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Shares of Tesla fell on Tuesday, along with the Nasdaq Composite.
Brendon Thorne / Getty Images
Sales of shares were accelerating on Tuesday dragging Tesla and other electric vehicle stocks. Shares have bounced back, but one of the consequences of the sale is that VE valuations are now spread everywhere.
It’s hard to decipher what the market is trying to tell investors.
He
Nasdaq Composite
it fell about 3% early in trading on Tuesday after falling 2.5% on Monday.
Tesla
shares (ticker: TSLA) fell nearly 11%, but then regained their way down about 2% from 10:50 am ET. The Nasdaq i
S&P 500
they now fall by about 1.9% and 0.4%, respectively.
Inflation is a new concern for investors, and high-growth stocks tend to be more affected when inflation expectations rise. Higher inflation means higher interest rates. Dividends and bond yields become a little more attractive in this scenario, rather than cash flows from high-growth companies that could take years. High interest rates also make financing financing growth.
Inflation isn’t the only thing going on with electric vehicle stocks on Tuesday. Lucid Motors agreed to merge with special purpose acquisition company Churchill Capital Corp IV (CCIV). The merger is a triumph for the electric vehicle sector. Investors bid a little too much on SPAC shares merging with Lucid, as they bet the deal would come. That made Lucid worth about $ 96 billion based on Monday’s price, even before the merger. Then, on Tuesday, Churchill shares fell more than 30%. But even with such a large drop, Tuesday’s prices continue to value Lucid at more than $ 60 billion, making it the eighth most valuable automaker on the planet. Lucid has still sold a vehicle.
Lucid is now quoted about four times its projected sales for 2025 of about $ 14 billion. The projections, in this case, are not estimates: they are Lucid’s internally generated numbers. For comparison, Tesla is quoted about 7 times and estimates sales of approximately $ 120 billion in 2025. This estimate is an average of several Wall Street analysts.
Going a little deeper into electric vehicle valuations makes things more confusing.
Fisker
(FSR), which predicts sales of $ 13 billion in 2025, is valued at a fraction of that amount. The reason for the valuation gap is difficult to determine.
Lucid lists impressive specifications and battery technology, including an estimated range of 500 miles per charge for its luxury Lucid Air sedan to be delivered later this year. Lucid is also led by former Tesla engineer Peter Rawlinson. But the Ocean, Fisker’s first model, promises to be an affordable SUV and Fisker is driven by legendary car designer Henrik Fisker. In addition, Fisker partners with an experienced car manufacturer,
Magna International
(MGA), to mount the Ocean.
The difference between Fisker and Lucid is not the only strange comparison. There is a relatively wide range of ratings for the three Chinese electric vehicle manufacturers with significant sales:
NIO
(NIO),
XPeng
(XPEV) i
Read Auto
(LI). These three are also quoted at a big discount on Tesla according to 2025 numbers.
With an estimated valuation range of 0.5 to 7.5 times estimated in 2025 sales, it is likely the right valuation level for electric vehicle stocks somewhere. It’s just hard to know exactly where it is. And there will also be winners and losers of electric vehicles in 2025, it’s hard to know who.
Write to Al Root at [email protected]