The electric vehicle (EV) sector looks to be growing increasingly divided. Indeed, shares of upstart EV maker Fisker (NYSE:FSR) are plunging in today’s session while other EV names like leader Tesla (NASDAQ:TSLA) are seeing significant upside. At the time of this writing, FSR stock is down more than 20%. Meanwhile, shares of TSLA stock have increased more than 5% as investors see this week’s relief rally continue.

Fisker’s decline today comes after the company announced that it has slashed its production targets. This also follows the release of its already-delayed third-quarter results.

Fisker now expects to produce between 13,000 and 17,000 vehicles, a steep decline from its 2023 projections of between 20,000 and 23,000 vehicles. As a result of the firm’s weaker-than-expected earnings results and reduced production forecasts, a number of analysts have been quick to cut their price targets on FSR stock.

Now, the company did note that October production numbers exceeded the entirety of the company’s Q3 production, as various kinks were worked out in its delivery process. However, a top- and bottom-line miss have investors pushing back forecasts of when the company will be profitable — a big negative in this high interest rate environment.

Let’s dive into what to make of this news and Fisker’s incredible decline from its peak.

FSR Stock Plunges on Slashed Production Guidance, Weak Earnings

Any time a company delays its earnings, only to report numbers that missed the mark by a wide margin, investors can expect a selloff. That said, today’s price action appears to have surprised even the most ardent bears, given the breadth and volume of trading in FSR stock today.

The company initially delayed its earnings report due to the key departure of its Chief Accounting Officer and issues with internal financial controls. With those issues seemingly sorted and the company lowering the bar for production, though, some investors may hope that most of the bad news has been thrown in — a sort of “kitchen sink” moment for the company.

Analysts at Bank of America have put forward the view that the company’s long-term prospects won’t likely be hindered by these near-term factors, although some pain over the near-term is likely to materialize. That said, it’s clear the majority of analysts on Wall Street and investors are taking a much more bearish view of the company. In essence, if Fisker isn’t able to hit its relatively muted near-term production targets, that doesn’t bode well for the future.

Fisker has always been among the more speculative EV names, particularly for investors concerned about this increasingly difficult environment to raise capital in. We’ll have to see how well the company utilizes the capital it has already raised and whether its trajectory to break even improves. However, for now, this selloff appears to be warranted by today’s news.

On the date of publication, Chris MacDonald 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.