The next Tesla proves hard to find
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The share prices of a number of entry-level electric vehicle makers have skyrocketed in recent years as investors sought the next company to shake up the auto market. But all have struggled recently – just like You’re here (TSLA) himself.
Rivian was briefly the third most valuable automaker on the planet, behind Tesla and Toyota, although it had yet to declare any sales when it was made public. When it finally announced its first sales on December 16, they fell short of expectations and the company cited the same chip and parts shortage that plagued the rest of the auto industry. Stocks closed on Thursday 44% lower from their pre-report high, and the sales report turned out to be a headwind for Lucid stocks as well.
Even Tesla, which earlier this year only became the sixth company to reach a market value of $ 1,000 billion, has recently run into trouble. Stocks fell 27% from an all-time high on Nov. 4 until Tuesday – before a weekend rally took them back above the $ 1,000 billion mark. Still, it is trading 13% below its all-time high.
Part of the recent problem for EV inventories is the apparent demise of the Biden administration’s Build Back Better bill, which had a number of benefits for the EV industry, including credit. Improved taxes for buyers that would have allowed automakers to charge more for vehicles. Build Back Better also includes money for a network of fast-charging stations, which would have addressed concerns of potential electric vehicle buyers about running out of juice on the road.
“It was a big blow for the EV bulls,” said Dan Ives, technical analyst for Wedbush Securities. “For the additional demand in 2022 and beyond, the tax credits for electric vehicles represent a factor of oscillation of 15% of the demand. “
But much of the decline in electric vehicle inventories took place before Sen. Joe Manchin said last week that he could not support the legislation, putting his future in doubt.
Much of the decline is due to continued announcements from established automakers such as Volkswagen, Toyota, Ford and GM of further investment plans in electric vehicles. The concern is that even if consumer preferences and stricter environmental rules are poised to create a massive shift from gasoline-powered vehicles to electric vehicles, autonomous EV companies won’t necessarily win the battle.
“There will be losers in the battle for electric vehicle market share,” Ives said. “Rivian comes out the door with a lack of delivery, it couldn’t have happened at the worst time. It’s a dark cloud for the makers of outright EVs. And investors have a lot less patience with everything wrong. no execution. “
Tesla has grown to the point where it is profitable and large enough to grow even in the face of increased competition from established car manufacturers. He predicts sales growth of 50% or more this year and beyond. And the stock has mostly withstood industry declines, rising 51% so far this year.
While this is only a fraction of the 743% gain in Tesla stock in 2020, it is better than most established automakers other than Ford, whose shares rose 131%. this year after making significant gains in its own electric vehicle efforts.
The two most struggling electric vehicle stocks – Nikola and Lordstown Motors – lost 27% and 80% of their value, respectively, through Thursday’s close, although Nikola’s stock jumped 18% on Thursday after announcing that she had finally made her first truck delivery.
But earlier in the week, Nikola agreed to pay a fine of $ 125 million to settle charges that Trevor Milton, its founder and former CEO, had deceived investors. Milton was forced to resign in September 2020 after questions about the company’s claims first surfaced. He now faces federal criminal charges.
Lordstown’s founder and CEO has also been forced to resign and the company has expressed doubts about its ability to remain in business.
The difficulty these companies had in keeping their initial promises means companies like Lucid and Rivian will need to do more to prove themselves before they are fully adopted by investors, Ives said.
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