The governments of several countries have announced ambitious plans to phase out internal-combustion vehicles in favor of electric vehicles (EVs) to achieve carbon neutrality over the next few decades. For example…
the Biden administration has allocated $7.50 billion for EV charging stations under a $1 trillion bipartisan infrastructure bill. In addition, 29 Senate Democrats are currently seeking $160 billion in additional funding for EVs.
However, the EV industry faces several obstacles, such as production and supply chain bottlenecks due to an ongoing semiconductor chip shortage. Furthermore, given this industry’s increasing popularity, several start-ups have entered the sector absent an adequate product pipeline or technological capabilities. These stocks have been advancing in price based solely on industry tailwinds and aggressive marketing.
Thus, we believe fundamentally weak EV manufacturing stocks Faraday Future Intelligent Electric Inc. (FFIE – Get Rating), The Lion Electric Company (LEV – Get Rating), and Lightning eMotors, Inc. (ZEV – Get Rating) are best avoided now.
FFIE designs, manufactures, sells, and distributes EVs and associated products. The company went public through a reverse merger with Property Solutions Acquisition Corp. and began trading on July 22, 2021. The business combination raised $1 billion in proceeds. FFIE is based in Gardena, Calif.
This month, FFIE declared that it is searching for permanent flagship store locations in New York City and Los Angeles. The company is targeting a flagship store presence in 20 top cities worldwide by 2025. The company is not expected to benefit from this long-term project immediately.
On August 26, FFIE unveiled its plans to partner with electric installation company Qmerit to develop future EV home charging energy solutions. It might take a while for the company to deploy such innovations, however.
Analysts expect the company’s EPS to remain negative at least until the next year. The stock has lost 33.8% in price since it went public on July 22, to close yesterday’s trading session at $9.26.
FFIE’s POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating, which equates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
FFIE has an F Growth and Value grade, and a D Quality grade. In the 64-stock, D-rated Auto & Vehicle Manufacturers industry, it is ranked #54. To see additional POWR Ratings for Momentum, Stability, and Sentiment for FFIE, click here.
LEV, which is headquartered in Canada, produces commercial EVs. The company went public in a reverse merger with Special Purpose Acquisition Company (SPAC), Northern Genesis Acquisition Corp., on May 7, 2021.
Last month, LEV retained its Canadian flagship corporation, Pomerleau, to establish a new battery plant and innovation center in the YMX International Aerocity of Mirabel. However, initial production in the plant is not expected to start until the second half of 2022.
On August 11, LEV entered a new revolving credit facility with a syndicate of lenders represented by the National Bank of Canada. The move could lead to a higher interest burden for the company.
In its second fiscal quarter, ended June 30, LEV’s gross profit decreased 14.2% year-over-year to $0.90 million, while its operating loss increased 7,863% year-over-year to $76.1 million. Its net loss for the…
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