2024-02-05 05:37:52 ET
Electric vehicle (EV) stocks are on edge on Monday as investors assess the impact of the ongoing power outages in California presents another risk to the industry. Tesla (NASDAQ: TSLA) stock price plunged by more than 1.35% in the pre-market session. VinFast’s stock, which has dropped by over 31% in the past month, also continued falling.
California in darkness
Fisker and Rivian shares plunged by over 1.23% and 1.35%, respectively. This decline is mostly a continuation of what has happened this year. Most of these stocks, including Tesla, have all crashed by double-digits this year as concerns about the sector’s slowdown continued,
Now, there is another concern as California, the most progressive state in the US, comes under total darkness. According to the New York Times , hundreds of thousands of Californians are without power as historic rains spread in the state. Temperatures have also dropped, putting more pressure on EV owners.
California has become the most popular states for EV owners in the US. Data shows that the number of EVs in the state accounts for 37% of all EVs sold in the US. EV registrations in the state has jumped to more than 1.1 million, according to the EIA .
All cars are affected by flooding, with recent data showing that vehicle insurance costs have jumped. However, EVs have some disadvantages compared to Internal Combustion Engine (ICE) vehicles. For one, prolonged power outages mean that these vehicles cannot be driven if they did not have charge in the first place. Filling stations still work when there is flooding.
Toyota vs Tata Motors vs EV stocks
Impact of weather on EVs
Further, studies show that an EVs range deteriorates in cold weather. In freezing weather, EV’s range tends to be about 10% to 20% less than in warm weather. Therefore, these factors could slow the demand for EVs in the future.
Other weather-related events will affect EV demand. For example, California tends to have regular wildfires that knock out the electricity supply. Further, the number of strong hurricanes in the US has been rising.
All these factors are impacting people’s decisions of buying electric vehicles, which is in turn having an impact on their stocks. Recent data shows that, while EV demand is rising, the growth has weakened substantially in the past few months. Some American auto dealers have warned that most customers are selecting ICE vehicles even after providing substantial discounts.
It also explains why ICE stocks are doing better than EVs. Toyota shares have surged to a record high of $200. In India, Tata Motors shares have also surged to an all-time high, making it the biggest automaker in the country. GM and Ford stocks have also bounced back.
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