A rally in global electric-vehicle makers that pushed the stocks to multiyear highs fizzled after growth prospects for some startups came into question.
Shares of Workhorse Group Inc. tumbled as much 25% Wednesday, leading the sector lower, after reports that the U.S. Postal Service further delayed a contract for new mail trucks. The company, which is working on making commercial vehicles for use in last-mile deliveries, was considered among the frontrunners for the bid.
The setback at Workforce highlights the challenges ahead for the startups, many of which have yet to post any profits or even, in some cases, revenue.
“Because of Covid, the EV industry has been hampered with both personnel and supply constraints,” said R.F. Lafferty analyst Jaime Perez, who rates Workhorse a buy. “We expected production delays and temporary setbacks throughout the EV industry, especially among the startup companies.”
EV stocks have surged over the past month after Joe Biden was elected U.S. president and it was announced that Tesla Inc. will join the S&P 500 Index. Tesla is up 45% since the end of October, while Workhorse has gained 33% over the same period.
“We get the sense that some investors consider the USPS award a done deal’ for Workhorse, since its product is electric and can save the USPS money over the years,” Colliers Securities analyst Michael Shlisky said. The analyst continues to assume Workhorse won’t win the award, adding that “value of it is so unclear if it must be shared with partners and could take multiple years to be realized, reducing the present value.”
Chinese EV makers Nio Inc. and Li Auto Inc. also plunged. Li earlier on Wednesday said it would offer about 47 million American Depositary Receipts, weighing on the stock, while Nio has now fallen for three straight sessions.
Tesla Inc. also posted a rare decline, falling as much as 7.5%. The stock surged 43% through Tuesday since its inclusion in the S&P 500 Index was announced on Nov. 16, lifting most EV names along with it.
Other smaller peers were also dragged lower, with Lordstown Motors Corp. falling 15%, Kandi Technologies Group Inc. dropping 18%, Fisker Inc. weaker by 12% and ElectraMeccanica Vehicles Corp. off by 17%.
Nikola Corp. was the standout in the group, rising as much as 8.1%. Nikola lost 38% of its market value earlier this week after General Motors Co. on Monday scrapped a plan to take a stake in the startup.
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