As stocks continued to plummet on Tuesday, one specific sector saw especially large losses across the board. Electric vehicle companies ended the day on a steep loss after a short seller published a scathing critique regarding one company. According to Blue Orca Capital, one specific EV company, called Hyzon Motors (NASDAQ: HYZN), is operating largely on a fraudulent basis, an accusation strong enough to send share prices plummeting.
Blue Orca Capital said that many big orders for Hyzon vehicles aren’t even real. In particular, the report highlighted a case where Hyzon signed a deal for over 500 trucks. However, records from the Chinese government showed that the buyer for this major deal was incorporated just a couple of days before the deal was announced.
Hyzon is trying to sell hydrogen fuel cells that would power heavy-duty trucks and commercial vehicles. It also has its own fuel-cell technology that’s been used in the past by other companies, first developed by its parent corporation, HongYun Automotive. While there is a legitimate product or service, at least at first glance, demand seems to be highly exaggerated, if not outright falsified.
“On September 9, 2021, Hyzon’s stock shot [after] a pre-market announcement that it secured a major new deal for 500 trucks. Yet Chinese government records show that [the buyer] was established only three days before Hyzon announced the deal and has no paid-in capital,” read the report from Blue Orca Capital. “The core of our short thesis is…there is quite a number of misleading customer contracts [and] misleading customer announcements.”
Ever since the first big frenzy in the electric vehicle industry took place, we’ve seen no shortage of EV companies pop up out of nowhere. Since then, many have turned out to be borderline frauds, with numerous short-seller reports targeting one EV stock after another. This includes companies like Nikola (NASDAQ: NIKOLA) and Lordstown Motors (NASDAQ: RIDE). Since then, investors have remained quite paranoid about other EV companies, especially those based in China, of potentially being fraudulent.
The news was enough to send Hyzon’s stock down 20.5%. The rest of the EV industry fared a little better, with most companies reporting sizable losses on Tuesday as well, thanks to this catalyst. This includes companies like AEye (NASDAQ: LIDR), Volta (NASDAQ: VLTA), Romeo Power (NASDAQ: RMO), and Nio (NASDAQ: NIO). All of these companies were down between 7.0-15.9% over the course of the day.
This entire fiasco with Hyzon and Blue Orca Capital wasn’t the only piece of recent news to affect the EV market, however. Before the trading day started, Lordstown Motors was downgraded to a sell by Goldman Sachs. While it isn’t a surprising development, given the scandals Lordstown has already had to deal with, the news isn’t helping the rest of the EV industry.
The only electric vehicle stock that did well was Tesla (NASDAQ: TSLA), whose stock jumped a bit as analysts predict the company will report the single, best quarter in its history for Q4 2021.
Hyzon Motors Company Profile
Hyzon Motors Inc operates as a hydrogen mobility company. The firm is a supplier of zero-emissions hydrogen fuel cell-powered commercial vehicles, including medium and heavy-duty trucks, buses, and coaches. – Warrior Trading News
