The electric vehicle (EV) market has been a hotbed of activity in recent years, with stocks previously soaring to unprecedented heights. However, with the advent of inflation, higher interest rates and rising geopolitical instability, investors might consider the top EV stocks to sell.
While various factors can influence the performance of EV stocks, certain indicators can guide selling signals. The market sentiment shifted drastically when Tesla (NASDAQ:TSLA) guided a decline in deliveries and vehicle gross margins in 2024. That inevitably impacted the luxury EV market, especially foreign companies in China that remain unprofitable. Although the EV market has a multi-decade growth trajectory ahead, certain EV companies will have an extremely difficult time surviving and navigating this competitive landscape.
Now, let’s discover the top EV stocks to sell ASAP in 2024!
Nio (NIO)
Nio (NYSE:NIO) is among the top EV stocks to sell in 2024. As first noted back in February, I gave my stance on why shares could fall 40% as more trouble loomed.
Nio stock was once an EV darling, but the company’s path forward in the highly competitive global EV market is uncertain. Firstly, NIO has been losing an insane amount of money since its IPO and those losses have only continued to increase. The poor execution of management and subsequent bet on battery-swapping technology has been abysmal, to say the least. Not only is the market not embracing this technology, but it’s likely to never materialize, as EV charging stations continue to be the gold standard. Moreover, the company has barely penetrated the market in its own region, having less than 2% market share in China. The company will have extreme difficulty navigating, both the EV headwinds and geopolitical risks in 2024. That is bad news for investors betting on a turnaround over the next few years.
Li Auto (LI)
Li Auto (NASDAQ:LI) is a much different story than its Chinese EV counterpart. Unlike Nio, the company did a complete 180 and saw its first full year of profitability in 2023. However, due to the company’s ties to China, some extreme risks exist for investors holding the company.
Li Auto is down 20% in the last month, after coming off a strong month in February. Risks in the broader economy and competition in the global EV market have investors spooked. On nearly every financial metric, Li Auto appears to be the cheapest it’s ever been since its IPO during the pandemic. However, this year looks very reminiscent of 2018 during the U.S./China trade war, which saw a major slump in Chinese stocks. It also doesn’t help that 2024 is an election year, and investors will be more critical of where they park their money. Additionally, the market may have already priced in a considerable amount of growth, despite the company’s improving financial performance. With slowing growth expected in the Chinese EV market and rising geopolitical instability, Li Auto is a strong sell in 2024.
Lucid Group (LCID)
Lucid Group (NASDAQ:LCID) is coming off an atrocious operational year in 2023. This year should be no different, as the company battles with competition, quarterly losses and slowing delivery growth.
Lucid Motors entered the market during the pandemic and enjoyed the backdrop of fiscal stimulus and lower interest rates. The company operates in the ultra-competitive luxury EV segment, where it battles against established giants like Tesla, Mercedes-Benz (OTCMKTS:MBGYY) and Hyundai (OTCMKTS:HYMTF). Additionally, the company has enjoyed being backed by notable investors such as Saudi Arabia’s Public Investment Fund. That has ultimately been a crutch for the company, and the CEO Peter Rawlinson, has continually overpromised and under-delivered on production targets. LCID has also experienced high executive turnover, with its CFO leaving back in December of 2023. Lucid continues to burn through cash at a very alarming rate, and its path towards profitability remains unclear. That makes Lucid stock one of the top EV stocks to sell before things get ugly.
On the date of publication, Terel Miles did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.