Electric vehicle jolts: What's working and not working with EV stocks
TERADAT SANTIVIVUT
Selling pressure hit pockets of the electric vehicle sector again on Tuesday as investors continue to digest the recent trips into the quarterly earnings confessional from companies big and small.
Notable decliners in late morning trading included (PEV) -10.23%, TuSimple (TSP) -9.65%, Hyzon Motors (HYZN) -7.88%, Kandi Technologies (KNDI) -7.24%, Wallbox (WBX) -7.12%, Proterra (PTRA) -6.93%, Lordstown Motors (RIDE) -6.85%. Faraday Future Intelligent Electric (FFIE) -6.40%, Aeva Technologies (AEVA) -5.48%, and Hyliion Holdings (HYLN) -5.17%.
The continued drops have come amid rising concern in the electric vehicle industry that the adoption timeline away significantly from internal combustion engines will fall short of the rosy predictions issued at the beginning on 2022 when the Green Tidal Wave thesis was strong. Since then, EV startups have been hit by commodities inflation, high interest rates, and an investor shift to more defensive investments.
Looking even further down the road, Morgan Stanley said its forecast of $7T total investment in the EV battery supply chain by 2040 assumes an array of targeted regulations and policies to facilitate an onshore, de-carbonized battery supply chain. "In our view, it may require over a decade to achieve industrialization and standardization, gated by a host of geopolitical, environmental, and economic considerations," warned Adam Jonas and team. The long timeline puts into question how many of the sub-$1 EV stocks can survive.
What's working in the EV sector? Investors have bid up some electric vehicle names in 2023 despite the gloomy backdrop. The biggest gainers in the sector this year are Blue Bird Corporation (BLBD) +93%, GreenPower Motor (GP) +55%, Kandi Technologies (KNDI) +41%, Li Auto (LI) +41%, LiveWire Group (LVWR) +39%, and Ayro (AYRO) +29%. Most of those companies have released positive production updates to inspire some level of confidence. Notably, Tesla (TSLA) is still up 38% despite some recent selling action.
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