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EV bubble bursts: Tesla, Nio, Lucid, and Co. shares drop in 2024

EV bubble bursts: Tesla, Nio, Lucid, and Co. shares drop in 2024
Elmaz Sabovic

Hardships from 2023 for the EV industry are carrying onto this year as well, with the leaders in the industry, such as Tesla (NASDAQ: TSLA), Nio (NYSE: NIO), and Lucid (NASDAQ: LCID), struggling to put out a strong stock performance.

Examining the performance of EV stocks since the beginning of this year reveals worrying trends. Tesla TSLA shares have experienced a decrease of -24.28%, while Rivian (NASDAQ: RIVN) has seen a substantial decline of -28.95%. NIO shares have decreased by -29.63%, and Lucid and Fisker (NYSE: FSR) have encountered significant decreases of -36.75% and -53.37%, respectively. 

Looking at the substantial declines, it might be hard for investors not to wonder whether the EV bubble has burst and if these stocks are in for a long, rugged path ahead.

Tesla reports worrying numbers

In its most recently released Q4 report on January 24, Tesla reported numbers that started worrying most investors.

After the markets opened on January 25, its stock was down by -10%, taking its value below the $200 psychological threshold and losing support at $190.

Tesla reported adjusted earnings of 71 cents per share, which fell slightly below the projected 74 cents per share, indicating a -40% decline from the previous year.

The company achieved $25.2 billion in quarterly revenue, reflecting a modest 3% increase from the previous year despite a notable increase in deliveries. This growth, however, was impacted by lower average sales prices resulting from repeated price cuts, falling short of the expected $25.6 billion in revenue.

Out of the frying pan into the fire for Lucid

Meanwhile, the EV market has become increasingly unforgiving towards unprofitable and underperforming companies like Lucid.

In 2023, the automaker implemented substantial layoffs, reducing its workforce by 18% in March. Concurrently, the company revised its full-year production outlook, attributing the adjustment to sluggish demand.

Compounding its challenges, the company faced further setbacks as its stock was removed from the Nasdaq 100 index. Additionally, it experienced multiple analyst downgrades, primarily attributed to lackluster interest in its high-priced vehicles.

The wider industry is also suffering a downturn, which might be caused by weakening demand or increased competition. EV producers haven’t been able to cope with two factors throughout the years. Attempts at increasing buyer interest are made with lower prices. However, profit margins are also lower. It seems that the industry is caught up in an endless cycle.

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