The electric vehicle (EV) sector saw widespread losses yesterday following news that a government plan set to offer incentives for the industry is poised to fail at the senate. Rivian, NIO, Nikola, and more all finished down for the day. Even industry giants such as Tesla and General Motors saw shares in the red by close of business.
So what exactly happened?
The U.S. President Joe Biden’s “Build Back Better” plan, aimed at sustainably developing the country’s infrastructure, had sought to incentivize people to buy EVs by offering large tax benefits of up to $12,500 per vehicle purchased.
The proposed bill took a costly hit yesterday, however, as leading Republican senator Joe Manchin declared his opposition to the bill. While this doesn’t necessarily mean the bill is doomed, it’s likely that it will undergo serious revisions in an attempt to pass through the senate.
This set off a cascade of stock falloffs throughout the EV industry, with almost every major player taking a hit. The bill would have spurred a huge demand for EVs in the new year and would also have added significantly to the nationwide charger infrastructure. With these investments now up in the air, uncertainty is rife across the EV space and some investors appear to be panic selling
Are EV stocks still worth investing in?
Yes. The world is accelerating rapidly towards an electric future. This very minor setback doesn’t change the monumental shift that is already happening in the automotive industry. Currently, EV purchases account for approximately 26% of new sales in the global market, and this is only set to increase as more and more countries roll out plans to phase out fossil fuel-powered vehicles.
Almost all major auto companies are rowing in behind the move towards zero emissions. The suspected failure of President Biden’s bill is certainly a road bump for the United States’ adoption of EVs, but the change is coming and it can’t be stopped. EV stocks are going to continue to increase in value over the next 10 years as demand grows stronger. Volatility is expected, and investors should try to get comfortable with days like yesterday – we’re likely to see plenty more of them over the next few years.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.