What happened
Several U.S.-based electric vehicle (EV) stocks were sliding Tuesday morning as investors balance increasing competition against growth initiatives. Rivian Automotive (RIVN -2.21%), Lucid Group (LCID 1.19%), and specialty EV maker Canoo (GOEV -8.52%) all sank between about 7% and 8% in early trading.
As of 11:30 a.m. ET, the stocks were still trading lower as follows:
- Rivian by 5.1%
- Lucid by 5.5%
- Canoo by 4.3%
So what
The moves came as a mixed bag of news affected the sector. Rivian confirmed it was expanding its product line to include electric bikes, reports Bloomberg. But investors are more focused on how fast the company is expanding its truck and SUV production volume and how the competitive landscape is evolving. Rivian and Lucid both disappointed investors with lowered production goals in 2022, and sector leader Tesla just raised prices for its Model Y over the weekend, again showing its dominant position.
Now what
The Wall Street Journal reported that Tesla's price boost was likely a reaction to changes revealed by the Treasury Department Friday to increase the number of domestic EVs that will be eligible for $7,500 tax credits built into the Inflation Reduction Act. The government clarified that vehicles including Tesla's Model Y and Ford Motor Company's Mustang Mach-E would be considered SUVs rather than crossovers and will now be included in the $80,000 price maximum for the subsidy. Buyers of those vehicles would have to have paid less than $55,000 to qualify for the credits when they were considered crossover sedans.
Image source: Rivian Automotive.
That's not good news for Rivian or Lucid, which had average vehicle selling prices that won't offer customers that added price incentive. Lucid's luxury sedans start at about $80,000 and Rivian's vehicles had an average selling price of $81,400 in the third quarter.
Rivian CEO RJ Scaringe reportedly told Rivian employees on Friday the company would expansion into electric bikes, but the company has also been cutting staff to trim costs. It was unclear if the venture into bikes meant electric motorcycles or bicycles, but either would fit with the outdoor adventure brand the company has cultivated. Investors, however, don't seem keem on the company adding new product lines when the success of its core electric vehicle business remains unclear.
The future of Canoo's business is even more precarious. Yesterday that company said it was raising more than $50 million in a new share offering that significantly dilutes existing shareholders. But Canoo needs that capital to fund the initial production of its multipurpose EVs.
Investors are interpreting Tesla's latest price increase as a sign of its strength, and an even higher burden for these start-ups to overcome. Investors are selling today as each company continues to lose money while working to increase production and build customer bases.
