EV Makers Fall on Lordstown SEC Review, Nikola Investor Sale

(Bloomberg) -- Investors in electric-vehicle startups are facing another tough day after signs of trouble at two companies and a sharp climb in Treasury yields.

Smaller U.S.-listed EV makers including Lordstown Motors Corp., Nikola Corp., Nio Inc., Workhorse Group Inc., XPeng Inc. and Li Auto Inc. all fell on Thursday. Tesla Inc. also dropped, down as much as 4.1%, after U.K. transport authorities lowered a purchasing bonus for EVs. The move means none of the Tesla cars will now qualify for the subsidies.

Sentiment toward EV stocks, which surged last year, has soured this month amid a rush of announcements from legacy automakers about their plans to move more aggressively into the nascent industry segment. Investors have also been shifting away from high-multiple stocks across the market as Treasury yields continued to rise.

The latest news from Lordstown Motors and Nikola can further weigh on the already depressed shares. Electric-truck startup Lordstown on Wednesday said it received an inquiry on its operations from the Securities and Exchange Commission. The company also said it won’t directly address the accusation raised by short-seller Hindenburg last week and that it was cooperating with regulators. Shares retreated as much as 12% on Thursday, falling for three straight sessions.

Lordstown shares have now lost nearly a quarter of their value since last Friday, when short-seller Hindenburg Research accused the company of misleading investors on its demand and production capabilities.

A Lordstown shareholder sued the automaker Thursday in a proposed class-action lawsuit, claiming the company and its chief executive officer defrauded investors. Much of the complaint, filed in federal court in Youngstown, Ohio, is based on the Hindenburg report.

Nikola also faced a setback on Wednesday, after its strategic partner -- South Korea’s Hanwha Group -- signaled an intention to liquidate half of its holdings in the troubled EV startup. Shares of Nikola, whose brush with the same short seller last year did not end well for the company, fell as much as 7.8%.

Read more: Smaller EV Stocks Falter as Big Automakers Lay Out Bold Moves

Despite the gloom, the long-term outlook for the EV industry remains strong. Goldman Sachs on Thursday raised its forecast for the adoption of battery electric vehicles in the U.S., citing a momentum in the federal and state level policies, continued reduction in battery prices, as well as higher gasoline prices, and automakers announcing incremental plans in the last few months to accelerate their shift to EVs.

“We now expect battery electric vehicles to comprise 20% of U.S. sales in 2025, 40% in 2030, 60% in 2035, and 75% in 2040,” Goldman wrote in a note to clients.

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