Tesla and other electric-vehicle stocks are down Friday, along with shares of autonomous-vehicle companies. The problem appears to be low consumer confidence.
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Shares of Tesla, and that other electric-vehicle and autonomous-vehicle companies, are down in Friday trading. The problem appears to be consumer confidence—or a lack thereof.
Tesla (ticker: TSLA) stock is down 0.4% in midday trading. The S&P 500 index and Dow Jones Industrial Average are both up slightly.
Earlier in Friday trading, Tesla stock higher when Elon Musk said production at its new German factory could begin in October. Shares just couldn’t hold the early gains.
And Tesla is one of the best-performing EV stocks Friday. Shares of Lordstown Motors (RIDE), Nikola (NKLA), Faraday Future Intelligent Electric (FFIE), Fisker (FSR), Arrival (ARVL), and Lucid (LCID) are down almost 5% on average. Lordstown is faring the worst, down about 8%, while Lucid shares are down about 0.6%.
Shares of lidar makers are dropping too. Lidar, which is essentially laser-based radar, is seen as a key enabling technology for autonomous vehicles.
Shares of lidar companies Luminar Technologies (LAZR), Ouster (OUST), Velodyne Lidar (VLDR), and AEVA Technologies (AEVA) are down more than 5% on average.
Luminar and AEVA reported second-quarter numbers. Earnings don’t matter much, as the companies are new, and both said they were on track to meet corporate milestones. There isn’t much EV news, beyond the positive report from Tesla about production, either. Something else seems to be bothering investors.
Consumer confidence seems to be the culprit. The Michigan Consumer Sentiment Index came in around 70 on Friday. Economists had been expecting a rating of about 80. It’s a big miss. And consumers appear to be worried about the Delta variant of Covid-19, and inflation.
The Delta variant has the potential to slow the economy. But higher inflation expectations raises the possibility the Federal Reserve will be forced to raise interest rates. Higher rates hurt new, richly valued companies in particular by making financing growth more expensive, and by reducing the value of cash flows earned in the future. New companies tend to earn most of their cash flow far in the future.
Cars are big purchases. Confidence matters for General Motors (GM) and Ford Motor (F) too. Shares of those two are down 0.9% and 1% in midday trading, respectively.
American depositary shares of U.S.-listed Chinese car makers haven’t been spared either, even though none currently sell product in the U.S. NIO (NIO), XPeng (XPEV), and Li Auto (LI) ADRs are off 2.7%, 2.5%, and 4.2%, respectively.
It’s a rough day for investors in new auto technology. But they should be used to volatility. Fisker stock, for instance, is down 54% from its 52-week intraday high, but up 67% from its 52-week low. Year to date, Fisker stock is flat, but up almost 20% over the latest 12 months.
Write to Al Root at [email protected]
