2023 was a rough year for electric vehicle space. Industry leaders like Tesla (NASDAQ:TSLA) have seen their shares dramatically underperform as traders focus on other fields like artificial intelligence and semiconductors.
It’s not just sentiment, though. EV firms struggle to generate much profitability amid intense competition and an unfavorable macroeconomic backdrop.
It seems a period of consolidation is coming for the electric vehicle space as so many firms are competing for market share. And these three EV stocks to sell are on a fragile footing for 2024 and beyond.
EV Stocks to Sell: Rivian Automotive (RIVN)
Rivian Automotive (NASDAQ:RIVN) was once one of the most hyped-up electric vehicle companies out there. With its large operating budget and ties to Amazon (NASDAQ:AMZN), the future seemed bright.
However, that promise hasn’t played out. In fact, Rivian shares plunged to new all-time lows in February following a dismal earnings report. Not only did the company miss estimates, but it also laid off workers and recently announced that it is halting construction of its Georgia manufacturing plant.
Rivian generated a stunning operating loss of $5.7 billion last year. Obviously, these sorts of losses can’t be sustained for long, and it makes sense that Rivian is cutting down its expenditures.
However, it’s hard to square Rivian’s cost-cutting with the firm’s recent new product announcements. Specifically, it is bringing out lower-cost vehicles. Given Rivian’s massive operating losses, the company needs to scale up revenues dramatically to break even. A combination of less manufacturing capacity and lower-priced vehicles seems unlikely to turn this ailing EV firm’s fortunes around, and traders should sell the recent pop.
NWTN (NWTN)
NWTN (NASDAQ:NWTN) is one of the newer publicly-traded EV stocks. The United Arab Emirates-based firm aims to integrate clever design, lifestyle personalization, self-driving, and IoT technology into its vehicles.
NWTN came public via a SPAC with East Stone Acquisition in Nov. 2022. Shares started holding their ground around $10 but tumbled more recently following the company’s failure to get operations rolling.
The company generated just $0.6 million in revenues over the six months ending June 30, 2023. Meanwhile, the company lost $70 million in operations over the same period. Also, the company had just around 100 employees and a fairly low cash balance.
Put another way, this is a fledging start-up that hasn’t proven it can withstand the increasingly competitive EV marketplace. On Friday, however, NWTN stock surged 36% despite a seeming lack of reported news or SEC filings that would justify the rally. NWTN’s market cap has rebounded to $1.2 billion following this move. That seems highly excessive, given the firm’s weak balance sheet and lack of revenues.
VinFast Auto (VFS)
VinFast Auto (NASDAQ:VFS) was one of the strangest stories in the EV stock space in 2023. Following an SPAC deal, shares of the Vietnamese EV maker briefly shot up to as high as $93. However, the hype quickly blew over, with VFS stock falling below its original $10 offering price.
VinFast is already an operating business with substantial commercial traction, so it’s ahead of NWTN on that front. In 2023, VinFast brought in $1.2 billion in revenues, and analysts see that jumping to $2.7 billion this year.
However, VinFast is running massive operating losses. The company has missed its delivery guidance, and its inability to get to the projected operating scale on schedule has hit profit margins.
Analysts forecast that the company will remain unprofitable through at least the year 2026. Meanwhile, it is investing heavily in capital expenditures, which have uncertain payoffs going forward. All this likely adds up to more shareholder dilution and red ink in coming years as VinFast struggles to build its business amid this highly competitive EV landscape.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.