Yesterday brought an exciting update in the electric vehicle (EV) race. Tesla (NASDAQ:TSLA) was reporting results for the final quarter of 2021 and interest was high. Elon Musk reported better-than-expected earnings and revenue and provided an updated project roadmap. In spite of all the good news, TSLA stock has been falling hard today and many of its EV peers have followed suit. In fact, every major U.S. EV producer is in the red today, a list that includes Lucid (NASDAQ:LCID), Rivian (NASDAQ:RIVN), Fisker (NYSE:FSR) and Nikola (NASDAQ:NKLA). This has been a bad day for EV stocks since markets opened and it hasn’t improved.
Why Are EV Stocks Down Today?
The patterns demonstrated by all five EV stocks mentioned above look fairly similar. Indeed, each company began this morning on a high note but was quick to start falling. For all the attention it has received, though, TSLA stock’s decline is not the worst of the day. As of this writing, it is currently down 8.6% and shows no signs of a rebound.
Not that any of these EV stocks do. LCID has fallen the most of the five, slipping more than 12% so far. RIVN is next on the list with decline of more than 9%. FSR isn’t doing much better. The only member of this EV pack that has faired better than Tesla so far is NKLA, whose loss for the day is just shy of 7%.
Why It Matters
For an industry’s whose rapid growth defined investing in 2021, declines of this sort are not encouraging. It’s also worth noting that this isn’t the first sign of such a downward trend. Earlier this week, we saw several EV stocks plunge into the red, along with their Chinese peers Nio (NYSE:NIO) and Xpeng (NYSE:XPEV). InvestorPlace contributor William White attributed these declines to the negative momentum sweeping markets.
That was three days ago, but sadly, not much has changed. TSLA stock rose yesterday as anticipation mounted for its earnings call. Now with the call behind us, there’s nothing to keep driving the enthusiasm that sometimes elevates markets in the short term. We all know that EV stocks follow the path of Tesla. Where the industry leader goes, they will follow. And right now, TSLA stock’s growth has stalled. Additionally, as InvestorPlace Assistant News Writer Eddie Pan noted, Rivian’s Q3 reported earnings tell the story of a still-unprofitable company.
At a quick glance, it’s easy to see the struggles of the EV sector and wonder about its profitability. To do so, though, would be to ignore the many catalysts that point toward growth in the year ahead. Both Tesla and Lucid have given investors plenty of reason to believe that they will continue scaling production in 2022, which is likely to drive sustainable growth. Fisker will also have the opportunity to rally as the hype surrounding its popular Ocean SUV continues to build. And investments in EV infrastructure that we will see in 2022 are likely to boost both LCID and RIVN.
What It Means
The EV race has hit a roadblock, but 2022 is just getting started. There’s plenty of time for these companies to regain the momentum that they’ve temporarily lost. EV demand is still high and it is only growing. When the economic landscape improves, so will these companies.
On the date of publication, Samuel O’Brient 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.
