2022 has been a great year for exposing weaknesses in various speculative industries. The market rout has hampered the tech sector and crypto world alike. Electric vehicle (EV) stocks have also taken quite a beating during this time. High-profile companies have seen stock valuations shaved down significantly. Jumpstart EV companies have also encountered a new class of competition as legacy automakers start to roll out their own fully electric vehicles.
There is a seemingly infinite pool of EV stocks to choose from — auto companies themselves, battery makers, charging companies and onward. With the market plunging and investors flocking to only the strongest of stocks, though, many of these companies can’t raise money as easily as they did in 2020 and 2021.
Simply put, much of this pack is on its way into the trash. Which ones? Consider some of these EV stocks to sell:
- Mullen Automotive (NASDAQ:MULN)
- Nikola (NASDAQ:NKLA)
- Canoo (NASDAQ:GOEV)
- Workhorse (NASDAQ:WKHS)
- Li Auto (NASDAQ:LI)
- XPeng (NYSE:XPEV)
- Nio (NYSE:NIO)
- Hyzon Motors (NASDAQ:HYZN)
- Lordstown Motors (NASDAQ:RIDE)
- Fisker (NYSE:FSR)
- ElectraMeccanica Vehicles (NASDAQ:SOLO)
- Arcimoto (NASDAQ:FUV)
- Volta (NYSE:VLTA)
- Solid Power (NASDAQ:SLDP)
- Tesla (NASDAQ:TSLA)
It’s all too easy for investors to pile into a hyped-up penny stock. It’s cheap, it’s getting lots of talk and if its price booms, it makes for quite the payday. But, as with most other hyped-up penny stocks, Mullen (NASDAQ:MULN) is just that. Hype.
This stock’s performance through 2022 has been poor, to say the least. MULN stock is down almost 97% year-to-date (YTD), making shares trading for $5.81 in January now worth just 20 cents. Indeed, long-term holders have a deep hole to crawl out of just to break even. If that doesn’t shake investor confidence, knowing that CEO David Michery sold over 2.5 million MULN shares this year might.
Still, at least two years out from seeing one of its cars on the road, Mullen has been generating attention almost entirely by absorbing dead competitors. MULN stock’s late October price spike came as the company shelled out $240 million in an all-cash acquisition of Electric Last Mile Solutions. Before that, the company acquired Bollinger Motors for over $148 million.
Neither of these companies were anywhere close to market when Mullen bought them. Throughout the last couple of years, Mullen has made tall promises. But its balance sheet suggests it can’t deliver, even with these “flashy” acquisitions.
Nikola (NASDAQ:NKLA) is trying to be the counterpart to Tesla (NASDAQ:TSLA), as its name implies. However, the company has proven time and again that it’s not equipped with the resources nor the management to hold a candle to the Elon Musk EV empire.
Speaking strictly in terms of business success, Nikola has a ways to go to compete with larger EV brands. Its third-quarter earnings report proves as much. From July through September 2022, the eight-year-old EV maker managed to produce only 75 vehicles for dealers. This is an improvement on the 50 produced in Q2, but not by much. For reference, Rivian (NASDAQ:RIVN) produced over 7,000 vehicles in Q3.
Granted, Rivian is an older company with far more cash in its coffers. However, Nikola has been grossly mismanaged to this point. So, having more money likely wouldn’t have gotten it in a better place by now.
For one, Nikola founder Trevor Milton is a scandalous figure. Milton has been accused on multiple occasions of fraudulently pumping the value of NKLA stock through false claims. Recently, that less-than-ethical behavior behind closed doors has caught up with him. After stepping down as CEO in 2020 amid U.S. Securities & Exchange Commission () and Department of Justice ( ) investigations, Milton has now been found guilty on three counts of fraud.
This company was born in, has lived in and will die in controversy. Whilst removed from Milton’s hands, Nikola is still unable to do the one thing it set out to do: sell EVs. The company’s slow production crawl, tumultuous relationship with investors and regulators and stiff competition are all cards stacked against it.
