Even the Rivian, seen by many automotive experts as one of the most promising startups for Western electric vehicles, is not immune to the boom and bust cycle of the electric vehicle market. But experts say this is normal when new industries are started.
Electric car stocks could fall sharply into a boom and bust. New industries that allow investors to ride the financial rocket in the realm of wealth, but some companies that go public may not be in the less exciting times. The 2000.com statue is one of the most cited examples.
Although no new public companies involved with electric vehicles have been convicted of fraud to date, according to William Quinn, a lecturer at the Queen’s Management School in the United Kingdom who studied the stock market bubbles, fraud is indeed the stock market. There is something special about bubbles. He pointed to the British Bicycle Bubble of 1890 when hundreds of new bicycle companies entered the stock market at exorbitant prices. Almost all went bankrupt in a few years.
David Krish, a business professor at the University of Maryland and co-author of the book “Bubbles and Crash”, said he expects some electric vehicle startups to survive but many to fail. “Stories are being exposed,” Christian told CNN Business.
American electric vehicle companies are not the only ones that have lowered their prices. Chinese electric vehicle startups have also been successful. Nio’s stock has fallen 49% this year, while X-Peng’s 52% and BYD’s 17%. Even Tesla, the world’s most expensive carmaker, was not immune. Its stock is down 27% this year.
Crush sees the falling stock prices of companies that want to compete with Tesla, a testament to how difficult it is to replace startups that turn investors into businesses with a story that generates revenue and Prove yourself on paper with profit.
“Some of these companies are being exposed in a way,” Krish said. “There’s a saying, when the tide goes out, you see who’s not wearing a bathing suit.”