As we enter 2024 in a few days, we should note that the electric vehicle market will be a bellwether on the economy. When the economy was roaring, EV sales surged. When the economy started slowing, EVs struggled to sell. What surprises me throughout 2022 and 2023 is that as many of the companies, like $RIVN $LCID $FSR
and other EV startups started ramping up production and sales, their share prices have fallen significantly. It's like people were overly optimistic when they were about to begin selling vehicles and once they started selling vehicles, the optimism faded away. Nevertheless, even as these companies looked to be struggling in the stock market, they continue to do well in the real world.
Using the charts created by InsideEVs, we can see how Rivian and Lucid are doing:
For Rivian, clearly everything is looking uphill. For Lucid, Q4'22 was the peak of the company's production and sales and things have declined since then. The difference between the two is that Rivian had the massive $AMZN
van contract, which helped boost deliveries amid declining demand on the consumer front and $LCID
is entirely reliant on consumers. Since both Lucid and Rivian cater to higher income demographics, theoretically their business should be less affected by a recession than say $TSLA
With EV sales slowing throughout 2023 as higher interest rates, scars from the pandemic buying environment, and a banking crisis have deterred customers from buying cars. As car dealers carry more electric vehicles in their inventory, it's expected that 2024 will come with more price cuts and incentives for car buyers. Hopefully this will make EVs less expensive than their gas-powered counterparts. As for the used EV market, the issue with battery degradation has made EVs incapable of holding onto their value. Used car dealers like $KMX
will find themselves struggling as used EVs struggle to maintain their value and struggle to find buyers.
Overall, it's fascinating to see the share price performance of EV stocks like Lucid and Rivian continue to perform poorly while their deliveries continue to grow. As we've seen with $FSR
, people are already discussing bankruptcy rumors as those two startups continue to ramp up the sale of electric SUVs and semi-trucks. As valuations throughout the EV space have plunged, these companies will grow into their valuations and at some point, reach a level of stagnation as car demand can't continually grow forever.