Image credit: Getty Images.
Each stock may have experienced a significant rebound, especially considering the recent sell-offs. Following Elon Musk’s support of President-elect Trump, Tesla saw a post-election surge but has since faced a decline, exacerbated by a shortfall in fourth-quarter deliveries reported in early January. This shortfall indicated that Tesla might encounter its first annual sales drop in 2024.
On the other hand, Rivian surpassed its fourth-quarter delivery target, leading to an initial increase in its stock value earlier in the month. However, concerns about interest rates caused a subsequent retreat. Rivian faced a double-digit drop in 2024 and remains unprofitable as it strives to scale up, reporting a loss of $1.44 billion in the third quarter of the same year.
Aehr Test Systems, though not a vehicle manufacturer, produces chip testing equipment primarily for silicon carbide chips used in electric vehicles. Aehr recently disclosed disappointing earnings, missing revenue and earnings projections, resulting in a stock decline of over 25%. Despite efforts to diversify with new orders from AI accelerator and gallium nitride clients, the company’s existing business is still influenced by the EV market downturn. CEO Gayn Erickson mentioned the challenges of silicon carbide investment outside of China in 2025.
As for the future of electric vehicle stocks, it remains uncertain whether the current Consumer Price Index (CPI) report signifies a turnaround. While a positive development, it is unclear if EV demand is solely tied to interest rates. The pace of EV adoption appears to have slowed, possibly due to factors such as range anxiety. Additionally, the possibility of the new administration repealing the EV tax credit could impede EV market recovery.
Investing in EV stocks carries risks, particularly given their high valuations or lack of profitability. Investors may opt for established and profitable entities within the EV supply chain, spanning from chip manufacturers to OEMs like Tesla and Rivian, to equipment suppliers like Aehr Test Systems. Monitoring interest rates, technological advancements, and policy changes is crucial in this sector, with potential for significant gains if EV adoption regains momentum.
For investment opportunities, Stock Advisor’s analysts suggest considering Tesla and other overlooked stocks as potential options. The importance of staying informed about market trends and making informed choices is emphasized, given the dynamic nature of the EV industry.
Disclosure: Billy Duberstein and/or associated clients hold positions in Aehr Test Systems. The Motley Fool endorses and holds positions in Tesla, abiding by a strict disclosure policy.
