Why major EV stocks fell despite a rising market in early 2024

The general trend for EV stocks in Q1 2024 was markedly bearish, with most stocks witnessing substantial declines. Here’s a summary of the performance of ten prominent EV companies:

• Nikola: +24.9%
• Li Auto: -12.5%
• Tesla: -29.2%
• VinFast: -29.5%
• Polestar: -30.3%
• Lucid: -31.3%
• XPeng: -45.3%
• Nio: -46.6%
• Rivian: -48.1%
• Fisker: -98.7%

This downturn can be attributed to slowing demand in major markets such as the US and China, which is particularly problematic for startups like Rivian and Lucid that have yet to turn profitable.

Nikola and Fisker stand out from the group but for very different reasons. Nikola, with an impressive gain of 24.9%, has shown positive momentum in its hydrogen fuel cell truck business. This boost is likely linked to its recent developments, including the inauguration of its first hydrogen refuelling station in Southern California, with plans for five more.

Conversely, Fisker’s staggering loss of 98.7% paints a grim picture. The company has been delisted from the NYSE following massive reservation cancellations for its “Ocean” electric SUV, now under scrutiny for door malfunctions. This downturn is a significant hit for a company that had rebranded and attempted to reinvent itself after the bankruptcy of Fisker Automotive in 2013.

The decline in EV stock is indicative of a larger trend where investors might be losing confidence in pure EVs, opting instead for hybrids and other alternatives. Legacy automakers like Ford are expanding their hybrid vehicle production, which could be drawing investors away from pure EV plays.

Despite the overall bleak performance in the EV sector, Tesla has reclaimed its title as the world’s best-selling EV company, outselling China’s BYD by 87,000 units in the first quarter alone.

The first quarter of 2024 has been challenging for the EV market, reflecting broader economic sentiments and a strategic pivot towards more diverse electric and hybrid models by established automakers. While companies like Nikola are finding niche success, the struggles faced by companies like Fisker highlight the volatility and challenges within the pure-play EV sector.

Investors and market analysts will need to watch closely how these trends develop, especially in light of changing consumer preferences and technological advancements in the automotive industry.

Source: Visual Capitalist