While electric vehicles (EVs) are expected to rule the car market eventually, in the long term, concerns about the formation of a price bubble after a skyrocketing stock rally last year and an ongoing semiconductor shortage make the industry’s near-term prospects bleak, or at least questionable. So, we think it’s wise to avoid fundamentally weak EV players ChargePoint (CHPT), Hyllion (HYLN), and XL fleet (XL). Let’s discuss.The year 2020 saw unprecedented investor interest in the electric vehicle (EV) industry as governments worldwide announced or implemented initiatives to address the climate change concerns. The future of the global EV market looks promising with massive opportunities for growth in the battery, hybrid, and plug-in-hybrid EV markets. According to Globe Newswire, the global EV market is expected to grow at a 29% CAGR from 2021- 2026.
However, EV production costs are increasing because the world is currently witnessing a global semiconductor shortage. This, along with stock price overvaluation, is motivating investors to rotate drop EV stocks in favor of relatively cheaper cyclical stocks amid the economic recovery. This activity is evidenced by the Global X Autonomous & Electric Vehicles ETF’s (DRIV) 4.1% gains over the past three months versus the SPDR S&P 500 ETF Trust’s (SPY) 12.8% returns.
So, it’s wise to stay away from fundamentally weak EV stocks ChargePoint Holdings, Inc. (CHPT), Hyllion Holdings Corp. (HYLN), and XL Fleet Corp. (XL).
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