The electric vehicle (EV) market continues to suffer from key demand risks. Interest rates in the United States and abroad remain elevated and will likely remain as such for some period of time. Sticky inflation has left U.S. Federal Reserve officials no choice but to adopt a “wait and see” approach in regard to potential interest rate cuts. The U.S. economy, being fueled by burgeoning amounts of consumer debt, is likely to slow if rates remain where they are. Key sectors reliant upon consumers taking out loans, such as the automotives (e.g., EVs), have already exhibited palpable signs of significant deceleration.
EV charging, being a subsector of the broader electric vehicle space, will also reel from the headwinds facing the wider market. In other words, as many EV stocks plummet, so will their EV charging counterpart stocks. Below are 3 to avoid amidst a possible market crash.
Tesla (TSLA)
It’s difficult to make a list on electric vehicle charging stocks without mentioning the largest amongst the pack: Tesla (NASDAQ:TSLA). Tesla, in its favor, pioneered the construction of electric vehicle charging infrastructure across the United States. The $1 trillion infrastructure the Biden Administration signed into law around two years ago also allocates billions to further develop a national EV charging network, largely leveraging Tesla’s existing network technology.
Unfortunately for Tesla and its shareholders, the EV maker has suffered ultimately from the current EV demand slump. Through the first quarter, Tesla’s monthly deliveries completely missed the mark, while Chinese counterparts increased deliveries YoY albeit at a cost to margins. The recent news that Chinese regulators gave Tesla tentative approval to employ autonomous driving technology in its cars in China will likely help boost margins, but sales headwinds remain.
ChargePoint (CHPT)
ChargePoint (NYSE:CHPT) has made commendable progress in building a competitor EV charging network to Tesla’s. The EV charging firm has built more than 286,000 charging stations across both the United States and Europe. Unfortunately, the business has faced a number of headwinds. For ChargePoint’s fiscal year 2024, which ends on Jan. 31, revenue increased lethargically by 8% from $468.1 million in 2022 to $506.6 million. ChargePoint’s net loss was almost as large as its reported revenue for the year, coming in $457.6 million. The EV charging firm also expects revenue to decrease by 19% in the first quarter of its fiscal year 2025.
ChargePoint’s shares have felt the turmoil in the market as well. CHPT stock has fallen around 84% over the past twelve months. For just the current year, CHPT shares have fallen almost 40%.
EVgo (EVGO)
The last EV charging stock to avoid on this list is EVgo (NASDAQ:EVGO). The EV charging firm claims to be the largest public charging network in the United States. EVgo has presence in more than 35 states and continues to develop infrastructure. The problem for the stock going forward will not just be its competitive environment but also its cost structure. The company is not profitable on any profitability metric besides gross profit. Generating operating profit and net income seem to be far out of sight.
Given current headwinds in the space, EVgo will likely struggle with this in the long run. The charging firm’s share price has fallen approximately 47% since the start of the current year. In case a market crash ensues, stocks like EVGO will face some of the most volatility, and investors are better of avoiding the stock because of it.
On the date of publication, Tyrik Torres 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.
