Last year was challenging for major automakers, as supply chain issues made it difficult to produce enough vehicles to meet demand. Also, rising commodity costs required to build vehicles were passed on to consumers, making them extremely expensive. For 2022, the United States reported the lowest new vehicle sales in almost a decade.
Along with supply chain disruptions and recessionary worries, global automotive executives are less bullish about EV adoption than they were a year ago. 76% of the more than 900 automotive executives who took part in KPMG's annual global auto survey expressed concern about how inflation and rising interest rates would adversely affect their business this year.
Estimates of new vehicles sold being EVs by 2030 globally ranged from 10% to 40%, down from 20% to 70% a year earlier. For the United States, the median expectation for EV sales was 35% of the new vehicle market, down from 65% a year ago and much lower than the Biden administration’s 50% goal by 2030.
Against this backdrop, it could be wise to avoid fundamentally weak and beaten-down EV stocks NIO Inc. (NIO), Lucid Group, Inc. (LCID), Nikola Corporation (NKLA), and Mullen Automotive, Inc. (MULN).
NIO Inc. (NIO)
Headquartered in Shanghai, China, NIO designs, manufactures, and sells smart electric vehicles. It offers both smart electric sedans and electric SUVs with multiple seating options. The company also designs, develops, and produces e-powertrains, battery packs, and components.
On December 25, 2022, NIO founder and CEO William Li warned of sales challenges in the first half of 2023 due to cuts in government subsidy and a broader economic slump, which have undercut local demand in China.
The country’s tight adherence to its Covid Zero policy has hindered the company’s production, transportation, and delivery and forced it to miss its annual delivery target of 150,000 units.
NIO’s trailing-12-month gross profit margin of 14.43% is 59.4% lower than the 35.58% industry average. Likewise, its trailing-12-month EBITDA margin of negative 22.05% compares with the 11.05% industry average.
For the fiscal third quarter that ended September 30, 2022, NIO’s gross profit decreased 12.9% year-over-year to $243.90 million. Its adjusted loss from operations widened 348.6% from the year-ago value to $458.10 million. The company’s adjusted net loss worsened by 514.2% year-over-year to $491.90 million.
In addition, the company’s loss per share came in at RMB 2.11, compared to RMB 0.36 in the previous year’s quarter.
For the fiscal year that ended December 2022, analysts expect NIO to report a loss per share of $1.06. Moreover, the company is expected to report a loss of $0.71 per share for the current fiscal year ending December 2023. Also, the company failed to surpass the consensus EPS estimates in each of the trailing four quarters, which is disappointing.
Shares of NIO have slumped 47.2% over the past six months and 62.8% over the past year to close the last trading session at $11.01.
NIO’s poor prospects are also apparent in its POWR Ratings. The stock has an overall rating of F, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an F grade for Stability and a D for Quality, Growth, and Sentiment. Within the D-rated Auto & Vehicle Manufacturers industry, it ranks #52 of 65 stocks.
Beyond what we stated above, we also have NIO’s ratings for Value and Momentum. Get all NIO ratings here.
Lucid Group, Inc. (LCID)
LCID is an automobile firm that designs, develops, manufactures, and sells EVs, EV powertrains, and battery systems. It delivers vehicles to consumers directly through its retail sales network and online sales.
A year after LCID began shipping its sole product, the Lucid Air sedan, owners' forums are flooded with complaints from users who claim the vehicles either moved forward while in reverse or lost all power in the middle of the road. Since mid-September 2022, owners of LCID vehicles have reported six instances of power loss or gear malfunction to federal car safety inspectors.
Car safety specialists claim that for a company that has supplied roughly 2,500 of its expensive cars through September, the number of complaints made to forums and the government is significant.
LCID’s trailing-12-month gross profit margin of negative 213.72% compares with the 35.65% industry average. Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA of negative 46.49%, 27.38%, and 27.26% compare to the industry averages of 12.93%, 6.59%, and 4.54%, respectively.
