The electric vehicle (EV) market broke records in 2021, with approximately 6.50 million new plug-in electric cars registered globally, which is about 108% higher than in 2020. However, despite the heavy investments and strong federal support, the industry’s growth trajectory seems to be challenged by several headwinds.
The lingering global chip shortage and the rising cost of crucial raw materials used in battery production are hampering the production targets. Additionally, the high upfront cost of EVs and lack of a solid charging infrastructure continue to deter those wanting to switch from combustion vehicles.
Moreover, battery EVs and plug-in hybrids have been facing more quality issues than average cars. According to a survey, new EV owners cited 39% more problems with their vehicles than others in 2022.
Given this scenario, we think investors should drop fundamentally weak EV stocks Workhorse Group Inc. (WKHS), Rivian Automotive, Inc. (RIVN), and Lucid Group, Inc. (LCID).
Workhorse Group Inc. (WKHS)
WKHS, a technology company, engages in designing, manufacturing, and selling zero-emission commercial vehicles in the United States.
For the fiscal first quarter of 2022, WKHS’ sales decreased 97.3% year-over-year to $14.30 thousand, while its gross loss came in at $3.91 million. Total operating expenses increased 48.1% from the prior-year quarter to $15.92 million. Loss from operations increased 20.5% from the same period the prior year to $19.83 million.
The consensus revenue estimate of $14.29 thousand for the fiscal first quarter ended June 2022 indicates a 98.8% year-over-year decline. The consensus EPS estimate for the same period stands at a negative $0.12. Also, WKHS missed street EPS estimates in each of the trailing four quarters.
In terms of its forward EV/Sales, WKHS is currently trading at 13.48x, 1,141.6% higher than the industry average of 1.09x. Its forward Price/Sales multiple of 18.96 is 2,077.6% higher than the industry average of 0.87.
The stock has declined 75.1% over the past year and 57% over the past nine months to close the last trading session at $2.84.
WKHS’ POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
WKHS has a Value and Stability grade of F and a Sentiment and Quality grade of D. In the 64-stock, D-rated Auto & Vehicle Manufacturers industry, it is ranked #59. Click here to see the additional POWR Ratings for WKHS (Momentum and Growth).
Rivian Automotive, Inc. (RIVN)
RIVN designs, develops, manufactures, and sells electric vehicles and accessories. It offers five-passenger pickup trucks and sports utility vehicles.
For the fiscal fourth quarter ended March 31, 2022, RIVN’s gross profit came in at a negative $502 million. Total operating expenses increased 162.7% from the prior-year period to $1.08 billion. The company’s loss from operations came in at $1.58 billion, up 285.1% from the prior-year period.
Street EPS estimate for the fiscal quarter ended June 2022 came in at a negative $1.63.
In terms of its forward EV/Sales, RIVN is currently trading at 7.44x, 584.9% higher than the industry average of 1.09x. Its forward Price/Sales multiple of 15.52 is 1,682% higher than the industry average of 0.87.
The stock has slumped 69.4% year-to-date to close the last trading session at $31.69.
It’s no surprise that RIVN has an overall F rating, which translates to Strong Sell in our POWR Ratings system.
RIVN also has an F grade for Value, Stability, and Quality and a D in Growth and Sentiment. It is ranked #63 in the Auto & Vehicle Manufacturers industry. To see the additional POWR Ratings for Momentum for RIVN, click here.
Lucid Group, Inc. (LCID)
LCID, a technology, and automotive company, designs, engineers, and builds electric vehicles, EV powertrains, and battery systems.
For the fiscal first quarter ended March 31, 2022, LCID’s loss from operations increased 100% year-over-year to $597.53 million. Net cash used in operating activities increased 126.2% from the prior-year period to $494.65 million, while the company’s net cash used in investing activities came in at $185.08 million, up 95.3% in the period.
Analysts expect the company’s EPS to decline 69.4% per annum over the next five years.
In terms of its forward EV/Sales, LCID is currently trading at 19.78x, 1,721.4% higher than the industry average of 1.09x. Its forward Price/Book multiple of 12.18 is 442.5% higher than the industry average of 2.25.
The stock has slumped 52.5% year-to-date and 45.9% over the past six months to close the last trading session at $18.09.
LCID's overall F rating translates to Strong Sell in our POWR Ratings system. The company also has an F grade for Value, Stability, and Quality and a D in Sentiment. In the same industry, it is ranked #52.
In addition to the POWR Rating grades we’ve stated above, one can see LCID ratings for Growth and Momentum here.
WKHS shares were trading at $2.88 per share on Wednesday morning, up $0.04 (+1.41%). Year-to-date, WKHS has declined -33.94%, versus a -15.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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