The electric vehicle (EV) market is still recovering from a highly volatile year. 2023 saw many of the sector’s leaders battle severe headwinds as macroeconomic conditions pushed EV stocks down. However, the number of U.S. drivers choosing to go electric still increased. As Cox Automotive reports, in 2023, “the EV share of the total U.S. vehicle market was 7.6% […] up from 5.9% in 2022.” Additionally, EV sales finished the year on a high note, setting records for both share and volume. This suggests that the electric vehicle market will continue to grow in 2024. But even if that happens, it doesn’t mean all EV stocks are good buys before the market booms again.
Last year, InvestorPlace’s Luke Lango predicted that the electric vehicle sector would experience a “great EV consolidation” in which many smaller companies would be acquired by larger ones. However, some small EV producers pose too many problems to be a good investment for anyone. These three troubled EV stocks in particular represent the worst that the sector has to offer.
EV Stocks to Sell: Nikola (NKLA)
Of all the struggling meme stocks, few have experienced a worse year than Nikola (NASDAQ:NKLA). This company has been fighting a losing battle ever since the downfall of its founder, Trevor Milton. The ex-Nikola executive is facing years in prison for securities fraud and wire fraud.
Since Milton stepped down, NKLA stock has been on a steady downward spiral. Shares are down more than 70% just in the past one year. Indeed, despite the occasional meme stock push, NKLA has failed to gain any actual momentum. In fact, the company recently received a delisting notice from the Nasdaq for failing to trade above $1 per share for 30 days.
InvestorPlace contributor Thomas Niel thinks that investors should bet against Nikola in 2024, citing its significant losses and inability to scale production. This argument makes sense, especially as NKLA stock — currently trading around 67 cents — trades well below the $1 mark. If that continues to be the case, NKLA will lose its spot on the Nasdaq and likely end up trading via an over-the-counter ( ) exchange.
Mullen Automotive (MULN)
While it may not be trading below $1 anymore, Mullen Automotive (NASDAQ:MULN) still belongs on any list of EV stocks to sell. This automaker did what Nikola hasn’t been able to do yet, regaining Nasdaq compliance by successfully meeting the $1 bid requirement. However, investors should consider the fact that MULN stock has plunged more than 90% just over the past six months.
Mullen also has a clear track record of failing to garner momentum, even when it reports good news. Last week, Mullen received a certification from the California Air Resources Board (CARB) but shares still closed out the week in the red, demonstrating that MULN has nowhere to go but down.
As it stands, there’s little to suggest that Mullen will survive 2024. InvestorPlace contributor Faisal Humayun also believes it won’t last the year, even though the company finally began generating revenue in 2023. If Mullen’s own problems don’t bury it this year, rising competition from stronger companies will.
EV Stocks to Sell: Workhorse Group (WKHS)
It’s hard to have faith in a company that has shares trading for only around 25 cents apiece. Workhorse (NASDAQ:WKHS) has spent the past year in a race to the bottom, watching shares decline by more than 85%. The company produces electric delivery vans and drones, but even exposure to multiple markets hasn’t helped WKHS stock grow.
Last week, Workhorse announced the sale of its Union City, Indiana plant, a move deemed necessary due to increasing financial problems. This does not bode well for the company as it enters a new year deep in the red.
Also hanging over Workhorse’s head is the bankruptcy and demise of Lordstown Motors (OTCMKTS:RIDEQ). This fellow EV producer once counted Workhorse as a top investor. Now, Lordstown has lost its spot on the Nasdaq and Workhorse looks destined for a similar fate.
As InvestorPlace contributor Ian Bezek reported back in October 2023:
“Workhorse’s vehicle business failed to generate meaningful commercial revenues. The company is now going for a longshot pivot to a drone business, but if that doesn’t show immediate results, Workhorse could follow Lordstown’s path into bankruptcy.”
Even if it can somehow avoid bankruptcy, Workhorse doesn’t seem to have any real path back to growth. This makes WKHS stock a clear choice as one of the top EV stocks to sell.
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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.