The increasing popularity of electric vehicles (EV) amid a global semiconductor shortage has resulted in a sharp increase in EV prices. But with limited potential federal investments to boost the industry’s growth, we think fundamentally weak EV stocks Enovix Corporation (ENVX), FREYR Battery (FREY), and CBAK Energy Technology (CBAT) are best avoided now. Read on.Governments worldwide have announced ambitious plans to phase out internal combustion powered vehicles over the next couple of decades. As a result, the electric vehicles (EV) industry is witnessing unprecedented private and federal capital investments. For example, president Biden recently signed an executive order to ensure that half of all new vehicles sold in the U.S. are electric by 2030. For this purpose, the government has allocated $7.50 billion from its $1 trillion infrastructure bill to fund the development of EV infrastructure.
However, this investment falls short of the estimated $50 billion needed to reach the production and sales target.
In addition, a global semiconductor chip shortage has harmed the EV industry with increased production costs and supply chain bottlenecks. Given this backdrop, we believe that the shares of fundamentally weak EV companies Enovix Corporation (ENVX), FREYR Battery (FREY), and CBAK Energy Technology, Inc. (CBAT), are best avoided now.