The electric vehicle industry has been in disarray recently. Investor sentiment was riding at all-time highs, and new innovations were popping up at every corner. It seemed there was nothing to hate when it came to electric vehicles. Well, that narrative ended with the chip shortage that has been decimating production. The result is a tank in EV stocks which has been so damaging, it has investors wondering: Will EV stocks ever go back up?
The chip shortage has leveled production for EV manufacturers worldwide. General Motors (NYSE:GM) and Ford (NYSE:F) both had to reduce production, and Tesla (NASDAQ:TSLA) has also briefly paused its production this year. Even abroad, companies like Nio (NYSE:NIO) struggle to stay afloat as the shortage hits Chinese shores.
Wall Street Divided on When EV Stocks Will See a Rebound
The resulting situation has led to conflicting analyses.
Experts are clashing over whether these concerns will blow over quickly and how big a deal they really are for EV stocks. Barron’s has published a number of pieces about the state of the EV industry. They report that the chip shortage, as well as crushingly high interest rates are crumpling the industry, especially Chinese EV companies. Capital raising is also reportedly a huge factor, as dilution is shaking investor confidence in performance.
Making matters worse? These are not issues with quick fixes. It will take a while to get chip manufacturing up to necessary levels and build confidence in investors in the midst of capital raises.
There are others yet who see these issues as surmountable. One of the key arguments of those saying the EV industry will get back on track quickly is that the demand for electric vehicles is at all-time highs. Production is continuing even through the chip shortage. As long as there are cars in stock, there will be buyers. And as President Joe Biden and his administration crack down on emissions, the demand will be forced even higher.
Dan Ives of Wedbush Securities is of the camp that is bullish on EVs even through the current growing pains. He calls the string of misfortunes a “painful digestive period,” which he believes precedes a multi-year bull trend for the industry. As the Biden administration provides tax credits in the name of expanding America’s “Green Tidal Wave,” investors can expect to see a turnaround for EV stocks soon.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article.
