Just a couple of years after electric vehicles looked to be the future of the automotive industry, the stock market’s taken a vicious turn. Now if you’re still investing in auto stocks, you need to think more about EV stocks to sell than those you should be adding to your portfolio.
Rising interest rates in the last year put a huge damper on EV sales. EVs are more expensive than vehicles with gasoline engines, and when interest rates went up, the cost of financing an EV was suddenly out of reach for many.
In addition, the U.S. Department of Energy helped gasoline-powered vehicle manufacturers last month by releasing final rules that will give legacy automakers more time to meet updated fuel-economy standards and receive more mileage credits for building EVs.
That means that those legacy automakers can make gasoline-powered cars through 2030 while still meeting federal fuel economy requirements.
I’m not convinced that EVs are dead and buried. It wouldn’t be surprising if clean energy powers the majority of vehicles in 15 to 20 years. But that doesn’t make EVs a smart investment today, particularly if you are closer to retirement and aren’t willing to take a flyer on an EV stock with a long runway to profitability.
The Portfolio Grader evaluates stocks based on a variety of factors, including earnings performance, growth and analyst sentiment. These are some EV stocks to sell for the sake of your portfolio’s health.
Nio (NIO)
Nio (NYSE:NIO) at one point was an extremely promising Chinese EV stock. The company had the advantage of healthy subsidies from the Beijing government, as well as an innovative battery swapping system. Instead of spending time charging a battery, Nio owners simply pull into a facility and swap their empty batteries for full ones. The process takes minutes.
No wonder Nio was a hot stock in its day. But that day has passed and if you’re still holding Nio stock, you regret the decision.
Nio’s issues aren’t easy to solve. Sales growth has slowed, the company is burning cash at an alarmingly high rate, and there’s real potential for continued shareholder dilution that would make Nio shares even less valuable.
Deliveries in the first quarter of 2024 are down 3% from a year ago and 10% from the previous quarter.
NIO stock is in penny stock territory, down 55% since Jan. 1. It gets a “D” rating in the Portfolio Grader.
Lucid Group (LCID)
Lucid Group (NASDAQ:LCID) and Nio actually have some things in common. Both EV companies were seen to be Tesla (NASDAQ:TSLA) killers, companies that had the best potential to take the wind out of Elon Musk’s sails.
As it turns out, both Nio and Lucid are crashing and burning. Tesla isn’t doing so well itself, either, but at least it looks like it will survive the EV downturn. I can’t say the same about Lucid and LCID stock.
After all, it’s hard to be a Tesla killer when you deliver only 6,001 vehicles in all of 2023, like Lucid did. And in doing so, the company lost a whopping $654 million in the fourth quarter.
And while Lucid got a minor bump in stock price when the Ayar Third Investment Company, which is an affiliate of Saudi Arabia’s Public Investment Fund, agreed to buy $1 billion in Lucid Group preferred shares the stock is on a long downward spiral.
Lucid has already given up all of its gains following the Ayar investment. The stock is down 42% in 2024 and gets an “F” rating in the Portfolio Grader.
Magna International (MGA)
Magna International (NYSE:MGA) is a Canadian automotive supplier. It can manufacture complete vehicles, or it can complete bodywork, electrical systems, powertrain modules and interior or exterior work.
One of its clients is Fisker (OTCMKTS:FSR), an EV startup that also was thought at one time to be a potential Tesla killer, but instead has faltered so badly that it’s trading in over-the-counter markets now.
There’s a real chance that Fisker will end up in bankruptcy, and that’s one of the headwinds facing Magna International these days. Evercore ISI downgraded MGA stock due to the threat.
MGA stock is down 16% in 2024 and gets a “D” rating in the Portfolio Grader.
QuantumScape (QS)
QuantumScape (NYSE:QS) makes solid state lithium metal batteries for use in electric vehicles. By using solid-state lithium metal technology, the company says its batteries can be charged faster and are safer to use.
The company trying to make waves by shipping prototypes of its new Alpha-2 battery cells to automotive manufacturers in hopes of generating sales. But the effort hasn’t successfully moved the stock.
QuantumScape doesn’t make money yet. It posted a first-quarter loss of $120.6 million, while analysts were expecting a loss of only $96.3 million.
It forecast for capital expenditure this year between $70 million and $120 million, and has just over $1 billion in cash and cash equivalents, giving it enough money to operate into late 2026.
One day, maybe, QuantumScape will be an attractive investment. But I’m not willing to put money into a company that still doesn’t have a product to sell and it in an industry that is staggering right now.
QS stock is down 21% in 2024 and gets a “D” rating in the Portfolio Grader.
Mullen Automotive (MULN)
I don’t know if Mullen Automotive (NASDAQ:MULN) is the worst EV stock you can buy. Fisker sets a pretty low bar. But it’s definitely in the conversation.
This is a company that, in a desperate attempt to stay listed on a major index, executed three reverse stock splits last year just to keep the stock price above $1 per share. The third split was a 1-for-100 split in December.
Even with all that financial manipulation, Mullen stock is in penny stock territory. It’s dropped 99.8% in the last year and more than 70% so far in 2024.
Now, there are some positive signs as of late. Investors rallied around Mullen when the company announced a cost-cutting plan earlier this month that will reduce operating and investing cash flow by $170 million.
The company is also shifting gears to produce commercial EVs rather than aiming for the saturated consumer segment.
It also completed the first phase of its battery line integration at its California plant, with an eye on the commercialization of EV battery packs.
While this is a needed turnaround for Mullen stock, I’m not willing to give it the benefit of the doubt … yet. MULN gets an “F” rating in the Portfolio Grader.
Polestar Automotive (PSNY)
Polestar Automotive (NASDAQ:PSNY) is a Swedish EV company. Polestar sells autos in 27 different markets spanning North America, Asia and Europe.
Scale remains an issue, however. Polestar only delivered 7,200 vehicles in the first quarter of 2024, down from 12,000 in the first quarter of 2023.
It doesn’t help that rental car company Hertz (NASDAQ:HTZ) announced it was pausing its agreement to buy 65,000 EVs from Polestar over the next five years.
The problem for Hertz is that the resale market for EVs has fallen, making the purchase of an expensive electric vehicle less appealing.
Polestar calls 2024 a transition year and says it has its sights set on better performance in 2025. But that doesn’t mean investors should stick around through the losses.
PSNY stock is down 45% in 2024 and gets a “D” rating in the Portfolio Grader.
ChargePoint Holdings (CHPT)
ChargePoint Holdings (NYSE:CHPT) manufacturers, owns and operates a network of charging stations that are designed to power EVs.
It looked like a solid investment choice a few years ago for anyone who was looking to invest in the infrastructure of EVs rather than buying the stock of a vehicle manufacturer.
But it’s proven harder for ChargePoint to become the obvious solution for EV charging. Tesla owns more than 40,000 charging stations of its own. It’s getting billions of dollars in annual profits from partnering with other automotive manufacturers.
That contributes to leaving ChargePoint out in the cold. Fourth-quarter revenue was $115.8 million, down from $152.8 million a year ago. Revenue from charging systems was $74 million, down from $122.3 million a year ago.
CHPT stock is down 45% in 2024 and gets an “F” rating in the Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.