The electric vehicle (EV) industry is struggling to stay afloat amid a global semiconductor chip shortage. Because several industry players plan to cut their production due to the shortage, the sector is expected to witness weak momentum in the near term. Thus, we think it could be wise to avoid financially weak electric vehicle stocks Faraday Future Intelligent (FFIE), Canoo (GOEV), and GreenPower Motor (GP). Their shares have declined more than 15% in price over the past week. Read on to learn more.Electric vehicles (EVs) are projected to dominate the automobile market eventually because governments worldwide are undertaking various initiatives to reduce carbon emissions. However, the global semiconductor chip shortage is likely to stall the industry’s growth because major industry players have plans to cut production significantly.
The chip shortage is projected to reduce global auto output by 7.1 million vehicles in 2021. The rising cost of semiconductor chips is another reason EV manufacturers are scaling down their output. As a result, many EV companies’ revenue and earnings growth forecasts will likely remain weak in the coming quarters.
Given the bleak outlook for the EV industry, we believe that financially unstable EV stocks Faraday Future Intelligent Electric Inc. (FFIE), Canoo Inc. (GOEV), and GreenPower Motor Company Inc. (GP) are best avoided now. These stocks have declined more than 15% in price over the past week.