In 2023, Tesla (TSLA) defied its stock downtrend when demand increased following the price cuts. The price change hurt its profitability but weakened its competitors even more. Lucid Motors (LCID) and Fisker (FSR), whose shares have a short interest of 27% and 47%, respectively, will likely face de-listing risks.
Yesterday, Hertz (HTZ) posted a shocker for the industry that will lead to the EV flop continuing. It is cutting its losses related to the adoption of EVs. It will sell 20,000 EVs, which accounts for 33% of its global fleet. Hertz will use the funds to buy gas-powered vehicles.
The abrupt strategic shift is a win for General Motors (GM), Stellantis (STLA), and Ford Motor (F). Indirectly, Rivian (RIVN) and the EV division of those three firms mentioned will face even bigger losses. The EV sale will dump another 20,000 in excess supply on the already shaky EV market.
Hertz’s decision calls the massive government subsidies into question. Consumers realize the mathematics of EVs over ordinary vehicles does not add up. For example, battery costs are in the $10,000 or more range just for the battery, after around 7-10 years. Repair costs for combustion vehicles are less.
The long-term winners are auto parts suppliers. Look at Magna (MGA), Advance Auto Parts (AAP), Cummins (CMI), Group 1 Automotive (GPI), and BorgWarner (BWA).
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