AllianceBernstein has signaled that the electric vehicle market dynamics are shifting as EV sales growth in the U.S. has decelerated even as more electric vehicle models are now offered.
While the electric vehicle industry has made tremendous strides in improvements and costs, shifts in demand seem to be easing up. “The pool of early EV enthusiasts is drying up. This dynamic is most clearly seen in the US, where growth in the number of EVs sold has decelerated sharply versus expectations of continued robust growth,” AllianceBernstein stated.
The investment institution went on to add that the industry is still expanding, just at a slower rate with more competitive pressures facing off.
See the below chart that AllianceBernstein provided:
The financial institution also believes that a more competitive electric vehicle landscape will more than likely also lead to lower profitability in certain cases and prolong losses for other auto manufacturers.
“In our view, equity investors must be very selective in holding shares of automakers whose earnings growth is predicated on winning more EV market share.”
With all that said, Alliance Bernstein doesn’t believe that the current speed bump will undermine the long-term potential of the electric vehicle market, it just believes the landscape is changing from what it previously looked like.
Automotive stocks investors can look to monitor along with each of their year-to-date price action:
Toyota Motor Corporation (TM) +31.3% YTD. Volkswagen (OTCPK:VWAGY) +23.4% YTD. General Motors (GM) +22.1% YTD. Honda Motor Co. (HMC) +18.3% YTD. Ford Motor Company (F) +9.9% YTD. Nissan Motor Co. (OTCPK:NSANY) -1.6% YTD. Tesla (TSLA) -34.7% YTD. Rivian Automotive (RIVN) -56.7% YTD.
For a more diversified approach to the electric vehicle sector, market participants can also examine the Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV). DRIV comes attached with 75 holdings as it aims to offer exposure to companies involved in the development of autonomous vehicles software as well as stocks that produce electric vehicles and EV components.