What happened
Thursday's trading session has been a lackluster one for all investors, with the S&P 500 down 0.75% as of 3:28 p.m. ET. It's proving to be a particularly rough day for shareholders of electric vehicle (EV) makers Canoo (GOEV -24.57%), Fisker (FSRN), and Lucid Group (LCID 1.57%) though, with those stocks down 6.9%, 3.9%, and 4.9% (respectively) in the wake of pushback against President Joe Biden's pro-EV agenda combined with the prospect of a rekindled trade war with China and disappointing domestic demand for electric vehicles.
So what
Don't look for company-specific reasons these three stocks are more than a little in the red today. You won't find them. Rather, take a step back and look at the rapidly changing bigger picture.
One of these red flags now working against the three companies is the prospect of renewed trade tensions with China. Although the announcement was made on Monday, the Fourth of July holiday obscured China's Commerce Ministry's recent decision to restrict exports of gallium and germanium. While added difficulty in sourcing the two metals hurts the chipmaking industry the most, electric vehicle makers are also adversely impacted.
More concerning, however, is that the decision marks the beginning of a wave of new curbs -- all meant to send a political message -- on much-needed exports from China.
There's also the not-so-small matter of possibly softening demand for EVs, at least in the United States. All told, Ford Motor Company sold 2.8% fewer electric vehicles in the second quarter of this year than it did in the same quarter a year ago. In fact, its all-electric Lightning pickup truck was the only EV it makes that saw domestic unit sales growth during Q2. General Motors' second-quarter sales of electric vehicles in the United States were also concerning, falling from Q1's count of more than 20,000 to only 15,652 last quarter.
Although these numbers in and of themselves don't directly spell doom for Canoo, Lucid, and Fisker, they do raise legitimate questions of future EV marketability.
Perhaps Thursday's most problematic stumbling block for these three electric vehicle companies, however, has been put in place by a state-based coalition. Attorneys general from 25 states have submitted a written warning to the Environmental Protection Agency that its newly proposed emissions-reduction rules (drafted in accordance with President Biden's clean vehicle agenda) are "unlawful, unwise, and unsustainable."
It remains to be seen how much -- if any -- legal traction this pushback might get. The threat is seemingly significant enough to spook several EV company shareholders today, however.
Now what
Collectively, the headlines are admittedly unsettling. Whereas Tesla, Ford, and GM are big enough, well funded enough, and/or diversified enough to push through such challenges, smaller and purer EV plays like Fisker, Lucid, and Canoo aren't on such firm footing. Thursday's pronounced weakness from these three stocks makes enough sense.
Broadly speaking, though, the headlines' underpinnings are less problematic than they seem on the surface.
Materials shortages are nothing new. Neither are threats of regulatory changes. For that matter, even the sales slowdown seen over the course of the past few weeks isn't enough to say the electric vehicle business's best days are behind it. It's all just noise rooted in recent, passing turbulence.
That doesn't inherently mean any of these stocks are a buy, nor does it mean they aren't. It simply means of you liked any of these three stocks prior to today, here's an opportunity to jump in at an even better price.