Today, the volatility in the electric vehicle sector continues. Investors are seeing a lot of red among top names. Accordingly, many may be asking the question: Why are EV stocks down?
That’s a complicated question. However, looking at stocks such as Nio (NYSE:NIO), Li Auto (NASDAQ:LI), Xpeng (NYSE:XPEV), and Churchill Capital (NYSE:CCIV), today’s declines are material. These stocks are all down between 5% and 7%, at the time of writing.
The EV sector has faced a series of headwinds of late. Accordingly, it appears investors continue to sell off these high-growth names amid a rotation toward value stocks in the market today. A global chip shortage continues to supply downside pressure as well. Furthermore, investors appear to be concerned about the ability of these EV players to hit aggressive growth targets, upon which their valuations are based.
That said, bond yields have come down slightly today. Additionally, there’s revitalized interest in the EV space following President Joe Biden’s open support for investing in EV infrastructure through the American Jobs Plan.
Here are a few other factors investors appear to be pricing in today.
Why Are EV Stocks Down Today?
In addition to the factors mentioned above, these four stocks appear to have their own issues right now.
Three of the four aforementioned EV players are based in China. Indeed, Chinese-U.S. relations are deteriorating right now. A series of diplomatic talks earlier this year didn’t pan out as expected. And now, there’s concerns about the U.S. intervening in the hot-button topic which is Taiwan.
Accordingly, U.S. investors appear to remain spooked when it comes to Chinese stocks in general. Given the ultra-high-growth nature of the EV sector, these concerns appear to be materializing into larger declines in this sector specifically.
All in all, the EV sector appears to have its fair share of headwinds right now. How long these headwinds will persist is anyone’s question. That said, for long-term investors bullish on the growth this sector provides, now may be a great time to consider hand-picking a few EV plays.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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