Electric vehicle (EV) stocks were falling broadly in January as a number of different news items weighed on the sector.
Those included fears that interest rates wouldn't fall as fast as investors were expecting this year, a weak report from Tesla as well as price cuts from the EV leader, and continuing evidence of slowing demand growth for EVs.
Additionally, stocks like ChargePoint (CHPT 0.79%), Lucid Group (LCID 0.41%), and Fisker (FSRN -12.70%) offered company-specific news that showed ongoing weakness. According to data from S&P Global Market Intelligence, they fell 18.8%, 20.2%, and 54.1%, respectively.
Other stocks in the sector, including Tesla and Rivian, also fell sharply. The chart below shows how ChargePoint, Lucid, and Fisker all performed last month.
EVs are still sputtering
Among the news pushing EV stocks down were changing expectations that interest rates wouldn't fall as fast as hoped, which tends to make unprofitable stocks like most of the EV industry. Additionally, media reports circulated that some EVs were unable to start in the cold in January, adding to concerns about a wholesale transition to EVs. Tesla, considered an industry bellwether, also disappointed with its fourth-quarter earnings report and gave modest production-growth guidance for the year, prompting questions about demand in the industry. It also slashed prices again, putting more pressure on the industry. Overall, skepticism seemed to build that these three EV companies could reach a profit at some point in the foreseeable future.
Fisker was the worst-performing stock of the three as investors feared that the company was running out of cash.
On Jan. 4, the company said it would change its sales model, moving from a direct-to-consumer model that Tesla uses to a more typical dealership model. That helped precipitate a sell-off in the stock. On Jan. 17, Fisker was downgraded by TD Cowen from outperform to market perform with a price target of just $1 due to delivery challenges and a change in its distribution model.
That same day, the National Highway Transportation Safety Authority said it was investigating Fisker over braking-loss complaints in the Ocean SUV. The stock briefly rebounded after the company gave an update, saying that it expected vehicles would be available in dealer showrooms by February, and it expected to sell through its 2023 inventory by the end of Q1.
ChargePoint, a maker of EV stations, is also seeing its cash balance dwindle. Last month, ChargePoint said it would lay off 12% of its global workforce, leading to $14 million in restructuring charges and around $33 million in annual operational savings.
ChargePoint shares fell 10% on that news, and concerns about weakening demand for EVs and interest rates remaining elevated seemed to weigh on the stock as the company needs EV sales growth to support demand for its charging stations. It's also competing with Tesla's Superchargers, narrowing its path to profitability.
Finally, Lucid also trended lower with the industry last month. The only major piece of company-specific news out on the stock seemed to be its Q4 delivery update, which sent the stock down 8% on Jan 12. Lucid said it produced 2,391 vehicles in Q4 and delivered 1,734 vehicles in the period.
For the full year, it produced 8,428 vehicles and delivered 6,001 vehicles, which was short of its original goal of 10,000 vehicles produced.
The gap between production and deliveries has led to speculation that demand for its vehicles isn't keeping up with supply.
Three Lucid vehicles. Image source: Lucid.
What's next for the EV sector
The ongoing price cuts from Tesla and other EV makers indicate that 2024 is shaping up to be another challenging year for electric vehicle makers and EV charging stocks like ChargePoint.
Though share prices have come down sharply for all these stocks, their valuations still remain high as they are losing money and still a long way from profitability.
In other words, further price competition for EVs and weakening demand growth seem likely to weigh on these stocks this year.
