When Mullen Automotive (MULN) bottomed last month, speculators thought the stock could rally to $4.00 and above. Instead, the electric vehicle company with a nanocap market capitalization dropped with Nasdaq’s decline. Similarly, Tesla (TSLA) staged an incredible rally in the last few weeks. But buying momentum is drying up.
MULN and TSLA stock mirror that of many publicly traded EV companies. They are well off their highs and are at risk of losing investor interest. Rivian (RIVN) and Lucid Motors (LCID) have billions in development and capital costs ahead. It has limited sales because of the supply shortage.
Internal combustion engine automotive firms like Ford (F) and General Motors (GM) face similar constraints. Not only will they sell fewer ICE vehicles, but they also cannot accelerate their EV output. Market panic will worsen in the weeks ahead. Investors that realize the EV expansion will slow for at least the next year will exit the sector.
Investors should treat the EV market as a bubble. Valuations are unfavorable, pricing the best-case scenario of growth for the next 5-10 years. China-based EV firms XPeng (XPEV) and Nio (NIO) are not immune to the selling, either. Despite posting good March monthly deliveries, it did not impress investors. Shares in both companies did not rally back to recent highs.
