The electric vehicle (EV) industry is anticipated to achieve solid growth in the upcoming years due to falling costs, improved performance, and government subsidies. But the ongoing semiconductor chip shortage poses a significant challenge for the industry’s progress in the near term. Thus, we think Nikola (NKLA), Poterra (PTRA), Hyzon Motors (HYZN), and Workhorse Group (WKHS), which were the worst performing EV stocks in the third quarter due to their poor fundamentals, should be avoided.The transition of the automobile industry from internal-combustion-powered cars to electric vehicles (EV) will have major ripple effects for multiple industries. Several states in the United States have already declared a ban on the sale of new internal combustion cars beginning in 2035 to decrease carbon emissions. In addition, several other nations have announced similar plans to allow only EV sales in the next decade.
However, a global semiconductor shortage has emerged as a major impediment to the growth of the EV industry. According to the CEO of semiconductor company Marvell (NASDAQ:MRVL) Technology, the semiconductor chip shortage may continue until 2022 and maybe beyond. This could dampen the revenue and earnings growth potential of several EV companies.
Given this backdrop, we think it would be wise to avoid fundamentally weak EV stocks Nikola Corporation (NKLA), Proterra Inc. (PTRA), Hyzon Motors Inc. (HYZN), and Workhorse Group Inc. (WKHS), which were the worst performers in the third quarter.