$1 Trillion Burned: Electric Car Stocks Are in Free Fall

The market capitalization of the top ten US electric car makers fell from $1.5 trillion to less than $600 billion in just over two years. This was determined by the newspaper Handelsblatt in a recent study. Among them, Tesla stands out. Chinese manufacturers such as BYDXpeng and Nio They were also affected, bringing the total loss to almost a trillion dollars. This is a good 926 billion euros.

Experts are pessimistic: previous maximum prices can no longer be reached

According to the article, analyst Pal Falda of Bankhaus Metzler doubts that share prices in the sector can ever return to previous highs. “The ratings were based on pure fantasy,” Falda recalls, looking back. He doesn't believe previous highs can be reached again. The expert points out that not even strict emissions standards and generous subsidies can prevent the share prices of electric vehicle manufacturers from falling.

Traditional manufacturers enter the electric car market

In addition to increasing competition from established automakers that are entering the electric car market, customer expectations for new products have decreased. Furthermore, the electric car market is growing much more slowly than expected. All this causes problems for manufacturers. The article demonstrates this with an example: Even the electromobility market leader, Tesla They have lost almost 60 percent of their value since the all-time high in November 2021.

The smallest manufacturers, their backs to the wall

According to the Handelsblatt newspaper, falling margins, declining demand and the social paradigm shift towards maintaining prosperity and security of energy supply represent considerable challenges for electric car manufacturers, especially small car manufacturers. US electric cars would struggle with the technology and volume of major manufacturers. “Small suppliers can't handle that,” says analyst Falda, according to the report. This is particularly true in the current environment, where capital has become expensive.

In the long term, electric car makers will likely be among the winners

Despite the current challenges, the long-term outlook for electric cars remains positive. According to the report, Elizabeth Krear of the analysis firm JD Power predicts that the market share of electric cars will exceed 50 percent in 2031. Analysts are especially optimistic about the Chinese manufacturer BYD (“Built Your Dreams”) , which has recently replaced Tesla as the largest electric car manufacturer.

Xiaomi is putting pressure on Tesla, BYD and others

Another example is the Chinese mobile phone manufacturer Xiaomi. It is currently starting sales of its new SU7 electric car. The vehicle is $4,000 cheaper than Tesla's base model. Thanks to high demand, Xiaomi shares rose hugely in China on Tuesday.

Xiaomi's online store currently has a five-month delivery time for the basic version of the SU7. This was reported by CNBC. Xiaomi later said it had received orders for more than 50,000 cars within 27 minutes of sales starting.

This also shows that Tesla founder Elon Musk has to find something.