Electric vehicle (EV) stocks are taking a hit Tuesday, with widely followed names such as Tesla (TSLA -1.16%), electric truck start-up Rivian (RIVN 5.35%), and Chinese manufacturer Nio (NIO 0.72%) leading the way downward. Some of their pain comes from self-inflicted wounds, while some is tied to the generally pessimistic market sentiment as geopolitical tensions rise. As of 2:17 p.m. ET, shares of Tesla, Rivian, and Nio were down 5.7%, 9.2%, and 7%, respectively.
Tesla shares are down by about 29% from where they opened on the first trading day of 2022. Some of that decline can certainly be connected to an overall market shift away from fast-growing tech stocks. But some of it can also be traced to company-specific issues. For instance, CEO Elon Musk is continuing to spar with regulators, including the Securities and Exchange Commission (SEC).
Musk and his attorneys most recently accused the SEC of publicly leaking information from a federal probe into Musk and Tesla as a form of retaliation. The company is also still enduring delays in getting full regulatory approval to begin operations at its new German gigafactory near Berlin. Add in the geopolitical uncertainty related to Russian aggression against Ukraine, and you have a recipe for stock declines.
Musk has been public about his criticisms of the SEC since 2018, when he posted a message on social media that Tesla had secured funding to go private. A subsequent settlement reached in 2019 called for his social media communications to be monitored by company lawyers. On Monday, as reported by CNBC, attorney Alex Spiro, representing Musk and Tesla, issued a letter to a federal court stating, "It has become clearer and clearer that the Commission [SEC] is out to retaliate against my clients for exercising their First Amendment rights."
Also on Monday, The Wall Street Journal printed an article highlighting the regulatory approval issues and public opposition that are hindering the planned opening of Tesla's German factory.
Those all sound like highly Tesla-specific issues, so they wouldn't explain why other electric car companies' stocks are down Tuesday. But Nio is closely tied to China's government, as its manufacturing partnership is with a state-owned company. And Nio is also just beginning to expand into Europe. The Chinese, U.S., and European markets will all be impacted in some ways if the Russia-Ukraine conflict escalates further.
Investors are generally adopting a "risk-off" stance as that situation continues to evolve. All of these EV makers are growth stocks carrying rich and speculative valuations. Any turbulence that could slow them along their paths to living up to those valuations will tend to reset investors' expectations, and with them, share prices. That seems to be what's occurring with Tesla, Rivian, and Nio on Tuesday.