What happened
Some electric vehicle (EV) stocks were tumbling today, including Tesla (TSLA -1.86%), Lucid Group (LCID -0.61%), and Nio (NIO -4.75%), likely in response to General Motors reporting second-quarter results that were worse than expected.
The company's earnings missed analysts' consensus estimate and GM said it was unable to ship 90,000 vehicles because of supply shortages.
EV investors took GM's second-quarter results as an indicator of problems within the broader automotive industry today, causing Tesla to fall 3.7%, Lucid to slip 3.4%, and Nio to tumble 1.2% as of 3 p.m. ET.
So what
GM's non-GAAP earnings per share of $1.14 were down from earnings of $1.97 in the year-ago quarter and missed Wall Street's average estimate of $1.20 per share. The automaker's second-quarter sales of $35.76 billion increased 4.6% year over year and outpaced analysts' consensus estimate of $33.58 billion.
Image source: Getty Images.
One auto company missing analysts' average earnings estimate doesn't always cause other car stocks to fall, but in this case, investors were likely honing in on two things. First, GM is still suffering from supply chain issues. GM said that an inventory of 90,000 vehicles piled up in the quarter because supply shortages left the vehicles unfinished.
Tesla, Lucid, and Nio investors likely took this as an indication that the EV automakers aren't out of the woods yet either when it comes to supply chain constraints.
And second, GM also said on its second-quarter earnings call it had "binding agreements" for all battery raw materials it needs to produce 1 million EVs a year by 2025. Tesla, Lucid, and Nio investors may have viewed these agreements as further proof that EV competition is heating up.
GM's CEO Mary Barra said on the call that "we are planning significant volume growth to meet our Investor Day commitment of $90 billion in annual EV revenue by 2030."
Now what
EV investors have been a bit on edge as inflation in the U.S. is still at a 40-year high and as the Federal Reserve takes aggressive action to bring it back down. The Fed is expected to raise rates again tomorrow, with investors expecting a 75 basis point hike.
Some investors fear an economic slowdown is on the horizon, and comments from GM about supply chain disruptions are causing EV investors to worry that automakers are dealing with rising costs, supply chain issues, and a potential slowdown all at the same time.
With Tesla, Lucid, and Nio focused on ramping up EV production at a time when higher costs and component shortages continue to plague the automotive industry, it's no surprise that these EV stocks were sliding today following GM's latest financial results.
