The electric vehicle and clean energy sectors exploded to new highs in the last month. Yet investors who overpaid for them on the way up could have permanent losses next. Companies in dire need of cash sold shares at high prices. That soured the mood and could end the bubble in the sector, especially with EV stocks.
On Nov. 30, famed short-seller Hindenburg warned that Kandi Technologies (NASDAQ:KNDI) is falsifying revenue. On Nov. 20, Kandi sold $100 million, or 8.85 million units.
On Nov. 30, General Motors (NYSE:GM) disclosed a non-binding memorandum of understanding with Nikola (NKLA). This fell short of expectations. Previously, markets expected GM would get involved in the development of the Nikola Badger. The sharp drop in NKLA stock is a stark reminder that EV and clean energy companies need billions of dollars in resources to develop a viable product. Nikola never had a product close to the market.
All-star stocks Nio (NYSE:NIO) fell 20% last week, with XPeng (NYSE:XPEV) down 23% in that time. Buying volume dried up, ahead of leader Tesla (NASDAQ:TSLA) getting listed on the S&P 500 this month. Investors should stay away from all of these EV stocks, in case bullish sentiment does not return.
