The global semiconductor shortage is expected to continue negatively affecting Electric Vehicle (EV) production and sales this year and beyond. Nevertheless, investors’ optimism regarding the EV industry is causing certain stocks with bleak growth prospects to trade at unsustainable valuations. Thus, we think speculative EV stocks Arrival (ARVL), Lordstown Motors (RIDE), GreenPower Motor (GP), and Ayro, Inc. (AYRO) are best avoided now. Read on.Electric vehicles (EVs) are revolutionizing the automobile industry as governments worldwide emphasize clean energy. According to the latest forecast by the investment bank UBS, 20% of all new cars sold globally are expected to be electric by 2025, a metric that is expected to jump to 40% by 2030. The bank also projects that by 2040, almost every new car sold will be electric.
However, a current semiconductor shortage is far from being solved and is the primary factor dragging automobile production and sales down. Analysts believe the semiconductor shortage could even last until 2023. This is expected to have a greater impact on start-ups with limited market share than on well-established EV manufacturers.
Thus, we think lesser-known and overvalued EV stocks Arrival Limited (ARVL), Lordstown Motors Corp. (RIDE), GreenPower Motor Company Inc. (GP), and Ayro Inc. (AYRO) are better avoided now.