This EV risk is bad news for EV stocks like Rivian, Lucid, MULN, GOEV

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Written on Feb 19, 2024

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EVs are facing numerous risks, including saturation by Chinese companies.
There is also a risk in that demand from American consumers is waning.
Another risk is the partisan divide as many Republicans rule out purchasing EVs.

It’s no secret that this is not a good year for EV stocks like Rivian, Tesla, Mullen Automotive, Canoo (GOEV), and Lucid Motors as most of them have tumbled hard. In a previous article, I warned that these companies face a difficult time as China’s EV companies like Nio, BYD, and Li Auto boost their production.

This is an important issue since China is known for driving lower prices of most items. In that article, I gave the example of steel whose price has crashed hard in the past few years. As a result, steel mills in most developed countries plunged. Most recently, China has helped to lower the prices of EV metals like lithium, cobalt, and nickel.

There is another risk that will likely affect EV demand in the coming years. This is the risk that partisan politics are hindering EV adoption in the United States. In most cases, EVs are usually bought by either Democrats or Republicans.

The most recent data shows that solidly blue states like California, New York, Washington, Oregon, and Maryland were among the top buyers of EVs. Another report by Gallup showed that over 70% of Republicans have ruled out buying EVs compared to 54% of Democrats who are open to buy these vehicles.

All this explains why EV demand is waning since there are millions of Americans who identify as Republicans. It also explains why the government will ultimately struggle to offer EV mandates nationally.

Most importantly, it is one reason why many traditional companies like Ford, General Motors, and Stellantis are paring back their EV investments. Instead, these firms are boosting their Internal Combustion Vehicles (ICE) and hybrid vehicles.

These companies agree that moving from early adoption to mass adoption will be difficult since early adopters have been wealthy coastal individuals.

Therefore, there is a likelihood that these EV companies like Rivian, Canoo, Fisker, and Mullen Automotive will struggle in the coming months. That’s because they are now seeing weak demand, high supply, thinner margins, and the partisan divide.