Experts are warning of falling values for electric vehicles in the near future as sales of new EVs stumble amid uncertainty from drivers.
Investing in electric has been a no-brainer for most car manufacturers with countries around the world introducing bans on the sale of petrol and diesel vehicles from 2030 at the earliest.
Consumer interest is there too, as millions of people around the world look to buy a clean car that helps them avoid charges for polluting vehicles like London’s Ultra Low Emission Zone.
However, experts are warning that companies experiencing an economic boom from electric vehicles could see their shares plummet.
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Experts have warned car companies that 'times have changed rapidly'
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Renault, one of the most popular car companies in the world, scrapped an initial public offering (IPO) of its electric vehicle and software arm, Ampere.
The French carmaker said market conditions were no longer suitable for the IPO, in addition to the increased profitability of the wider business.
Renault had previously backed Ampere as a €10billion (£8.5billion) rival to Tesla and Chinese electric vehicle manufacturers.
There has been a slowdown in the sales of electric cars in Europe in recent months with experts highlighting a lack of financial grants, concerns about the charging network and the upfront cost putting consumers off.
Renault's Ampere has been hit with adverse market conditions
RENAULT
Mark Taylor, director at UK broker Panmure Gordon, commented on the falling value of companies manufacturing electric vehicles.
He said: “When they first quoted the $10billion (£7.8billion) valuation for Ampere, the EV bubble was in peak mode with VinFast trading as [the] second largest automaker on the planet.
“Times have changed rapidly,” the expert told Bloomberg News.
The pandemic saw the value of EV companies explode with popularity, notably Rivian Automotive which saw its value hit $153billion (£120billion) at one point.
Electric vehicle shares have fallen in recent months with Chinese brands Lucid Group and XPeng losing more than 80 per cent, according to Bloomberg.
While experts are not yet predicting the “bubble to burst” for electric vehicles, there are fears major companies could ease plans to ramp up production of EVs.
Adam Jones, analyst at Morgan Stanley, said car manufacturers were still struggling to deal with the “Darwinian struggle for EV viability”.
He added: “Look for a potential array of announcements from JVs with China EV partners, impairments, delayed capacity expansion, carve-outs and horse-trading with regulatory bodies to possibly reset ‘unrealistic’ EV tarets.”
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BYD slashed prices to meet sales targets earlier this year
REUTERS
Even the most successful companies are not exempt from being hit with tough market conditions, as seen by China’s EV behemoth BYD.
In a bid to meet lofty sales goals, BYD – which stands for Build Your Dreams – cut prices on its vehicles massively, causing a slump in shares.