Market Volatility: Electric Vehicle Stocks Take a Wild Ride
As the dust settles on the election results, the stock market is experiencing a whirlwind of activity. While some sectors are surging, others are plummeting. The electric vehicle (EV) sector, in particular, is presenting a mixed bag.
Tesla Soars, Rivian Stumbles
Shares of Tesla, the sector leader, have skyrocketed by approximately 13%. In contrast, Rivian Automotive, an EV startup, has seen its shares tumble by around 9%. This downward trend leaves Rivian’s stock down a staggering 60% year to date.
Unraveling the Crosscurrents
Investors would do well to examine the underlying forces driving these disparate performances. Tesla CEO Elon Musk’s open support for Donald Trump has sparked concerns about potential changes to the existing $7,500 tax credit for EV buyers. If Trump were to eliminate or alter this credit, it could negatively impact electric car sales. However, investors believe this could ultimately benefit Tesla, as its profitability would give it an edge over unprofitable competitors.
Rivian’s Unique Challenges
Rivian, still unprofitable, faces distinct challenges. Its high-priced trucks have largely failed to qualify for the tax credit. The upcoming launch of its lower-priced R2 and R3 platforms in 2026 and 2027, respectively, could be impacted by changes to government policy. Despite this, Rivian has sufficient capital to reach the production stage and has been working to reduce costs. Any policy shifts might not have as severe an impact on the company as investors fear.
A Buying Opportunity?
With Rivian’s shares hovering near all-time lows, some investors may see this as a calculated risk worth taking. Tomorrow’s third-quarter update will provide valuable insights into the company’s outlook on potential headwinds.
Expert Insights
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