Canoo (NASDAQ:GOEV) is another one of the EV stocks to sell right now. The company has done well to build up its image throughout 2022. Headlines aside, though, Canoo is unlikely to deliver on its big promises and quick deadlines.
A big name has put its chips on the Canoo name already; retail giant Walmart (NYSE:WMT) produced waves of interest for GOEV stock when it ordered 4,500 EVs. That’s the biggest order yet for the company. However, after an initial spike on the news, GOEV is in worse shape than it was before the announcement. When delivery fleet-leasing company Zeeba ordered 3,000 of the vans in mid-October, the similarly sizable news failed to even register as a blip on Canoo’s stock chart.
This is because investors aren’t into the big headlines when it comes to EV companies so much as they’re into seeing those EVs on the road. Canoo has already got a leg up on the competition, starting production for the first time ever in November. But this production facility is quite small, meant mostly for testing purposes. Plans are to manufacture just 15 cars at the facility to start, all of which will go to strategic partners. Production-scale manufacturing is still a ways out and will rely on Canoo getting its Oklahoma City facility up and running. Meanwhile, Canoo has outsourced the production of its vehicles for the Walmart order to keep from falling behind.
While the company makes glamorous claims about beginning production and multi-thousand vehicle deals, investors are beginning to understand that these headlines are a lot of fluff and little substance.
Speaking of low production figures, Workhorse (NASDAQ:WKHS) remains one of the best EV stocks to sell as the company’s estimates continue to pare down. The company’s production is of a similarly small scale to Nikola and failing to meet bare-minimum estimates. WKHS stock investors could definitely be buckling up for a rough ride.
Like many others on the list, Workhorse is banking on success by leaning into the electrification of commercial transport vehicles rather than luxury EVs. And, like its competitors, the company has been unable to turn a profit for shareholders. The company saw a 22 cent EPS loss in Q3. That’s a slight improvement on the 63 cent EPS loss in Q2, but analysts had expected much better results.
Not helping its case is the $35 million settlement Workhorse paid out in a class action lawsuit related to the company’s unsuccessful bid for a U.S. Postal Service contract. The company had, according to the lawsuit, failed to properly communicate to investors that this contract was not already secured.
While the company flounders financially and suffers a marred reputation amid the USPS news, it’s still failing to churn out vehicles. Workhorse disappointed investors in its earnings call when it revised production expectations. Although it initially planned to produce between 150 and 250 vehicles in 2022, the company now expects to only produce between 100 and 200. Atop other production delays, this news doesn’t paint a bullish future for WKHS stock in the short or medium term.
Li Auto, XPeng and Nio
The reason Li Auto (NASDAQ:LI), XPeng (NYSE:XPEV) and Nio (NYSE:NIO) land on this list of EV stocks to sell doesn’t have to do with production figures or financial statements. In fact, for all three companies, those metrics are solid. The trio are in healthy shape, producing thousands of vehicles each month and making their EVs common on Chinese roads.
Instead, the main issue plaguing these stocks is the uncertainty of China’s presence on Wall Street amid increasing crackdowns by both the U.S. and China. Specifically, the Xi Jinping-led Chinese government is becoming more interested in sewing up the Variable Interest Entity () loophole that allows XPEV, LI, NIO and others to appear on Wall Street. Chinese companies launch VIE shell companies for the express purpose of bringing in foreign investment.
Earlier this year, U.S. regulators signaled a plan to start delisting these companies by demanding access to their financial audits. More recently, President Joe Biden signed several executive orders which prevent Chinese investment in U.S. tech companies. This “U.S.-China tech war” is fracturing an already-splintered relationship between the two countries. With plenty of new incentives to do so, there’s an increasing possibility that these stocks get yanked off the market by either U.S. or Chinese regulators. These companies are sure to live on, but their U.S. shell companies are a different story.
