After electric vehicle stocks failed to break out in the Jan. to Feb. period this year, stocks are slumping. Nio, Xpeng (NYSE:XPEV), and Li Auto (NASDAQ:LI) continue to fade badly. Only the incumbent EV giant, Tesla (NASDAQ:TSLA) is steady.
Why?
Tesla is the global leader in the EV space. It has Giga factories worldwide and strong brand name recognition worldwide. Conversely, neither Nio nor Xpeng may expand outside of China in a big way. It may only ship a few thousand units at the most. To expand sales, both firms need billions of dollars to fund marketing and operations.
Wary of losing more, investors are unlikely to react favorably to another stock offering by Nio or Xpeng. Li is in a weaker position. It is the most recently-listed IPO and needs to prove its value to investors.
In the SPAC space, Churchill's (NYSE:CCIV) botched post-SPAC deal with Lucid Motors damaged its reputation. Retail investors over-paid for the stock ahead of the deal. Similarly, QuantumScrape’s (NYSE:QS) attractiveness is dropping. It will take a few years before QS’s battery is ready for prime time. Volkswagen’s investment in QS is already profitable on paper. The auto giant paid owned the stock at lower prices.
Avoid buying the dip in EV stocks for now.
