It’s fair to assert that EV stalks are dangerous overall. The sector has been maligned throughout 2024 and continues to face ongoing issues. The electric vehicle industry continues to evolve but is facing what can optimistically be called a rough patch. Thus, many investors would classify any and all EV stocks as being dangerous.
Yet, as with any sector, there are bound to be certain stocks that are overall more dangerous. Those are the companies that we will be discussing today: what I believe are the most dangerous EV stocks to avoid within the electric vehicle industry.
Remember, the sector is still growing but doing so more slowly. Optimism remains but so do real challenges. That combination of factors can result in real danger and create rapid losses from certain stocks. Let’s look at a few.
Lucid (LCID)
Lucid (NASDAQ:LCID) is an EV stock name that arguably has more heft than many of its also dangerous counterparts. That’s the point I want to make about Lucid being dangerous: The company in the cars it builds has become relatively well known, and that has lent the company an air of stability.
Investors are generally aware that the Lucid Air Sedan poses a real threat to the Tesla S. All of the positive press could wrongfully lead investors to assume that Lucid is more stable than it actually is.
Investors who dig into the financial status of lucid will quickly realize that it faces significant issues. The company’s operational losses eclipsed $3 billion in 2023. Yes, the company increased its deliveries by nearly 40% during the year but at what cost? It’s crystal clear that Lucid is nowhere near any semblance of profitability at its current rate of deliveries.
That’s where the real trouble arises. The company anticipates building 9,000 EVs this year. The company once stated that it would deliver 90,000 by this point. While that chasm between former and current guidance is disappointing it’s more important to note that the company will continue to lose mountains of cash if it reaches the once unfathomable goal of producing 9,000 vehicles in 2024.
Faraday Future (FFIE)
Faraday Future (NASDAQ:FFIE) might not receive as much press as Lucid and other dangerous EV stocks but don’t be fooled: it’s every bit as bad. In fact, Faraday Future is much worse from the perspective of how much it has declined.
Shares traded above $107 within the last year. They’ve fallen to a value of $0.04 cents at present. Lucid’s decline from $8 to below $3 was a relative walk in the park.
However investors slice it, Faraday Future is dangerous. Share prices are far too low, and the room is non-compliant with the Nasdaq. It looks like the company will end up getting delisted soon.
Furthermore, Faraday Future is barely selling any vehicles currently. Readers should note that those results are relatively old. The reason the company hasn’t provided more updated results is that its most recent 10-K submittal was deemed non-compliant due to share price issues. The result is actually good for investors. It all paints the picture of a dumpster fire that is easily avoided.
Mullen Automotive (MULN)
Mullen Automotive (NASDAQ:MULN) is an EV stock that almost all of my colleagues agree is one to avoid. Most understand that following multiple reverse stock splits there simply isn’t much left of the company. It has been diluted to the point that it is at real risk of complete failure and bankruptcy.
Yet, Mullen Automotive’s shares recently spiked in price. The reason for the spike is government subsidies from the state of California that have drastically reduced the effective price of its class 3 EV truck. The vehicle also qualifies for federal subsidies making it much more attractive. However, it remains difficult to depend on subsidies for success. Yes, those subsidies will entice buyers to consider Mullen’s vehicles in the immediate term. However, those subsidies have come and gone many times. Investors should rightfully be wary of them as a long-term catalyst. If Mullen Automotive is to succeed in the long term it will be because it builds a strong foundation, not because of government handouts.
However, the company is clearly trading on thin ice and has not managed to build any strength to this point.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.