Wall Street May be Growing Wary of EV Stocks

Whether it’s investors looking to take profits or worrying the Federal Reserve might be ready to start raising interest rates, battery-car stocks have reason to be worried as their share prices begin the week on a sharp slide.

Tesla Fremont California plant exterior
Tesla’s stock price has taken a hit in recent weeks, although have yo-yoed quite a bit in recent months.

Tesla, the 800-pound gorilla of BEV manufacturers, saw its shares tumble by more than 5% as of midday Monday, at one point sliding below its benchmark market capitalization of $1 trillion. And other EV stocks weren’t doing any better.

EV stocks aren’t the only ones to feel the hit, reported the Wall Street Journal, noting that “heavyweight technology stocks (overall) dropped on expectations of a high interest rate environment” as the Fed signals it may be ready to raise interest rates.

Tesla tumbles

Tesla shares have yo-yoed for months, struggling to regain the carmaker’s 52-week high of $1,243.99. This month’s — Jan. 3 — peak came within striking distance as the automaker reported all-time record deliveries of more than 960,000 vehicles in 2021. But after topping out that day at $1,199.78, Tesla has been on the slide.

By midday Monday, Tesla shares lost a hefty 14% during the prior five days of trading. Monday brought shareholders even more turbulence, dipping as low as $1,023.21 before rebounding slightly. But barring a late-day recovery, the day will close with TSLA shares down yet again.

Tesla 6M stock chart 1-10-22

Tesla’s record sales numbers briefly boosted the outlook for its competitors, as well. Investors have been hoping that 2022 really will bring the long-awaited tipping point for BEV sales — and startups like Lucid, Rivian and Fisker will begin to emulate Tesla’s success.

Others follow

But such optimism seems to have been squashed. Or, at the least, investors are questioning just how much opportunity there is for EV stocks.

Rivian 6M stock chart 1-10-22

Fisker lost 15.51% of its value during the past month, and 9.52% in just the last five days. Monday’s brought another 7% decline, as of the lunch hour, with even less of a rebound visible than Tesla has shown today.

Rivian has been hit even harder. Its shares are off 29.45% during the past month and 21.51% for the past five days. Its decline has continued Monday, with a midday slump of more than 6.2 percent.

Rivian has faced a series of complications, touched off by an end-of-year advisory CEO R.J. Scaringe sent to customers. He warned that buyers looking for vehicles with the brand’s longest-range batteries may have to sit tight until 2023.

An exception? Not anymore

Lucid 6M stock chart 1-10-22

Lucid seemed to be the exception, up 10.75% for the month and 2.18% for the past five days. But it was also hammered on Monday, shares seeming to level off at a nearly 0.5% decline for the day.

Other clean car startups, such as Nikola and Lordstown Motors, haven’t fared any better.

Nor have companies servicing the EV market. Chargepoint, one of the largest suppliers of charging gear and charging stations, took a tumble on Monday, as well.

Oh, the irony

The irony is that there are numerous signs that this will, indeed, be a good year for sales of battery-electric vehicles, on top of the more than 100% increase in demand in 2021.

But a move by the Federal Reserve to raise rates — long anticipated, but nonetheless feared — has investors worried. The Dow Jones was down by about 1% in early afternoon trading, and other key indices were off, especially the tech-oriented ones.

Nascent BEV makers might feel a sense of misery-loves-company, however. Traditional automakers were also taking a hit as Monday trading dragged on.