2023 is almost over and electric vehicle (EV) producers are likely happy about it. After all, this year hasn’t been the strongest for the sector. Despite rising gas prices and a focus from President Joe Biden and his administration on investing in clean energy and EV infrastructure, EV sales haven’t been doing as well as in previous years.
In October 2023, The Wall Street Journal reported that automakers are having an increasingly difficult time finding buyers willing to splurge on luxury EVs. But as it turns out, it isn’t just brand new EVs that are struggling to sell. According to a recent study from iSeeCars, used electric and plug-in hybrid vehicle sales are also falling. This may cause investors to wonder whether EV stocks are still a smart investment as the year winds down.
This development isn’t necessarily a reason to bet against the sector. However, investors should approach EV plays with caution. Some companies are likely better-positioned than others to ride out this difficult season.
A Rough Road Ahead for Some EV Stocks
Today hasn’t been a bad day for EV stocks. In fact, far from it. Tesla (NASDAQ:TSLA) stock closed the day up by more than 4% as momentum builds for its Cybertruck delivery day. Meanwhile, fellow EV producers Rivian (NASDAQ:RIVN) and Lucid (NASDAQ:LCID) are riding the wave, having closed up 4.5% and 5% respectively on Tuesday. This demonstrates that falling used EV sales aren’t necessarily an indication that individual EV stocks are going to outright struggle.
That said, it’s important to examine the latest data in context. Used EV prices have fallen almost 34% for the year but hybrid vehicle prices are down less than 10%. What’s more, one of the most impacted brands is Tesla. iSeeCars’ study shows “a $21,775 decrease for the Model X, $18,596 for the Model S and $14,716 for the Model 3.” Meanwhile, the slowest selling vehicle isn’t an EV but the Maserati Quattroporte, a luxury car that prices at over $100,000 new. This isn’t a bad time for all used sports cars, however. As the study states:
“Hybrids and sports cars are among the fastest-selling used cars right now. The top-ranked BMW X5 hybrid’s average time to sell is 26.8 days, which is about twice as fast as the average for all used cars. One electric vehicle, Rivian’s R1T midsize truck also makes the list and is under the overall average at 35.5 days on market. Rivian’s truck is produced in relatively limited quantities and still has strong demand.”
Last month, InvestorPlace reported that slowing demand for luxury EVs meant a key opportunity to bet on companies that produce hybrid vehicles. This recent study further supports that hypothesis. iSeeCars shows a questionable economic landscape for luxury EV producers while hybrid vehicles, on the other hand, hold their own amid uncertain economic times. In particular, the recent success of both Rivian and BMW (OTCMKTS:BMWYY) as found by iSeeCars shows that not all EV stocks are created equal. Demand for some higher-priced vehicles still exists.
BMW is still a likely winner of the 2024 EV race, but investors should also carefully watch companies like Toyota (NYSE:TM) and Hyundai (OTCMKTS:HYMTF). Their vehicles also make the list of top-selling used cars.
On the date of publication, Samuel O’Brient did not hold (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.