Even though the electric vehicle (EV) battery industry is expected to grow substantially over the long term, thanks to the increasing demand for EVs and government policy support, the global semiconductor chip shortage could mar its growth in the near term. Against this backdrop, we think it could be wise to avoid EV battery manufacturers Microvast (MVST), Romeo Power (RMO), and Flux Power (FLUX), which look overvalued at their current price levels. Let’s discuss.The demand for electric vehicles (EVs) has been increasing, with the governments globally taking measures to transition their nations to zero-emission transportation. As a result, the demand for EV batteries has also been growing rapidly. According to an Emergen Research report, the global EV battery market is expected to reach $46.80 billion by 2027.
However, EV production continues to be hamstrung by the global semiconductor chip shortage, making the EV battery industry’s near-term growth prospects bleak. While governments have been taking steps to ameliorate the situation, and companies have been ramping up production to meet the growing demand for semiconductors, it is widely held that the current chip shortage will persist.
So, even though the EV battery industry could grow significantly in the long term, some stocks in this sector—for example pace, Microvast Holdings, Inc. (MVST), Romeo Power, Inc. (RMO), and Flux Power Holdings, Inc. (FLUX)—have seen the price of their shares outrun their intrinsic values. So, we think it could be wise to avoid these names now.