The electric vehicle (EV) industry continued to get bad news on Wednesday, this time led by Polestar Automotive (PSNY +19.86%) CEO Thomas Ingenlath stepping down from the company. Michael Lohscheller was named CEO, but he won't be able to fix the company's problems very quickly or change industry dynamics.
Polestar's shares fell as much as 18.6% in trading today. Xpeng (XPEV 1.15%) was down 10.5% and Lucid Automotive (LCID 5.48%) fell 6.8%. At the close of trading, the three stocks were down 16.4%, 9%, and 4.1% respectively.
NASDAQ: PSNY
Key Data Points
Polestar's leadership change
Lohscheller comes to Polestar with plenty of auto industry experience, but not a lot of success. He was previously CEO of Opel, VinFast, and Nikola -- not exactly the leading giants of the industry.
He also takes over as global demand growth for electric vehicles is coming down and competition is getting fierce. Not only are the EV-focused companies facing losses, which you can see below, but the drop in stock prices makes it more difficult to raise capital to fund growth aspirations.
PSNY Revenue (TTM) data by YCharts
Canada's tariffs on Chinese EVs
Xpeng was hurt today by the news that Canada will add a 100% tariff to Chinese-made electric vehicles. The company will likely face similar pressures in the U.S. and Europe, potentially closing off more of the market just as Chinese competitors are ramping up to a global scale.
The market doesn't see Lucid's potential
Yesterday, Lucid Senior Vice President of Design and Brand Derek Jenkins said in an interview with CarBuzz that the company is working on three more affordable vehicles that could begin production late in 2026.
Like Polestar, the problem is timing and the capital needed to get to the vision. Lucid hasn't proven the ability to make a profit on its existing lineup and will burn billions before launching a more expanded and low-cost lineup. It's not clear the company will have the financial ability to get there.
The uncertain EV market
What all of these companies are dealing with is an uncertain future for the EV market. For multiple EV start-ups to survive and live up to their valuations the industry needs to rapidly shift to electric vehicles and somehow be significantly more profitable than legacy automakers. It's not clear either of those things will happen.
The longer it takes to get to profitability, the more investors question the EV market and the more stocks fall. Falling stock prices make it harder to raise funds through equity and can even make debt more costly. And with everyone wanting to expand, that means capital expenditures at a time when capital is harder to come by.
I don't think more than a few electric vehicle companies will survive over the next decade and many companies will either go bankrupt or be forced to sell to larger rivals for a fraction of what they're currently worth. Polestar may already be heading in that direction.
Xpeng and Lucid have more time to prove themselves, but it's an uphill battle to add any value in the EV industry today.
