Bloomberg: the EV bubble has burst as TSLA, NIO, Rivian stocks dive

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Written on Apr 19, 2024

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Bloomberg is warning that the EV bubble has burst.
It notes that EV sales in Europe have plunged hard in the past few months.
Some countries are considering more EV incentives.

The electric vehicle (EV) bubble is slowly bursting as I warned a few months ago. Now, according to Bloomberg, the sector is melting down in Europe, which is often seen as a key market.

EV bubble is bursting

Bloomberg cited numerous factors, including the recent vehicle registration figures. A report showed that EV registrations in Europe tumbled by 11% in March from a year earlier and the trend is growing. Key countries like Germany, Sweden, and Italy had over 30% YoY declines.

There are other signs that the bubble has burst. As I wrote recently, Chinese EVs have flooded some of the biggest European ports recently. Many distributors are using ports as parking bays, especially at Zeebrugge, the bloc’s biggest port for vehicles.

Most analysts believe that Europe and other countries will need to continue supporting the industry by providing incentives. For example, the Italian government is preparing a round of incentives that will provide up to 13,750 euros to low-income families buying EVs. In a statement, the head of Mobility Sweden said:

“We are losing momentum. The market is no longer growing, and the share of electric cars in the market is actually decreasing.”

EV stocks have plunged

The best evidence that the EV bubble is bursting is the stock market. No EV stock has jumped this year. Tesla shares have dived by 40% in 2024 while Rivian, Nio, Lucid, and XPeng have all dived by 62%, 55%, 42%, and 50%, respectively.

TSLA vs RIVN vs NIO vs LCID vs XPEV stocks

Similarly, Fisker, a company that manufactures its vehicles in Austria has been delisted by the NYSE. Stocks like Mullen Automotive, Canoo, and Workhorse Group are also languishing.

Most importantly, big automakers like Mercedes Benz, General Motors, Ford, and Stellantis have started scaling back their EV investments. Ford and GM have redirected some of their investments to share buybacks and dividends.

Investors have rewarded traditional automakers this year. In particular, they have rewarded companies that have a strong lineup of hybrid vehicles.

Toyota shares have jumped by over 26% this year. Stellantis is up by 10.4% while Ferrari, GM, and Mercedes Benz have jumped by double digits in the past 12 months.

I believe that the EV industry will not die but its growth trajectory will moderate in the next few years. As I wrote on my QuantumScape stock forecast, the solid-state battery technology, coupled with increased investments in charging infrastructure, will help to supercharge its growth.