The EV stock bubble has burst, and prices are tanking in a historic sell-off.
Formerly high-flying stocks like Rivian, Lucid, and Xpeng are down 80% to 90% from their peaks.
The industry is being slammed by higher borrowing costs, slow growth in Europe, and expiring subsidies.
The electric-vehicle stock bubble has burst, and prices are tanking in a historic sell-off.
Formerly high-flying stocks like Rivian, Lucid, and Xpeng are down 80% to 90% from their peaks, Bloomberg first highlighted on Tuesday. Even EV king Tesla, recently dethroned by BYD as the world's largest EV maker, is down 22% over the past month.
Further, EV stock indexes are trailing other carmakers by anywhere from 50% to 80%, Bloomberg data shows.
The industry is feeling headwinds in the form of higher interest rates (which make borrowing more expensive) and lackluster economic growth in Europe. Demand has also taken a hit with expiring EV subsidies in countries like Germany.
That sell-off marks a sharp turnaround from the pandemic, when there was hype galore for EV firms, multiple of which went public with valuations exceeding $100 billion. Lucid tested public markets in July 2021. Then Rivian IPOed in November that year, surpassing Volkswagen's market cap for a fleeting moment.
Today, almost all EV stocks that went public or merged with SPACs in the last 5 years are trading at lower than their debut price — many significantly so.
Even industry titans aren't immune from the rout. Tesla's stock took a big hit last week after it missed fourth-quarter estimates, signaled weak sales growth ahead, and turned in a "train wreck" of an earnings call. Even shares for industry darling BYD tumbled on Tuesday after the company undershot earning estimates.
This year has continued to pose challenges to the industry. From a potential rollback of EV incentives under a Trump presidency, to slowing EV exports out of China, to low favorability among fleet buyers — the outlook isn't so sunny. EV sales are also experiencing an overall decline.
And the bad news keeps coming. This week, Renault canceled the IPO for its software unit, Ampere. Bloomberg also reported Volkswagen AG postponed its plans to seek outside investors for its battery company, PowerCo.
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