Shares of pretty much every electric vehicle (EV) company competing with Tesla (TSLA -1.59%) for sales dropped this morning. As of 11:05 a.m. ET, Rivian (RIVN 0.08%) shares are shedding 2.6%, Fisker (FSRN) is off 3%, and Lucid Group (LCID -0.47%) is a 4% loser.
And it's mostly because of what Tesla did on Friday.
What did Tesla do this time?
For years, investors (and car shoppers) have anticipated Tesla's introduction of a true electric car for the mass market. Called the "Model Q" and more often the "Model 2," this is supposed to be a $25,000 subcompact car that will be revealed perhaps in 2024 and go on sale in 2025.
Now it sounds as if Tesla is getting ready to build it.
As Reuters reported early this morning, Tesla CEO Elon Musk visited his Tesla factory in Germany on Friday and informed staff there that he plans to build a 25,000-euro EV at the Gruenheide plant (which currently specializes in building Model Ys for the European market). Reuters further noted that the plan in question was last reported to be building Model Ys at a pace of 250,000 cars per year -- but that Tesla plans to expand that production rate to 1 million cars per year.
And a car going for 25,000 euros (which is about $26,800) sounds an awful lot like the rumored $25,000 Model 2.
Why Rivian, Fisker, and Lucid investors should worry
And if Tesla is about to start selling a $25,000 (or even $26,800) EV, then that's going to make it significantly tougher for Rivian to sell its EVs, which currently retail for more than $74,000 in the cheapest configuration (the R1T electric truck). Lucid, too, may struggle to sell Lucid Air electric luxury sedans at prices that range as high as $115,000.
For that matter, $25,000 (or $26,800) will even underprice Fisker's newest Ocean EV model ($37,500) as well as the promised Fisker Pear ($29,900).
Indeed, on Friday -- the same day Musk made his announcement in Germany -- Reuters reported that Lucid had just announced limited-time price cuts of between $7,500 and $10,000 on several models. Even after the cut, however, the currently cheapest Lucid model costs just under $75,000, or about three times the rumored price of Tesla's Model 2.
Admittedly, these aren't all apples-to-apples comparisons. The Model 2, after all, won't be a powerful truck like Rivian's R1T -- but rather a tiny subcompact sedan. It won't offer luxury like Lucid's wares, either -- it will probably be more of an electrical econobox. But even so, an electrical econobox that sells for $5,000 less than the cheapest comparable electrical econobox from Fisker, for example, might well be enough to make a lot of car buyers sit on their wallets, waiting for the Model 2 to come out -- and not give their money to Rivian, Lucid, or Fisker in the meantime.
This, in a nutshell, is why investors are probably worrying about Rivian, Lucid, and Fisker stocks today -- and why they're right to worry.