- Electric vehicle stocks are in serious hot water.
- Tesla (TSLA): How long can the market leader retain its crown?
- Rivian (RIVN): Major shareholders are dumping the stock as fast as they can hit the “sell” button.
- Lucid Group (LCID): Production problems continue to hold this EV start-up back.
- Fisker (FSR): Investors will need to separate the hype form reality with this formerly bankrupt company.
- Lordstown Motors (RIDE): Despite a recent cash infusion, the company still doesn’t have enough money to enter production of its EV pick-up truck.
- ChargePoint (CHPT): Government efforts to build out EV infrastructure haven’t helped this company’s share price.
- Nio (NIO): Can China’s leading EV company retain its stock’s listing on the NYSE?
It’s been a bumpy road for electric vehicle (EV) stocks this year. As the market has fallen lower, shares of electric vehicle makers have been among the most battered and bruised.
Established companies to start-ups have seen their share prices fall 40% or more in recent months as investors move away from speculative stocks that are viewed as risky. Instead, investors are seeking safe haven assets instead.
The selloff in EV stocks could worsen in coming months as high inflation forces consumers to put off discretionary purchases, such as a new vehicle, and rising interest rates make it more expensive for capital-intensive industries, such as automakers, to finance their operations. Throw in global supply chain problems and a war in Europe, and it becomes clear just how potentially risky investing in electric vehicle stocks is right now.
In the current climate, it might be best for investors to sell the following seven EV stocks before they truly crash and burn.
|Rivian Automotive, Inc.
|Lucid Group, Inc.
|Lordstown Motors Corp.
|ChargePoint Holdings, Inc.
Electric Vehicle Stocks to Sell: Tesla (TSLA)
Tesla (NASDAQ:TSLA) remains the world’s dominant electric vehicle maker — for now. While the company currently boasts a 20% share of worldwide EV sales, competition is heating up and coming from all corners. Established automakers ranging from Ford (NYSE:F) to Volkswagen (OTCMKTS:VWAGY) are ramping up production of electric vehicles in an effort to dethrone Tesla.
At the same time, the company continues to be hobbled by ongoing production problems in China, where Covid-19 restrictions have slowed production at the company’s Shanghai plant to 200 cars a day, which is a fraction of the normal 2,600 electric vehicles produced daily at the site. Plus, there are growing concerns that CEO Elon Musk’s is distracted by plans to buy Twitter (NYSE:TWTR) and other adventures.
Year to date, TSLA stock is down 30% at $733 per share. Things might get worse before they get better.
Rivian’s (NASDAQ:RIVN) major investors are dumping the company’s stock. News has just broke that auto giant Ford has sold another seven million Rivian shares worth $188.42 million. This latest sale comes days after Ford sold $214 million worth of RIVN stock, bringing the total amount offloaded by Ford to more than $400 million in the past week.
Ford’s sale came after the lock-up period expired on Rivian’s stock following the electric vehicle start-up’s initial public offering (IPO) last fall. Ford, along with Amazon (NASDAQ:AMZN) are the two largest shareholders in RIVN stock. For its part, Amazon said when releasing its first-quarter results that it took a $7.6 billion loss on its stake in Rivian after the EV company’s share price fell by more than 50% in the first three months of this year. That swung Amazon to a rare quarterly net loss.
So far this year, RIVN stock is down 73% at about $28 a share. News that Ford is continuing to sell shares has put additional pressure on Rivian’s stock.
Electric Vehicle Stocks to Sell: Lucid Group (LCID)
Lucid Group (NASDAQ:LCID) has had some good news lately, including receiving a big order for its electric vehicles from the Government of Saudi Arabia. However, the good news can’t hide the fact that Lucid has struggled to increase its production amid global supply chain problems that are making it difficult to source parts.
Earlier this year, Lucid lowered its full-year guidance for production of between 12,000 to 14,000 vehicles from 20,000 vehicles previously. That downgrade helped prompt the current selloff in LCID stock that has accelerated in recent months. The company’s stock is now down 53% year to date at about $18 a share.
Add in an investigation by the U.S. Securities and Exchange Commission into the company’s IPO last summer, and a class action lawsuit by investors who feel they’ve been mislead about the company’s production capacity, and there is a lot of uncertainty around Lucid Group.
Manhattan Beach, California-based Fisker (NYSE:FSR) has been touting that it now has more than 45,000 reservations for its fully electric SUV called the “Ocean.” However, the company has yet to put any of its electric vehicles into production. Right now, we currently have promises that the Ocean SUV will enter production by the end of this year with help from manufacturing partner, Magna International (NYSE:MGA).
However, before the first Ocean vehicles roll off the assembly line, Fisker’s management team is already promising to increase production capacity from a planned 50,000 annually to three times that amount by the end of next year (2023). Investors sniffing around this company will want to separate the hype from reality.
Already down 29.5% this year to $11.09 a share, FSR stock will surely fall further if there are any production delays with its electric SUV.
It’s also worth noting that Fisker has gone bankrupt in the past. Originally founded in 2007, the automaker went bankrupt in 2013 before returning to public markets in its current form in 2020.
Electric Vehicle Stocks to Sell: Lordstown Motors (RIDE)
Even among electric vehicle makers, shares of Lordstown Motors (NASDAQ:RIDE) are highly speculative and trading deep in penny stock territory at $2.26 a share. The company had been struggling to raise capital and continue operations before recently selling its Ohio manufacturing plant to Taiwanese electronics manufacturer Foxconn. That sale gave Lordstown Motors $260 million in much needed cash.
Lordstown Motors said the sale to Foxconn will enable it to move forward with production of its long-delayed Endurance electric pick-up truck. However, despite earning $260 million in cash from the Foxconn deal, Lordstown said it still needs to raise an additional $150 million to put its Endurance electric pick-up truck into full production. Where that additional money will come from remains to be seen.
In the past six months, RIDE stock has declined 28%. Over the past year, the stock has fallen 70.5%.
ChargePoint (NYSE:CHPT) isn’t an electric vehicle manufacturer in the same way the other stocks on this list are. The Campbell, California-based company makes public charging stations that are needed to recharge electric vehicles. They must become as commonplace as gas stations on roads and highways if EV adoption is to really takeoff around the world.
While governments, including the U.S., continue to funnel infrastructure dollars at ChargePoint and other electric vehicle charging companies in an effort to stimulate their growth and expansion, the money and incentives have had limited impact.
This helps to account for the fact that CHPT stock has pulled back 45% so far in 2022 to trade at just $10.50 a share. The stock is now down 71.5% from its 52-week high of $36.86 reached last June.
Electric Vehicle Stocks to Sell: Nio (NIO)
Nio (NYSE:NIO) is considered the EV leader in China, but its stock has been clobbered in recent months amid concerns about its production and expansion, as well as the future of its U.S. listing on the New York Stock Exchange.
The Shanghai automaker announced earlier in May that it plans to pursue a secondary listing of its shares in Singapore, as regulatory scrutiny puts the company’s New York listing in doubt. Such a delisting would not be good for American shareholders.
Nio’s stock plunged 15% in a single day in early May after the company revealed that the SEC is investigating it over an accounting problem. The SEC has the authority to suspend NIO stock from trading on the big board in New York if it concludes that such an action is warranted upon further investigation. That prospect has many investors spooked. So far in 2022, NIO stock has plunged 49% to $16 a share.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.