Is it worth investing in EV stocks? No. Here’s why…
“Is it worth investing in EV stocks?”
A Disruption Investor member asked me this question on our monthly “ask me anything” calls last week.
EV stocks have declined quite a bit in 2024:
Tesla $TSLA: -31%
Rivian $RIVN: -56%
Lucid $LCID: -36%
Li Auto $LI: -27%
Xpeng $XPEV: -44%
Source:Koyfin
I understand some investors might be tempted to bottom fish here. But that’s a mistake.
Electric vehicles are a disruptive megatrend, and the technology is far superior to gas-powered cars.
There are just 20 moving parts in an EV engine, compared to roughly 2,000 for the average gas guzzler. That makes them much cheaper to run and maintain.
And EVs will only continue to improve as the cost of batteries (the most expensive part of the car) keeps dropping.
Did you know battery costs plunged 80% in the past decade?
Source: Clean Technica
All great. But none of it matters to us as investors.
I had breakfast with a well-known Wall Street veteran recently who asked not to be named.
My friend covered the auto sector for a big Wall Street firm for over a decade, so he knows the industry inside and out.
Bottom line: He explained to me selling cars is one of the worst businesses on the planet… and EVs are no exception.
To make money in a fast-growing trend, you need to buy into a great business profiting from it.
There are no great EV businesses. Ford (F) lost nearly $65,000 for each of the 72,000 EVs it sold last year.
And Tesla (TSLA) got absolutely hammered after reporting a drop in sales and earnings a few weeks ago.
Tesla stock plunged 60% since late 2021.
Source: Koyfin
Put EV stocks in the “too hard” pile for now. There are easier ways to make money in the stock market.
P.S: For more insights and analysis, subscribe to my investing letter The Jolt⚡.
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