peak EV capitalization occurred in the first half of 2022
The EV Stock Bubble Bursting Has Cost Investors $1.5 Trillion
isker stock dropped 55% this past week after The Wall Street Journal reported it was preparing for a possible bankruptcy filing. The startup’s current challenges are the latest in a growing line of challenges for almost every electric vehicle start-up.
Building a car business has proven harder than most imagined, costing investors trillions of dollars.
Fisker issued a statement Thursday saying, “As a matter of company policy, Fisker does not comment on market rumors and speculation. However, Fisker often works with outside advisors to help manage its business and assist in developing and executing strategies. Fisker is focused on raising additional capital and engaging in a strategic partnership with a large automaker.”
Recent declines have left Fisker, Canoo, Lordstown Motors, Arrival, and Faraday Future, along with electric trucking companies Nikola, and Hyliion, with market capitalizations under $1 billion each.
At each stock’s peak, the combined market value of those seven totaled almost $100 billion. Now it totals about $1 billion.
A lot of strategies are represented by the seven. Fisker is asset-light, using Magna International to build its cars. Lordstown has less expensive capacity purchased from General Motors. Arrival tried to pioneer microfactories. Canoo pioneered multipurpose, highly configurable commercial vehicles. And Faraday focused on ultraluxury EVs.
In trucking, Nikola focuses on vertically integrating hydrogen production. Hyliion can sell its systems to existing truck manufacturers.
All have hit roadblocks because building cars, and a car company, is hard and requires billions of dollars in start-up capital and working capital.
None of the seven is close to turning a profit, according to Wall Street estimates aggregated by FactSet. XPeng, NIO, Polestar Automotive, Lotus Technology, Lucid, VinFast Auto, and Rivian Automotive aren’t profitable, either. Those seven still have market capitalizations greater than $1 billion each.
Today, the market value of that group is roughly $58 billion combined. At their peak capitalizations, the figure was roughly $650 billion. The peak was helped by wild early trading in VinFast, which pushed that stock’s market capitalization above $200 billion.
Today, just three EV makers generate consistent profits: Tesla, BYD, and Li Auto. Those three are worth roughly $650 billion combined. At their peaks, the trio were worth about $1.4 trillion.
Overall, EV makers’ combined market value is some $700 billion—Tesla is about 75% of the total—down a whopping $1.5 trillion from peak capitalizations.
Most of the peak capitalization occurred in the first half of 2022. That, for investors, was peak-EV.
The peak market values for GM and Ford Motor were also in the first half of 2023, according to Bloomberg. Those two got swept up in EV hope as well.
The Detroit-Three auto makers, GM, Ford, and Chrysler parent Stellantis, have a combined market value of some $185 billion. Their peak figure was about $320 billion.
GM, Ford, and Stellantis are all profitable and make EVs. They might win their share of EV business in the future. Investors, however, have never valued them like growth-laden start-up stocks.
Toyota Motor, today, is worth some $383 billion. Its peak market capitalization happened on Mar. 6. It doesn’t sell a lot of battery-electric vehicles yet, but its hybrids are still hot sellers.
