The third quarter of 2022 saw EV sales of over 200,000 in the United States, setting a new record. Electric car sales grew faster than any other auto industry segment. According to the Electrified Light Vehicle Sales Report, Americans bought 67% more electric vehicles in the third quarter than in the year-ago period.
Boosted by government funding and the appeal of its sustainable nature, the EV industry has seen impressive growth over the past few years. The Bipartisan Infrastructure Law has introduced the National Electric Vehicle Infrastructure (NEVI) Formula Program, which makes $5 billion available over five years, and is said to help build a convenient, reliable, and affordable EV charging network across the United States to boost EV adoption.
Moreover, the demand for EVs is being fuelled by rising gas prices. However, despite the incentives, electric vehicles have remained more expensive than gasoline-powered vehicles due to the expensive batteries used to power them. The prices of cobalt, lithium, and nickel, the raw materials used in the production of EV batteries, have also soared.
Additionally, high borrowing rates make it difficult for consumers to afford EVs. Moreover, the lack of charging station infrastructure puts the industry on the back foot. Although the government proposed tax credits for EVs under the Inflation Reduction Act, the rules come with various restrictions, proving it to be counterintuitive.
While the government attempts to boost the industry’s growth, the current macroeconomic picture doesn’t look supportive. With growing recession fears, fundamentally weak and underperforming EV stocks Rivian Automotive, Inc. (RIVN), Lucid Group, Inc. (LCID), Nikola Corporation (NKLA), and Mullen Automotive, Inc. (MULN) might see further downside. So, these stocks are best avoided now.
Rivian Automotive, Inc. (RIVN)
RIVN designs, develops, manufactures, and sells electric vehicles and accessories. It offers five-passenger pickup trucks and sports utility vehicles and sells its products directly to customers in the consumer and commercial markets.
RIVNs total liabilities widened 18.8% to $3.30 billion for the fiscal second quarter ended June 30, 2022, compared to $2.78 billion as of December 31, 2021. Its total operating expenses widened 73.1% year-over-year to $1 billion. In addition, its non-GAAP net loss widened 153.2% from the prior-year quarter to $1.47 billion.
RIVN’s EPS for the quarter ended September 30, 2022, is expected to remain negative. The stock has fallen 69.8% year-to-date to close the last trading session at $31.32.
RIVN’s POWR Ratings reflect its weak fundamentals. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the D-rated Auto & Vehicle Manufacturers industry, it is ranked #59 out of 63 stocks. The company has an F grade for Value, Stability, and Quality and a D for Sentiment.
Click here to see the other ratings of RIVN for Growth and Momentum.
Lucid Group, Inc. (LCID)
LCID is a technology and automotive company that develops electric vehicle (EV) technologies. The company designs, engineers, and builds electric vehicles, EV powertrains, and battery systems.
LCID’s total assets declined 9.5% to $7.13 billion for the second quarter ended June 30, 2022, compared to $7.88 billion for the fiscal year ended December 31, 2021.
The company’s loss from operations widened 124.7% year-over-year to $559.20 million. Its net loss widened 15.8% from the prior year’s quarter to $220.42million. However, its net loss per share narrowed 95.4% year-over-year to $0.33.
LCID’s EPS for the quarter ended September 30, 2022, is expected to remain negative. Over the past year, the stock has fallen 66.9% to close the last trading session at $13.85.
LCID’s grim outlook is reflected in its POWR Ratings. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system. It is ranked #56 in the same industry. It has an F grade for Value, Stability, and Quality and a D for Sentiment.
We have also given LCID grades for Growth and Momentum. Get all LCID ratings here.
Nikola Corporation (NKLA)
NKLA is a technology innovator and integrator that works to develop energy and transportation solutions. It operates through two business units, Truck, and Energy.
The Truck business unit develops and commercializes battery hydrogen-electric and battery-electric semi-trucks for the trucking sector. In contrast, the Energy business unit develops and constructs a network of hydrogen fueling stations.
For the fiscal third quarter ended September 30, 2022, NKLA’s loss from operations narrowed 15.5% year-over-year to $229.72 million. Its non-GAAP net loss widened 38.3% year-over-year to $122.45 million.
In addition, its adjusted EBITDA loss widened 24.6% from the prior-year quarter to $105.93 million, while its non-GAAP net loss per share widened 27.3% year-over-year to $0.28.
NKLA’s EPS for the quarter ending December 30, 2022, is expected to remain negative. Over the past year, the stock has fallen 78.2% to close the last trading session at $2.86.
NKLA’s weak fundamentals are reflected in its POWR Ratings. The company has an overall rating of F, which equates to a Strong Sell in our proprietary rating system. It is ranked last in the Auto & Vehicle Manufacturers industry. In addition, it has an F grade for Stability and Quality and a D for Growth, Value, and Sentiment.
Click here to see the rating of NKLA for Momentum.
Mullen Automotive, Inc. (MULN)
MULN is an electric vehicle company that manufactures and distributes electric vehicles. It also operates CarHub, a digital platform that leverages AI to offer an interactive solution for buying, selling, and owning a car, and provides battery technology and emergency point-of-care solutions.
For the fiscal quarter ended June 30, 2022, MULN’s loss from operations widened 184.5% year-over-year to $18.22 million. The company’s net loss widened 289.9% year-over-year to $59.47 million. Moreover, its net loss per share narrowed 94.5% from the prior-year quarter to $0.16.
Over the past year, the stock has fallen 97.7% to close the last trading session at $0.27.
MULN’s gloomy prospects are reflected in its POWR Ratings. The company's overall F rating translates to a Strong Sell in our proprietary rating system. It is ranked #57 in the same industry. In addition, it has an F grade for Value and Stability and a D for Sentiment and Quality.
To see the other ratings of MULN for Growth and Momentum, click here.
RIVN shares were trading at $31.97 per share on Tuesday afternoon, up $0.65 (+2.08%). Year-to-date, RIVN has declined -69.17%, versus a -18.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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