Buying EV stocks is like having a roller-coaster ride!
Most of the EV companies remain unprofitable and yet they are still burning more cash to build up on their infrastructure and expansion. A recent example is NIO trying yo raise US$3 billion from its investors. Furthermore, the ongoing price war is likely to hurt their profit margin even further and they are likely to remain unprofitable in the near future.
Like most new industries, eventually only a few companies would emerge victorious! A few EV companies (Lordstown Motors, Proterra) have declared bankruptcy recently and I'm sure there's more to come.
Unlike Tesla, most EV companies clearly have issues scaling up their production significantly. The competition in the EV market has intensified as numerous traditional car markers (Mercedes-Benz, BMW etc) are also investing and building more EV units.
The key question is what is a fair valuation for these EV companies? How fast can it grow over the next few years? Like any new industry, eventually there will only be few survivors.
There's still a lot of uncertainties from China economy that include contracting manufacturing activities, high youth unemployment, poor economy outlook etc. Hence, it is likely that the short-term outlook for China's EV will be bleak. What do you think? Let me know your thoughts!
$NIO Inc.(NIO)$
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The reason why Li is sputtering even with outstanding numbers is the P/E ratio, it is currently 175, and for Tesla it is 72. Li is being compared to Tesla, by having these P/E ratio, Li is overpriced by 2.5 times compared to Tesla. Li has to earn more money to lower down the P/E price to earnings ratio for the stock to move up. Investors are smart and look at the P/E ratio.
Share price going down regardless of real news, rumor news, or fake news. NIO will not be in favor until margins increase and revenues show profitability at the end of a long tunnel they dug themselves.
Nope, LI is already profitable and will continue to do so. I am in for the longer term as long as LI will be profitable. No brainer.
That’s true. I’m only holding TSLA and I have the same kind of feelings. Not to mention other EV stocks
Great ariticle, would you like to share it?
NIO Inc. is a pioneer and a leading company in the premium smart electric vehicle market.
teslas will drop big time with so many new e cars coming...
Niceeeee33