What happened 

Shares of EV stocks traded sharply higher this week as some relatively good news came out of the industry. Earnings from Tesla (TSLA -0.24%) certainly helped, but rumors of a buyout did as well. 

The biggest mover was Lucid (LCID 0.20%), which is up 128% since last Friday's close as of 2 p.m. ET, Rivian (RIVN -0.51%) is up 30.8% in that time, and EVgo (EVGO 1.14%) is up 17.5%, according to S&P Global Market Intelligence. 

So what 

Today's news impacting Lucid has been the most impactful. Rumors were up that Saudi Arabia's sovereign wealth fund called Public Investment Fund is interested in buying Lucid. The company is trying to ramp up its electric vehicles in the face of higher interest rates and a slower economy, which will make it hard to make money. That's why the stock is falling, so a buyout may be the best way out, and that's why the stock then popped. 

The scale of today's increase is what's truly shocking. It's likely that a rapid move higher caused short positions to be liquidated, pushing the stock even higher. It's like a flywheel effect, but eventually, that stopped, and the stock crashed 30% in just a few minutes. Don't look for this move to be sustainable at all. 

Tesla's earnings on Wednesday after the market closed were a little more telling about the state of the industry. The company reported great growth numbers but falling margins. Investors shook off the margin news, and Lucid and Rivian were moving higher, as it appears demand won't be a problem for now. 

But Elon Musk did say that pricing really matters to demand, and long term, that's the challenge for the company and the industry. Can Tesla, Rivian, and Lucid all grow and deliver high margins? History says no, but EV investors think the future still looks bright. 

All this demand could mean an increase in demand for electric chargers, which is why EVgo is up this week. But again, the company hasn't proven it can make money. 

Now what 

Electric vehicle companies are still in growth mode, but there have started to be some cracks in their financial metrics. Pricing has gotten more important, and margins are coming down. Lucid was the first to appear to be in financial trouble, but it may be getting a lifeline if it's bought out. 

I'll be watching margins and pricing for Rivian closely. Tesla cut prices earlier this month, and it's possible that Rivian and Lucid are forced to follow that lead. Both companies have prices well over the competition, and that could impact demand. Earnings won't be out for a few weeks, but both companies have reservation backlog, which I'll be watching closely. 

As good as the week was for EV stocks, there were signs that growth and profitability may not last forever. It may be time to take some chips off the table if you're invested in these companies. Competition is going to increase in 2023, and with interest rates on the rise and a recession possible, these stocks may not deserve their premium valuations.