To The Moon

2023 and 2024 are definitely not the year for EV investment and now fully replaced by AI related theme. What's the reasons behind and how long will the EVs stocks continue to pullback? 

Root Causes Behind

Falling EV sales are leading Chinese car companies to resort to an oft-used tactic: price wars. Deliveries of electric cars in China have slowed at the start of this year compared with the final quarter of last year, with drops hitting brands like Nio, Li Auto, Xpeng, and BYD.

China has the world's largest EV market; the sector is highly competitive given the number of brands that operate in the country. Some EV makers have turned to price wars to increase sales. BYD's aggressive discounts may have helped it unseat Tesla as the world's biggest seller of battery electric vehicles.

But discounts may have an unintended effect on consumers, who are now holding off on purchases in hopes of getting a further discount.

Then there's the possibility that after years of strong growth and investment, the Chinese EV market may now be producing more cars than can be sold domestically. Chinese carmakers are now looking overseas for growth opportunities, yet a flood of cheap Chinese EVs could trigger retaliation in markets like the U.S. and Europe. China, too, is warning of overcapacity in the domestic EV sector.

Invest in EV, Yes or No?

EV stocks in technical review 

Let's start with the market leader in EV, Tesla! The stock price experienced a bearish breakdown from the short term uptrend line, $Tesla Motors(TSLA)$  . As we know, Tesla was surrounded by plenty of bad news since beginning of 2024, causing the stock price to drop quite significantly. The next major support is a bit far, at around 150 USD. I believe Tesla stock will not show any bullish signal in short term and before the earnings call.

Tesla Daily Chart

Next, let's look at one of the Chinese EV leaders, LI Auto. LI is undoubtedly the best performers among the Chinese EV trio, namely LI, Nio and Xpeng. The share price gapped up strongly after its better than expectation earnings but now all the gain was erased last week. The share price is currently situated nearby the EMA200 trendline support, which should be a strong rebound point for Li, therefore a bullish vote for $Li Auto(LI)$  .

LI Daily Chart

However, if compared with LI, another Chinese EV maker, Nio was performing extremely poor. All the EMA lines are facing downwards as we can see in the figure below. However, the share price is consolidating at current price zone, forming a strong support here, around 5.50 USD. It will be disastrous if the stock continues to breakdown and plunge downwards. So, I believe Nio will be able to hold at this level $NIO Inc.(NIO)$  

NIO Daily Chart

Next, let's look at the meme EV, Rivian. The stock gapped down badly after its disappointing earnings release, but then the stock slowly regained the uptrend momentum last week, stimulated by the good news of its new released models. A higher low is formed in near term and I believe the share price will head towards the blue colour resistance area at around 14.56 USD in near term, $Rivian Automotive, Inc.(RIVN)$  .

RIVN Daily Chart

Lastly, let's end with the worst ever EV stock, $Faraday Future Intelligent Electric Inc.(FFIE)$  . This is the only EV stock which keeps on making new low and new low, I don't know how much lower it could go but it just never stops. Nothing much to see technical wise, the candle just keeps going lower. 

FFIE Daily Chart

How do you see EV sector now? Will you invest in EV by collecting the falling knife? Which strategies suit you, buy low or chase high? Come and share your strategies with us.

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