Tesla Leads Fellow EV Makers Down The Hill

Tesla NASDAQ: TSLA is down -15.26% year-to-date, posting a decline of 11.48% in March. That follows a 14.87% downturn in February.

It’s closed Friday at $597.95, it’s first sub-$600 close since early December.

Tesla’s decline is part of a broader market pullback, particularly among techs and other growth names.

Other electric vehicle stocks followed Tesla down. You’ll often see stocks in the same industry move in tandem.

One factor affecting Tesla and its industry compatriots: A spike in Treasury yields caused investors to switch out of techs. In addition, growing optimism about a post-pandemic world means a shift toward the energy and industrial
sectors.

Electric vehicle makers have been among leading growth stocks.

Known as an Innovator

China-based EV manufacturer Nio NYSE: NIO was on a tear in 2020, and sports a one-year return of 924.46%.

Recently, it’s followed the same downward trajectory as Tesla. The company has built a strong brand in the Chinese market, where it’s known as an innovator. For example, the company says its proprietary NOMI technology is the first in-vehicle artificial intelligence system.

Nio’s best-selling vehicle is the EC6 crossover SUV, which only launched in September.

Company-wide sales jumped 130% in the most recent quarter, to $1.02 billion. The company lost $0.14 per share. Both top- and bottom-line numbers missed analyst expectations.

Downside trading volume accelerated in the past two weeks, a sign that institutional owners are exiting. Given the big run-up in 2020, it’s not necessarily a surprise to see some profit-taking at this point.

The stock closed Friday below its 50-day moving average, but 26.9% above its 200-day line. Support at that line would be a signal that large holders have continued conviction in the stock.

Warren Buffett Likes the Stock

Fellow Chinese EV maker BYD OTCMKTS: BYDDF is also heading downhill. This stock’s 2020 chart action was stellar. The stock’s one-year return is 299.81%.

Year-to-date, BYD is down 6.08%.

The company is making a name for itself with electric buses, as well as passenger cars.

It has the support of perhaps the world’s most famous investor, Warren Buffett, who said in a shareholder letter that Berkshire Hathaway NYSE: BRK.A owned 8.2% of the company. That’s a larger holding than Berkshire owns in General Motors NYSE: GM.

Are Three Wheels Enough?

Eugene, Oregon-based Arcimoto NASDAQ: FUV is etching its own path by manufacturing futuristic three-wheeled vehicles. It remains to be seen if these offbeat products gain big traction, but the stock had a strong if volatile, 2020.

Its one-year return is 840.63%. Unlike some other EV makers, Arcimoto is showing a year-to-date gain; it’s up 13.76% so far in 2021.

Arcimoto is slated to report fourth-quarter results on March 31. Analysts expect a loss of $0.12 per share on revenue of $1.46 million. Those low sales expectations, relative to other publicly traded companies, are a reflection of the company’s early stage. At the end of the third quarter, the company had shipped only 136 vehicles.

The business appears to be scaling up quickly, but it remains at a very early stage, and charting its trajectory involves a high degree of speculation. Across the year ending Sept. 30, Arcimoto produced just 136 vehicles.

Even so, the past few weeks have been a rough ride, sending the stock down 17.11% in February and another 16.02% so far in March.

 Industry Poised for Growth

Although EV stocks are skidding lately, analysts continue to have high expectations for the industry, including companies other than Tesla.

Dan Ives, an analyst at Wedbush Securities, said in a recent note that he sees a million electric vehicles delivered in 2022, with Chinese manufacturers in the lead.

However, he sees a bright future for Tesla in the near-to-mid term, as well. He says Tesla, with a current market cap of $573.94 billion, could reach a $1 trillion market cap this year, despite the recent selloff.

Ives also sees the wider EV market reaching $5 trillion over the coming ten years. It was around $250 billion last year.