What happened
U.S.-based electric vehicle stocks were rising higher in early trading today. The moves were initially being led by Tesla (TSLA -1.06%), Rivian Automotive (RIVN 0.34%), and Lucid Group (LCID 0.83%). In early trading, the three stocks all jumped by about 5%. At 11:33 a.m. ET, however, those gains had slipped some. Tesla and Rivian were still up 2.7%, but Lucid shares were up only 0.12%.
So what
Tesla investors have been balancing a mix of positive and negative news in recent days. The company's long-term prospects continued to improve as it celebrated the opening of its fourth manufacturing plant in Texas last week. But new COVID-19 restrictions in China have had a short-term impact on production out of its Shanghai plant.
Image source: Tesla.
Competition is also ramping up for Tesla. Lucid announced today that it would begin deliveries of a new performance model of its luxury Air Grand Touring sedan in June 2022. That model will compete directly with Tesla's Model S Plaid. The Model S Plaid accelerates from zero to 60 mph in about two seconds and has peak power of 1,020 horsepower (hp). Lucid's Grand Touring Performance model achieves that speed in 2.6 seconds and delivers 1,050 hp.
Now what
Investors may be looking at the competition as a growing long-term challenge for Tesla, but they are also considering the effects of a suspension of production in China as Shanghai tries to stem the spread of COVID-19. The Chinese city that is home to Tesla's manufacturing plant continues to have lockdown measures in place after cases hit a new record over the weekend.
CNBC reports that the U.S. has ordered all non-emergency government staffers to leave Shanghai. The lockdowns are already having an impact on auto sales, according to The Wall Street Journal, as overall car sales in China dropped 10.5% in March. Several industrial cities have been hit by restrictions slowing production of vehicles and parts.
Investors that follow the electric vehicle sector are likely struggling to adjust quarterly delivery numbers for Tesla as its new German and Texas facilities begin production at the same time that Shanghai is facing delays.
Investors are also struggling to decide what to make of dueling analyst calls on Rivian's stock. Just one day after Royal Bank of Canada (RBC) analyst Joseph Spak assigned the stock a price target of $100 per share with the equivalent of a buy rating, analysts at Exane BNP Paribas told investors to sell its shares. That global institutional bank believes shares are worth only $35, representing a drop of 11.4% from Monday's closing price. Today's up-and-down trading in the stocks is reflecting all these conflicting signals.
