Electric Vehicle Stocks: A Tale of Two Halves in 2024
Tesla’s Dramatic Turnaround
Risk-averse investors likely had a rough ride with Tesla (NASDAQ: TSLA) stock in 2024. By mid-year, shares had plummeted over 20%, while the S&P 500 index surged 15% higher. However, the second half of the year told a different story, with Tesla ending 2024 with a staggering 62.5% gain, according to S&P Global Market Intelligence.
Fellow EV Makers Struggle
Rivian Automotive (NASDAQ: RIVN) and Lucid Group (NASDAQ: LCID) also faced a tough start to 2024, but unlike Tesla, they failed to recover, ending the year down 43.3% and 28.3%, respectively.
Lessons Learned
The contrasting performances of these EV maker stocks offer valuable lessons for investors. Tesla’s rollercoaster ride in 2024 served as a prime example of risk and volatility. Shares plummeted 43% at their lowest point and soared 93% at their highest. The reasons behind Tesla’s second-half recovery may hold clues for its future performance in 2025.
Catalysts for Growth
EV start-ups Rivian and Lucid have their own potential catalysts to boost shares in 2025. However, risks remain high for these stocks. Rivian’s production volume held steady as it retooled its plant for the next-generation R2 electric SUVs, while Lucid delivered over 10,000 vehicles for the first time and will introduce its new Gravity SUV in 2025.
Understanding Risk
Investors in the EV sector should be comfortable with the risk profile. One major drag on the sector in 2024 was sagging consumer demand, leading to slower sales growth and throttled expansion plans. Even Tesla pushed back its plan to build a new factory in Mexico. However, Tesla’s strong financial condition allows it to weather a slowdown, unlike Rivian and Lucid, which remain unprofitable.
Tesla’s Diversification
Tesla’s energy segment is growing rapidly, with energy storage deployments increasing 114% year over year. The company has also invested heavily in artificial intelligence infrastructure, which could lead to additional subscription revenue and a potential fleet of self-driving taxis. Robotics is another division with major potential to boost earnings.
What’s Ahead for 2025
While risks remain, Tesla’s diversification and strong financial condition make it a leader in the EV sector. Its future potential is what investors see, and it’s likely to maintain its lead over other EV makers in 2025. Meanwhile, Rivian and Lucid will need to report impressive sales and production volumes to rebound.
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