Republican presidential candidate Donald Trump recently unveiled his pick for vice president. At 39 years old, Ohio Senator JD Vance is a fresh face in Washington D.C. Despite being one of the most prominent millennial generation politicians out there, however, Vance holds surprisingly anti-electric vehicle sentiments.
In fact, Vance has suggested the EV proponents are hypocrities, since EV cars are sometimes charged via dirty power sources such as coal. In fact, Vance said “The whole EV thing is a scam.”
Vance has proposed some measures which would greatly harm the EV sector, such as subsidizing gas-powered cars. And it’s worth considering that Vance isn’t alone in his views. Trump has announced plans to end the so-called electric vehicle mandate on day one of his administration if he is elected.
All this makes it a perilous time to own EV stocks. These three in particular could end up in trouble this November.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) CEO Elon Musk has recently given Donald Trump a high-profile endorsement. It’s unclear if this will work out well for Musk. Both Trump and JD Vance seem intent on slowing down the EV industry’s growth trajectory.
Potential Tesla buyers also may recoil at buying a car from a company openly involved in the political scene.
Tesla is one of the largest players of EV stocks. And its international diversification helps shelter it somewhat from a U.S. government with an anti-electric vehicle agenda.
Still, after its recent rally, TSLA stock is now selling for almost 100 times forward earnings. That’s an awfully expensive price for an automobile company that could be heading into a rough political environment.
Nio (NIO)
The electric vehicle industry as a whole could face harsh consequences if the Trump/Vance ticket wins in November. Chinese EV makers are likely to face an especially tough blow.
Nio (NYSE:NIO) initially was billed as the Tesla-killer, at least in the Chinese market. While Nio has always struggled with profitability, it was able to grow revenues quickly for the past few years.
With the Chinese economy’s slump, however, Nio has stalled out. Its vehicle sales fell year-over-year in Q1. Meanwhile, the company incurred an alarming $728 million net loss last quarter alone.
If that seems bad, just wait until Trump potentially returns to the White House. He’s taken aim at Chinese cars specifically, vowing to curtail their sales in an attempt to bolster domestic U.S. vehicle manufacturing. Needless to say, this would be another blow to an already struggling Nio.
XPeng (XPEV)
XPeng (NYSE:XPEV) is another Chinese electric vehicle company that could face massive ramifications from a Trump/Vance presidency.
Unlike Nio, XPeng has stayed more under the radar and has gradually built up quite a business for itself. It brought in $4.3 billion in revenues in 2023, and is on pace for more than 40% growth this year despite the Chinese vehicle market’s slump.
Despite that, however, it is increasingly hard for XPeng to fight off all the negative political and regulatory headwinds. In addition to all the saber-rattling from Trump and Vance, there are other concerns.
The European Union appears set to start slapping tariffs on Chinese vehicles. Meanwhile, the Biden Administration just hit the Chinese vehicle makers with a hefty tariff on batteries and rare earth materials. While XPeng is trying to make the most of a challenging situation, the outlook for XPEV stock, and EV stocks in general, is cloudy, at best, in the months to come.
On the date of publication, Ian Bezek 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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