For the fiscal 2022 third quarter that ended September 30, LCID’s total cost and expenses increased 77.6% from the year-ago value to $882.98 million. Its loss from operations widened 38.3% year-over-year to $687.52 million. The adjusted EBITDA loss came in at $552.90 million, compared to $244.96 million in the prior year’s period.
Furthermore, LCID’s net loss attributable to common stockholders stood at $670.25 million, widening 27.8% year-over-year. As of September 30, 2022, total current assets came in at $4.16 billion compared to $6.51 billion on December 31, 2021.
Analysts expect LCID’s loss per share to be $1.04 for the fiscal year ended December 2022. Moreover, the company is expected to report a loss per share of $1.26 for the ongoing year ending December 2023. Furthermore, the company missed its consensus EPS estimates in three of the trailing four quarters.
The stock has plunged 59.1% over the past six months and 79.2% over the past year to close the last trading session at $8.16.
LCID’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
The stock also has an F grade for Stability, Quality, Value, and Sentiment. Within the Auto & Vehicle Manufacturers industry, it is ranked #59.
Click here to see the additional ratings of LCID for Growth and Momentum.
Nikola Corporation (NKLA)
NKLA is a technology innovator, and integrator focused on developing energy and transportation solutions. It operates in two segments, Truck and Energy. The Truck segment creates and commercializes battery hydrogen-electric and battery-electric semi-trucks, while the Energy segment builds a hydrogen fueling station network.
The stock’s trailing-12-month gross profit margin of negative 133.29% compares to the industry average of 29.06%. Also, its trailing-12-month asset turnover ratio is 94.9% lower than the 0.80% industry average.
NKLA’s adjusted EBITDA loss widened 24.6% year-over-year to $105.93 million in the fiscal 2022 third quarter (ended September 30). The company also reported a non-GAAP net loss of $122.45 million, worsening 38.3% year-over-year, and its non-GAAP loss per share widened 27.3% year-over-year to $0.28.
As of September 30, 2022, the company’s total liabilities stood at $595.40 million compared to $296.25 million as of December 31, 2021.
Analysts expect NKLA’s loss per share to come in at $1.85 for the fiscal year ended December 2022. For the current fiscal year ending December 2023, the company is expected to report a loss per share of $1.64. Moreover, the company failed to beat the consensus EPS estimates in three of the trailing four quarters.
Shares of NKLA have slumped 55.9% over the past six months and 73.2% over the past year to close the last trading session at $2.47.
NKLA’s POWR Ratings reflect its poor prospects. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
The stock has an F grade for Stability and Quality. Within the same industry, it is ranked last.
We have also given NKLA ratings for Growth, Momentum, Value, and Sentiment. Get all NKLA ratings here.
Mullen Automotive, Inc. (MULN)
MULN is a manufacturer of electric vehicles. It is involved in producing commercial cars as well as electric vehicles. Additionally, it runs CarHub, a website that uses artificial intelligence to give user-friendly ways to buy, sell, and own a car. It also sells battery technology and emergency point-of-care solutions.
MULN’s trailing-12-month ROTC and ROTA of negative 80.31% and negative 244.40% compare to the industry averages of 6.59% and 4.54%, respectively. Its trailing-12-month cash from operations stood at a negative $65.80 million compared to the $90.79 million industry average.
For the fiscal year that ended September 30, 2022, MULN’s loss from operations increased 332.9% year-over-year to $96.99 million, and the company’s net loss widened significantly year-over-year to $740.32 million. Moreover, as of September 30, 2022, MULN’s total liabilities came in at $145.64 million compared to $78.88 million on September 30, 2021.
The stock has plunged 73.5% over the past six months and 92.4% over the past year to close the last trading session at $0.28.
MULN’s POWR Ratings are consistent with its bleak fundamentals. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system.
The stock also has an F grade for Value and Stability and a D for Sentiment and Quality. Within the same industry, it ranks #57.
Click here to access the additional ratings for MULN (Momentum and Growth).
NIO shares were trading at $10.85 per share on Thursday afternoon, down $0.16 (-1.45%). Year-to-date, NIO has gained 11.28%, versus a 1.96% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
4 EV Stocks That Belong in the Junkyard StockNews.com