Hyzon Motors (NASDAQ:HYZN) is another one of the EV stocks to sell right now. As is a common theme with startup EV makers, the company has been allegedly misleading investors into believing it’s in better shape than it really is. Beyond fudging some balance sheet numbers, Hyzon has sparked controversy by manufacturing fake customers.
By utilizing hydrogen fuel cell technology, Hyzon offers a different take on EVs than many of its competitors. The company’s semi-trucks aim to sustainably deliver across the globe without the need for time-consuming charging stops. This model may seem attractive to investors. However, Hyzon is a detriment to itself as it gets caught making business look much better than actuality.
Late last year, reputable short seller firm Blue Orca levied serious accusations against Hyzon. The firm accuses the company of overinflating its revenue outlook, claiming higher future returns while knowing that its margins are negligible at best. But even worse, the report unveiled that Hyzon’s two largest customers aren’t real. Its largest customer is a fake shell company while the second-largest is a marketer in disguise, helping Hyzon peddle vehicles to other buyers.
A SEC investigation in the wake of this report has added to these controversies. The probe by regulators has been found to confirm at least some of the details in the report. With the company already utterly unprofitable and HYZN stock down 85% since going public, there’s no reason to hold onto shares any longer.
Lordstown Motors (NASDAQ:RIDE) is another company that just recently got production off the ground. Now, Lordstown is wooing some speculative investors with the milestone, which puts it in a better position than other players only theorizing car concepts. Still, the company faces plenty of headwinds which analysts expect will put it behind the competition when all is said and done. That lands it on this list of EV stocks to sell.
Back in late September, Lordstown announced that it was kicking off vehicle production at its Ohio-based manufacturing facility. The announcement itself has come with several cautionary warnings, however. Production is slow-going for the time being and Lordstown says it will remain that way so long as supply-chain issues persist.
The fact that production has started is great news, but neither RIDE stock investors nor the company have any idea of how much it will need to ramp up. Lordstown has yet to close a single sale, meaning it’s producing vehicles nobody wants yet. This is arguably a better practice than competitors, who launch presales and then leave buyers waiting for months or years. But it still leaves the company with much to speculate over when it comes to scaling up production figures.
Moreover, investors have surely become a bit fed up with the many delays Lordstown has faced. The company had promised to have the first full-electric truck to market as early as 2020. Two years later, Lordstown is only just getting started — and it’s certainly not the first fully electric truck on the road.
If these more pragmatic logistics aren’t a convincing argument to sell RIDE stock, there’s also a slew of controversies which have followed Lordstown over the years. From faked sales (a la Hyzon) to horrifying testing results and executive turnover, there’s plenty of reason to put distance between RIDE and your portfolio.
Fisker (NYSE:FSR) is in a unique position among EV makers. It’s the redemption shot of Fisker Automotive, a short-lived automaker that went bankrupt with only about 2,000 cars on the road. Henrik Fisker, the founder of the company, is doubling down as Chairman and CEO of the new Fisker. Unfortunately, though, it seems like the company could end up just like its precursor, seeing as it’s currently very overvalued.
FSR stock started the year with a massively overbloated price. But even as the stock is down 57% YTD, it still isn’t justifying its price tag. Fisker has begun production of its Ocean EV on schedule, sure. But the company is trying to get the product to market by outsourcing production to Austria.
This isn’t necessarily an issue on its own, but it comes with the drawback of not being able to assure quality for the final product. Fisker Automotive outsourced the production of its Karma sedan to Finland in the early 2010s. After problems with recalls and production failures, the original company was brought to its knees.
Maybe Fisker has learned from its predecessor’s failures, maybe not. Only time will tell. However, there’s plenty to fear over the company repeating the same mistakes. That makes FSR one of the top EV stocks to sell.
ElectraMeccanica and Arcimoto
ElectraMeccanica (NASDAQ:SOLO) and Arcimoto (NASDAQ:FUV) are certainly paving their own way in the EV world. The pair of automakers is grabbing attention with their designs, which are wholly unique not just to EVs but to combustion engine cars as well. But can these ideas take off? There are lots of doubters. SOLO and FUV remain top EV stocks to sell as a result.
