:BMWYY), and Stellantis (STLA) topped the profitability list.