The next Tesla is hard to find

Share prices of a number of emerging electric vehicle manufacturers have skyrocketed in recent years as investors looked for the next company that could shake up the auto market. But everyone has been fighting lately – as well as Tesla (TSLA) self.

Rivian was briefly the third most valuable automaker in the world, just behind Tesla and Toyota, though no sales were reported when it went public. When it finally reported its first sales on December 16, they fell short of expectations, with the company citing the same chip and parts shortages as the rest of the auto industry. Shares closed 44% below pre-report highs on Thursday, and the sales report also proved headwind for Lucid shares.

Even Tesla, which became only the sixth company to reach a market value of $ 1 trillion earlier this year, had gotten into trouble lately. Stocks fell as much as 27% from an all-time high November 4 through Tuesday – before a rally later in the week lifted them back above $ 1 trillion. Still, it’s 13% below its all-time high.

Part of the recent problem for EV stocks is the apparent demise of the Biden government’s Build Back Better bill, which contained a number of goodies for the EV industry, including improved tax credits for buyers that would have allowed automakers to get more for the vehicles to request. Build Back Better also includes funds for a network of fast charging stations that would have answered the concerns of potential EV buyers about running out of juice on the go.

“That was a punch in the heart for the EV cops,” said Dan Ives, a tech analyst at Wedbush Securities. “For increased demand in 2022 and beyond, the electric vehicle tax credit is a demand factor of 15%.”

But much of the decline in EV stocks came before Senator Joe Manchin said last week he couldn’t support the legislation, which seriously challenged its future.

Much of the decline is due to ongoing announcements by established automakers like Volkswagen, Toyota, Ford and GM about additional investment plans in electric vehicles. The concern is that even if consumer preferences and stricter environmental regulations will result in a massive shift from gasoline-powered vehicles to electric vehicles, stand-alone EV companies will not necessarily win the battle.

“There will be losers in the battle for electric vehicle market share,” said Ives. “Rivian is coming out of the gate with a delivery bottleneck that couldn’t have come at the worst possible time. It’s a dark cloud on pure EV manufacturers. And investors are much less patient with execution mistakes.”

Tesla has grown to the point that it is profitable and big enough to grow even in the face of increasing competition from the established automakers. It predicts sales growth of 50% or more this year and beyond. And the stock has largely defied the sector’s declines, up 51% so far this year.

While that’s only a fraction of the 743% rise in Tesla stock in 2020, it’s better than most established automakers other than Ford, whose shares are up 131% this year after seeing significant gains in their own EVs – Have made efforts.

The two worst-hit EV stocks – Nikola and Lordstown Motors – lost 27% and 27% respectively by the close of trading on Thursday.

But earlier in the week Nikola agreed to pay a $ 125 million fine to settle charges that Trevor Milton, its founder and former CEO, misled investors. Milton was forced to step down in September 2020 after questions about the company’s claims first emerged. He is now threatened with federal criminal proceedings. He has pleaded not guilty in the case.

Lordstown’s founder and CEO was also forced to step down, and the company has expressed doubts that it can stay in business.

The difficulty these companies have struggled to deliver on their early promises means companies like Lucid and Rivian will have to do more to prove themselves before they are fully embraced by investors, Ives said.

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The next Tesla is hard to find

WVW Worx

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The next Tesla is hard to find

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