Watching the electric vehicle (EV) market is like experiencing a slow-motion car wreck. Amid a dramatic slowdown in sales, companies are throwing in the towel. Mercedes-Benz (OTCMKTS:MBGAF) just scrapped its plans to go all-EV after 2030 while Apple (NASDAQ:AAPL) just killed its electric car project.
General Motors (NYSE:GM) previously backed off its pledge to be all-electric by 2035. Instead, it will bring back hybrid vehicles and see how EV demand pans out before committing more resources. Similarly, Ford (NYSE:F) is delaying spending $12 billion on EVs and will also increase hybrid production.
There’s carnage everywhere as Nikola (NASDAQ:NKLA) is near bankruptcy while Polestar Holding (NASDAQ:PSNY) staved off the same fate with a last-minute $1 billion lifeline.
The green future is looking blood red for EVs. Unfortunately, they ran into the wall of reality. Most car buyers don’t want electric cars. They don’t trust them enough to give up their gas-powered vehicles. From batteries bursting into flames to being unable to charge their cars in bone-chilling temperatures, most car buyers prefer the reliability of existing vehicles.
That’s why there is only one EV stock to buy today and two that are must-sells now.
EV Stock to Sell No. 1: Lucid Group (LCID)
Lucid Group (NASDAQ:LCID) is one of those luxury EV makers swimming in red ink. It lost $2.8 billion last year or more than double the amount in 2022 as it sold fewer cars than the year before. The automaker may have just received a promise for $6 million from Michigan to site a non-production facility in the state but let the government throw tax dollars into that sinkhole. You don’t have to follow suit.
The EV stock can’t sell its cars. At $80,000 they are too expensive in a market that can’t move EVs at half the price. And the introduction of a cheaper model won’t help because it still costs more than the average new EV.
The electric car industry hoped that gaining price parity with gas-powered vehicles would be the tipping point for sales growth. The demand still hasn’t materialized. Kelley Blue Book says a new EV averages $55,353, down 11% year over year. The average cost of a new car overall was $47,401, a 3% decline from last year. Despite the convergence, the rate of growth for new EVs stalled out. Just 1.8% more EVs were sold in 2023 than the year before.
Although Lucid just dropped the base price of the Air by $8,000 to just under $70,000 because of falling demand it’s still too expensive. And that’s the third time in seven months it cut pricing. The EV maker says it will only produce 9,000 vehicles this year but even that might be too many. LCID stock is one to sell now.
EV Stock to Sell No. 2: Rivian Automotive (RIVN)
Another luxury EV company trying to go down market is Rivian Automotive (NASDAQ:RIVN). It is the second EV stock you should sell. Don’t wait for the company to unveil its new lower-priced R2S SUV on Mar. 7 before selling. Get out now before more damage can be done.
Rivian’s earnings were one of two data points I said investors should use to determine how RIVN stock would go. The financials were worse than expected. While the unveiling of the R2S was the second point to ponder, it’s clear the automaker’s position is too dire for a new model to matter. Even Elon Musk says bankruptcy is a likely outcome for Rivian.
Despite reporting higher than expected revenue and a narrower loss for the fourth quarter, Rivian’s outlook isn’t bright. It is firing 10% of its workforce and forecasts it will produce only 57,000 vehicles this year. That’s essentially flat compared to 2023 and far below the 80,000 expected.
Yet with EV sales growth tanking, that might be pie-in-the-sky thinking too. Rivian didn’t announce any new price cuts and the R2S will be priced between $40,000 and $60,000. If it is not near the low price point it could be disastrous. With RIVN stock down 52% already in 2024 now is the time to cut losses and sell the stock.
The Only EV Stock to Buy: Toyota Motors (TM)
Toyota Motors (NYSE:TM) has been one of the very few automakers showing any sort of common sense in the EV market. While the Japanese car company makes EVs, it didn’t dive head-first into the shallow end of the pool like other automakers. EVs account for less than 1% of all vehicle sales at Toyota or a little more than 100,000 vehicles. More prevalent were hybrids, which represent almost 31%, or 3.6 million of the auto stock’s total 11.2 million vehicles sold.
Toyota was skeptical of the headlong rush into all-electric cars and chose instead to focus on hybrids. It turns out the company was right. Car buyers are willing to look at alternative fuel vehicles so long as there is a backup plan in place. The hybrid vehicle gives buyers the assurance they won’t be stuck if the green solution fails. Toyota chose to invest across the full spectrum of energy options and its profits doubled last quarter.
The Japanese automaker is the leading EV stock to buy today. Arguably, it’s the only one. Even with TM stock up 30% year to date, it has such a clear lead over all its rivals in the hybrid space it is now the one to catch.
On the date of publication, Rich Duprey 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.
