To The Moon

Shares of the electric vehicle makers $XPeng Inc.(XPEV)$ Bearish, $NIO Inc.(NIO)$ Bearish$Li Auto(LI)$ Bearish, $Faraday Future Intelligent Electric Inc.(FFIE)$ Bearishand $Rivian Automotive, Inc.(RIVN)$ Bearishhave been falling along with the broad market lately, amidst concerns of slowing global major economies and renewed fear of the Fed pressing ahead with interest rate hike in the FOMC meeting next month, after latest data showed US inflation reversing trend to climb again, as the cooling inflation appears to be warming again.

EV stocks have risen with growing adoption of EV on the roads on the back of rising global awareness of climate change and tightening of regulations over emissions. With EV becoming mainstream a question of when rather than if, the prospects of electric vehicles have not looked brighter. The recent partnership of Volkswagen and XPeng shows that incumbent makers of conventional vehicles are increasingly facing the threat from EV and joining the revolutionary industry.

Nevertheless, EV stocks are also looking expensive, as their fundamentals have yet to catch up with their lofty P/E multiples despite recent price weaknesses. It does not help that interest rates are likely to stay elevated for longer given the sticky inflation, thus increasing the borrowing costs for the EV startups and depressing their stock valuations.

Hence, I would take short-term bearish bets on trading the EV counters, even though I remain optimistic of their long-term prospects.

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