We’re starting to see a shakeout in the electric vehicle (EV) sector as some automakers pull ahead and others fall behind. With established motor vehicle makers such as General Motors (NYSE:GM) and Toyota (NYSE:TM) spending billions to electrify their fleets, it’s getting harder for smaller start-up companies to compete. Plus, some of the bigger players, such as Tesla (NASDAQ:TSLA) have slashed prices to drive sales, serving to undercut competitors and pressure margins. It’s making for an exciting time in the fast-evolving EV industry. The stakes remain high as the transition from gas-powered to electric vehicles accelerates. U.S. investment bank Goldman Sachs recently forecasted that electric vehicles will account for most (61%) of global automotive sales by 2040. As electric vehicle production moves into the fast lane, we look at three sorry EV stocks to sell in April before it’s too late.
EV Stocks to Sell: Rivian Automotive (RIVN)
Sadly, shares of Rivian Automotive (NASDAQ:RIVN) peaked in the weeks immediately after its November 2021 initial public offering (IPO). Since then, RIVN stock has plunged 89%, including a 54% decline in the last six months. In recent weeks, the stock has fallen from one all-time low to another. The company’s market debut was hyped due to several high-profile investments and partnerships with Ford Motor Co. (NYSE:F) and Amazon (NASDAQ:AMZN). But those investments and deals have since hit the skids.
What’s left at Rivian is a company that is hemorrhaging cash. Between 2021 and 2022, Rivian’s operating losses swelled to $6.8 billion from $4.2 billion. While sales have grown to $1.6 billion, they have not been enough to offset the heavy operating losses. Profitability seems a long way away for Rivian, and some analysts are now encouraging the company to sell itself before it ends up in bankruptcy court. Investors would be smart to steer clear of this sorry electric vehicle stock.
Lucid Group (LCID)
Since it went public via a special purpose acquisition company (SPAC) in February 2021, the share price of luxury electric vehicle maker Lucid Group (NASDAQ:LCID) has fallen 85% to now trade at less than $10. The plunge in LCID stock has been particularly sad given the potential the company showed with its flagship luxury sedan, the Lucid Air. This is a vehicle that was named the 2022 MotorTrend Car of the Year and seemed well-positioned to give rival Tesla a run for its money in the U.S. market.
Repeated production delays have undone the promise shown by Lucid Group. The company recently announced that it plans to build 10,000 to 14,000 electric vehicles this year, far less than the consensus forecast of 27,000 among Wall Street analysts who cover the company. Lucid’s main manufacturing plant is currently equipped to build 34,000 vehicles annually, but the company has run into continual problems ramping up its output. Most recently, Lucid announced 1,300 job cuts and warned of future losses. Sell.
Nio (NIO)
Since peaking at just under $62 a share in January 2021, the stock of Chinese electric vehicle maker Nio (NYSE:NIO) has cratered by 84%. The decline in NIO stock has been unrelenting, and the share price is now hovering near a 52-week low and at its lowest level since before the Covid-19 pandemic struck in early 2020. The relentless drop definitely makes Nio a sorry EV stock to sell in April. This is from an automaker that competes aggressively against Tesla in China.
Nio’s problems have been both internal and external. On the external front, the company’s production has been hurt by repeated Covid-19 lockdowns in its home market of China, which has hurt its production and sales. The company has also been hurt by European rival Volkswagen’s (OTCMKTS:VWAGY) filing of a trademark lawsuit against it. Internally, Nio has struggled with accounting problems that have led to an investigation by the U.S. Securities and Exchange Commission (SEC). Add it all up, and NIO stock is one for investors to avoid.