Monday was a surprisingly bad day for electric vehicle companies, especially considering how well EV stocks did back in 2020. For most of last year, the entire EV sector entered a period of frantic hyperactivity, with traders jumping on any promising start-up looking to create some kind of electric vehicle. Even non-EV stocks that had even the vaguest connection to the industry saw significant gains in 2020. However, it seems like this is changing. Shares of Tesla (NYSE: TSLA) are falling today, with the rest of the EV sector following in suit.
Tesla is down around 8.6% so far on the day. Other big EV names, such as GreenPower Motor (NASDAQ: GP), Lordstown Motors (NASDAQ: RIDE), and XPeng (NYSE: XPEV) are all down 10.5%, 8.2%, and 6.9%, respectively. While there isn’t any big catalyst or piece of news to justify this reversal, EV stocks, in general, have been falling out of favor among investors. With tech stocks largely underperforming so far this earnings season in comparison to more traditional value stocks, investors are starting to think that EV companies are a bit overpriced.
Long a long-term perspective, general optimism surrounding EV’s as a general trend remains quite high, with some analysts expecting the total EV global market to hit around $3 trillion in the future. However, looking at it from a more short-to-mid-term lens, it seems like investors are tired of spending an arm and an egg to buy EV stocks at the moment.
Even over the past couple of months, EV stocks have been losing their appeal. Tesla has fallen around 21% from its January highs. Considering Tesla is worth almost all other EV stocks put together, a major decline of its stock usually leads to similar declines in other, smaller companies. That’s exactly what happened on Monday. Xpeng, Li Auto (NASDAQ: LI), and NIO (NASDAQ: NIO) are all down around 8% this morning, as well as being down 20% since January – mimicking Tesla’s decline.
Although this is happening, it doesn’t seem like EV IPOs are slowing down at all. One particular company, Lucid, confirmed that it would be going public soon via a SPAC deal valued at approximately $24 billion. The new company would trade on the NYSE, directly competing against Tesla on the same exchange, some time in the second quarter.
While new EV companies are still likely to draw up plenty of investor excitement, it wouldn’t be surprising if the markets start to take a more realistic appraisal of these companies. With most EV start-ups failing to report any revenue at all as of yet, analysts ask why do these same companies deserve valuations in the tens of billions with nothing to show for it.
Tesla Company Profile
Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. It sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. The Tesla Roadster debuted in 2008, Model S in 2012, Model X in 2015, Model 3 in 2017, and Model Y in 2020. Global deliveries in 2019 were 367,656 units. Tesla went public in 2010 and employs about 50,000 people. – Warrior Trading News