High inflation, semiconductor chip shortage, and supply-chain disruptions have posed significant challenges for the electric vehicle (EV) industry. These factors have impeded the industry’s growth prospects by slowing production, making it challenging to meet the demand.
The shortage of automotive semiconductors and critical raw materials has forced auto manufacturers to cut production levels. Moreover, the growing economic headwinds have also dampened consumer confidence, decreasing aggregate demand.
Also, the high upfront cost of EVs and lack of charging infrastructure continue to discourage those wanting to switch from ignition vehicles to EVs.
The Bipartisan Infrastructure Law (BIL) provides $7.5 billion to develop the country’s charging infrastructure by installing 500,000 public EV chargers. According to a Mckinsey report, America would require 1.2 million public EV chargers and 28 million private EV chargers by 2030. This concludes that the country would need almost 20 times more chargers than it has now.
Given this challenging backdrop, it could be wise to avoid fundamentally weak EV stocks Lucid Group, Inc. (LCID) and Rivian Automotive, Inc. (RIVN).
Lucid Group, Inc. (LCID)
LCID uses its equipment and factory to design, develop, manufacture and sell electric vehicles, EV powertrains, and battery systems in-house.
For the fiscal second quarter ended June 30, 2022, LCID’s loss from operations widened 124.6% year-over-year to $559.20 million. Its total costs and expenses increased 163.6% year-over-year to $656.53 million. The company’s net loss and net loss per share narrowed 15.8% and 95.4% year-over-year to $220.42 million and $0.33, respectively. Also, its adjusted EBITDA loss came in at $414.08 million, up 89.9% from the prior-year value.
Analysts expect the company’s EPS to remain negative in fiscal 2022. The stock has slumped 68.5% over the past nine months and 57.7% year-to-date to close the last trading session at $16.10.
LCID’s weak fundamentals are reflected in its POWR Ratings. It has an overall rating of F, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It also has an F grade for Value, Stability, and Quality. Within the D-rated Auto & Vehicle Manufacturers industry, it is ranked #53 of 66 stocks. Click here to see the other ratings of LCID for Growth, Momentum, and Sentiment.
Rivian Automotive, Inc. (RIVN)
Founded in 2009, RIVN is a manufacturer of electric adventure vehicles. Its offerings include electric SUVs and passenger pickup vehicles designed for both on- and off-road driving. Recently it launched its R1 platform, a two-row five-passenger pickup truck.
For the fiscal second quarter ended June 30, 2022, RIVN’s total operating expenses increased 73.1% year-over-year to $1 billion. The company’s loss from operations widened 194.5% year-over-year to $1.71 billion. Also, its net loss came in at $1.71 billion, widening 195.2% from the year-ago period. In addition, its net loss per share narrowed 67.1% year-over-year to $1.89.
Street expects the company’s EPS to remain negative in fiscal 2022. Shares of RIVN have declined 72% over the past nine months and 68.1% year-to-date to close the last trading session at $33.06.
RIVN’s POWR Ratings reflect this bleak outlook. It has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It has an F grade for Value, Stability, and Quality and a D for Sentiment. In the same industry, it is ranked #63. To see the other rating of RIVN for Growth and Momentum, click here.
LCID shares were trading at $16.17 per share on Tuesday morning, up $0.07 (+0.43%). Year-to-date, LCID has declined -57.50%, versus a -12.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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