Weekly EV Bubble Watch

Up until Volkswagen (VWAGY) announced a $5 billion investment in Rivian (RIVN), electric vehicle stocks looked like they would keep falling. Instead, Rivian shares bottomed at below $10 to close at $16.37. Tesla (TSLA) performed even better. The stock traded at around $140 before the firm posted earnings of $0.45 on April 23, 2024.

TSLA closed at $263.26 and has a good chance of retaking its 52-week high of $299.29.

Is Tesla’s 12 straight days of gains too good to be true?


Tesla needs to solve full self-driving (“FSD”). In China, Baidu (BIDU) rose from $88 to nearly $100 recently. Beijing authorities announced on Tuesday that it would support robotaxis in ride-hailing and car rental vehicles. Baidu runs Apollo Go, a robotaxis. Baidu’s advancements would pressure Tesla to announce positive progress in FSD. Otherwise, the firm risks falling behind technology firms in China.

Bears are not as convinced about Rivian as they are about Tesla. Short interest is 13.4%. As wholesale used auto prices fall, Tesla has a diversified business in solar power and batteries. Conversely, Rivian relies on vehicle sales.

In June, vehicle prices fell by 16.6% Y/Y. Non-EV prices fell by 9.5%, according to the Manheim Used Vehicle Value Index.

Wait for used car prices to fall by at least 30%. When they return to pre-Covid price levels, demand for vehicles of any time may improve.

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