As longtime readers know, I’m a huge electric vehicle (EV) stock bull. I’m 100% confident that electric vehicles will entirely replace gas-powered by cars by 2040, thanks to improving EV technology, falling battery costs, shifting consumer demand to eco-friendly products, and increasing supply of EVs. At this point, the EV Revolution is inevitable, and EV stocks will surge as a result.
But… even as a huge electric vehicle bull… I acknowledge that most of the EV startups in the market today will go bankrupt.
Yep. You heard that right. I’m one of the biggest EV bulls in the world, and at the same time, I think that most EV stocks in the market today are worthless.
In fact, I don’t think that – I know that.
Why the confidence?
Because history repeats itself.
Let’s rewind back to the dawn of the gas-powered car.
Bicycle mechanics J. Frank and Charles Duryea of Springfield, Massachusetts designed the first successful American gasoline automobile in 1893. Six years later, in 1899, 30 American manufacturers collectively produced 2,500 gas-powered cars.
And that was just the beginning.
Over the next decade, some 485 companies entered the automobile manufacturing business, all hoping to strike it rich as the gas-powered car redefined the world of transportation. It was a “gas-powered car boom” – much like the “electric vehicle boom” of today.
We all know what happened next…
The gas-powered car did go on to redefine the world. Today, around 70 million new passenger cars are sold every single year.
But almost none of those 485 companies that popped up back in the early 1900s turned into a success story.
Less than 50 of them were still in operation by 1930 – and just three of them accounted for 80% of the market.
In other words, even though gas-powered cars did take over the world, 9 out of every 10 gas-powered companies that emerged at the dawn of the gas-powered car didn’t even survive to see those cars take over the world – and less than 1-in-100 turned into auto industry titans.
The EV Revolution will play out similarly.
Which EV Stocks Should You Sell?
Today, there are hundreds upon hundreds of electric vehicle companies in the world, all of them hoping to strike it rich as the electric vehicle redefines the transportation world.
The second part will happen. EVs will take over the world over the next twenty years, just as gas-powered cars took over the world in the early 1900s.
But, also similar to what happened in the gas-powered car boom, the EV boom of the 2020s and 2030s will comprise a few top players differentiating themselves from the pack in terms of some major value-add, whether it be cost, design, performance, or branding. Those top players will attract all the consumer demand, reap all the rewards of the EV Revolution, and squeeze out the other 90% of companies in the industry.
So, when I look at the EV landscape today, I see a graveyard with a few shining stars.
The key to striking gold in the EV Revolution, then, is to find those shining stars… and avoid the companies doomed for what will soon be a crowded EV graveyard.
That’s why I want you to avoid the following three EV stocks. They’re doomed to fail, and an investment in them could end up permanently losing 50% or more of its value:
- Lordstown Motors (NASDAQ:RIDE): This company is a mess. Management lied about its pre-order volumes. The CEO and CFO were ousted. The DOJ is investing the company. Lordstown itself issued a warning that the company may not even have enough cash to keep the lights on. In the hyper-competitive EV market, there’s no way this company survives – especially since, even if Lordstown does survive today’s optical issues, no good engineer is going to want to work for them, and so, they will forever be starved of talent. Bankruptcy is the likely outcome here.
- Workhorse (NASDAQ:WKHS): At one point, I liked Workhorse, because I believed the company was going to win a big USPS contract that would give the company the attention and resources it needed to more fully flesh out its technology platform. But Workhorse lost that contract, and when you combine that loss with the fact the UPS walked away from Workhorse just a few years prior to work with Arrival, it becomes crystal clear that Workhorse’s technology must not be very good. Indeed, after the USPS contract loss, my team and I took a deeper look at the Workhorse team and the underlying tech. Long story short, as engineers, we were very underwhelmed. We believe Arrival will dominate the electric last-mile delivery market, and that Workhorse will get squeezed out. We believe bankruptcy is a very likely outcome here, too.
- Ayro (NASDAQ:AYRO): I also used to be a fan of Ayro, a tiny EV company that is making small, low-speed electric vehicles of niche use cases. But since I first discovered this company about 12 months ago, there has been very little news on product development, or manufacturing build-out, or commercial contract wins. This lack of news really worries me, especially because the company doesn’t have a ton of cash, and because the competitive backdrop of small EVs is quite intense with ElectraMeccanica and Arcimoto. There may be a path forward here for Ayro, but we don’t see it as being very likely to materialize.
If any of those three EV stocks are in your portfolio, get rid of them right away. They have huge downside potential, and are not worth owning in any capacity today.
Because… in an industry full of so much opportunity… why would you own the industry’s worst companies?
Go out and buy the best EV companies.
To help you do just that, we’ve put together a portfolio dubbed Next-Gen Mobility in our exclusive, technology-focused investment research advisory Innovation Investor.
In that portfolio, we’ve included our favorite EV stocks to buy right now. These are stocks of EV winners led by great management teams, with robust technology platforms, great products, tons of resources, and awesome branding.
These are the stocks that are going to go on to score 5X… 10X… even 20X returns in the EV Revolution of the 2020s – not Lordstown Motors or Workhorse.
It’s time, folks, to start separating the wheat from the chaff in the EV market, or else your portfolio is going to pay a steep price.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s the theme of his premiere technology-focused service, Innovation Investor. To see Luke’s entire lineup of innovative cutting-edge stocks, become a subscriber of Innovation Investor today.