Why Electric Vehicle Stocks Plunged This Week

Core Insights - The EV market is facing significant pessimism, with stocks dropping sharply after earnings reports, indicating that anticipated profitability is not materializing soon [1][9] Company Performance - Li Auto reported vehicle sales of $5.9 billion in Q3 2024, with a vehicle margin of 20.9% and total revenue of $6.1 billion, a 24% increase year-over-year, surpassing analyst expectations [3] - Li Auto's stock had previously risen over 50% from September lows to late October, but the recent drop reflects a correction of those gains, with October deliveries at 51,443, showing flat growth compared to Q3 [4] - Nikola's situation is dire, with only 90 trucks shipped in Q3, a gross loss of $61.9 million, and a net loss of $199.8 million, leaving the company with just $198 million on its balance sheet [5] - Polestar aims to achieve cash flow break-even by the end of 2025 but lacks the scale and brand recognition, having delivered only 11,900 cars in Q3 [6] Market Environment - The potential for a more restrictive policy environment post-election could impact the EV market, with existing tariffs on Chinese EV imports possibly increasing, affecting both costs and export opportunities [7][8] - A more challenging trade environment may hinder EV exports from China and increase costs for U.S. consumers, impacting companies like Li Auto and Blink Charging [8] Industry Outlook - The market is beginning to recognize that many EV companies may struggle to achieve profitability, as the auto industry is not inherently highly profitable, a challenge that persists despite the shift to electric vehicles [9]