Nevermind the fact that SOLO and FUV are down 63% and 92% since their respective public listings. Nevermind the fact that Arcimoto is burning through cash at a sprint and accumulating capital at a snail’s pace. And nevermind that ElectraMeccanica reported worse Q3 metrics than analysts had predicted.
The hindrance facing these companies is simply consumer adoption. Both have flagship vehicles that are fully electric, three-wheeled pods. They aren’t sleek or sexy and the aesthetic of their three-wheel designs is unlikely to find mass appeal.
EV makers already face headwinds when it comes to adoption. EVs are expensive to purchase. Range anxiety keeps consumers from adopting them. Charging stations remain far more sparse than gas stations. With all of these issues working against the industry, one has trouble seeing the oddball designs presented by this pair seriously taking off with consumers. They might turn heads in a corporate slide deck. But they won’t do well enough on the market to justify holding FUV or SOLO for the long run.
Volta and Solid Power
There are so many different EV makers and most of them aren’t spending the extra budget to develop batteries. These companies need to get their batteries from somewhere, though. However, not all battery stocks are going to surge; with a sizable pack of competition, not all can make it. Plus, there’s competition from legacy automakers turning to EVs complete with their own battery tech. This cuts out the need for battery startup middlemen. As a result, Volta (NYSE:VLTA) and Solid Power (NASDAQ:SLDP) both face some incredibly stiff competition, making them some of the best EV stocks to sell.
Indeed, the cards are stacking up against Volta, Solid Power and countless others. However, these two companies are especially strapped for cash compared to competitors, with only $100 million and $98 million in cash on hand, respectively.
These two companies will need lots of fresh funding to put up products to make them stand out. Unfortunately, though, the number of potential suitors is dwindling — and fast. Most automakers are working with well-established battery makers already — companies like Panasonic (OTCMKTS:PCRFY), LG and Samsung who don’t need to worry about liquidity. Legacy automakers, meanwhile, are taking cues from Tesla and making their own batteries. And those that aren’t doing this are gravitating toward startups like QuantumScape (NYSE:QS), which bears a much higher market capitalization and is already deep into testing.
Simply put, VLTA and SLDP are behind the eight ball. Ongoing EV volatility could make them victims of the massive market consolidation.
Okay, Tesla’s not going to die. It’s quite literally the EV maker, for better or for worse. But the Californian-turned-Texan company isn’t immune to the broader market downturn. And as TSLA stock sees a deep price correction right now, there’s concern that Elon Musk’s antics could hurt Tesla’s prospects. Investors should legitimately consider this extremely unorthodox situation when evaluating the future for TSLA stock.
Most everybody is aware of the controversy that Tesla CEO Elon Musk is basking in right now. The entrepreneur has shelled out billions of dollars to buy Twitter for the vague purpose of “restoring free speech” to the platform. In funding this purchase, Musk has sold off some of his own Tesla holdings. Meanwhile, his decision has tanked the social media platform’s value. It has also led to a mass exodus of employees and caused many of Twitter’s largest advertisers to cut ties. All the while, the company has consumed Musk’s time — time that Musk could spend on Tesla or any of his several other tech companies.
TSLA stock is down 55% YTD. Atop weakening demand for it EVs and bearish macroeconomic factors, Tesla also has to deal with Musk’s ongoing PR disaster. The Twitter fiasco is causing some to question Musk’s ability to lead and many people are “swearing off Tesla” as a result of the antics.
TSLA shareholders have already seen the tangible effect the Twitter deal has had on the stock price. Now, there’s mounting concern that it could have a lasting effect on the company. Already a far cry from its all-time high of more than $400 apiece, one has to wonder whether Tesla will be surpassed by one of its close competitors in the near future as the de facto EV brand. That could make TSLA one of the many EV stocks to sell.
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On the date of publication, Brenden Rearick did not hold (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.