What happened
Shares of electric vehicle (EV) makers Nikola Corporation (NKLA +0.00%) and Lordstown Motors (RIDE +0.88%), as well as fuel cell electric vehicle company Hyzon Motors (HYZN +0.00%), fell earlier in the day today, likely as investors processed the latest news from General Motors and Tesla.
Yesterday, Tesla reported solid first-quarter deliveries, but they came as the company cut its vehicle prices. Then today, GM announced that thousands of its salaried workers accepted the company's buyout offers. Those two bits of negative automotive industry news weighed on Nikola, Lordstown, and Hyzon.
But Hyzon's stock later rebounded, likely on news of the company receiving an extension from the Nasdaq Stock Market that will allow its shares to continue to be listed on the exchange. Nikola was down by 5.8%, Lordstown dropped 4.9%, and Hyzon -- which was down by 1% earlier in the day -- had gained 1.9% as of 2:42 p.m. ET.
Image source: Getty Images.
So what
GM said today that 5,000 of its white-collar workers would take buyouts after the company offered the option to its employees last month. GM's management is trying to cut $2 billion from the company's expenses by 2024.
While the buyouts weren't a surprise, some auto industry investors may see GM's current cutback on expenses as a negative sign for the rest of the industry, especially as GM gears up to transition much of its vehicle lineup to EVs.
Nikola, Lordstown, and Hyzon investors were also likely keeping a close eye on Tesla's latest vehicle delivery news. The company's deliveries jumped 36% in the first quarter to 422,875 but the impressive gains also came as Tesla cut prices across the U.S., Europe, and China.
OTC: NKLA
Key Data Points
Tesla investors were disappointed with those results as some worried that additional price cuts could be on the way. Nikola, Lordstown, and Hyzon investors may be concerned about this because these smaller EV start-ups don't have the same margins or high vehicle production numbers to absorb price cuts as well as Tesla can.
Hyzon Motors' stock rebounded later in the day, likely as investors processed news from yesterday that the company can continue to be listed on the Nasdaq exchange. Hyzon is facing a potential delisting for failing to file certain reports. The company now has until May 15 to file all the necessary delinquent reports.
Now what
There's no getting around the fact that this is a very difficult time for small companies to carve out their niche in the EV space. Rising interest rates make it more expensive for smaller companies to borrow money and high inflation is putting pressure on material costs and customers' willingness to make expensive vehicle purchases.
Additionally, there is rising competition in the EV industry as legacy automakers are already moving production to EVs and introducing new electric-powered models.
And when you add to all of that the fact that some investors are still concerned about a potential recession, it means that Nikola, Lordstown, and Hyzon investors may want to prepare for more volatility from these stocks in the coming months.
