Electric and self-driving vehicle stocks tumbled this week

The decline in electric vehicle (EV) demand worldwide has not been isolated to EV manufacturers. Industry suppliers are also seeing that demand is low and that is exacerbating losses.

This week was one of the worst EV suppliers they’ve seen. According to data provided by S&P Global Market Intelligence, shares of Intermittent charging (BLNK -3.99%) are down as much as 25.8% this week, Fixtures (LAZAR 0.76%) decreased by 34% and Solid power (SLDP -1.09%) decreased by 16.4% to the minimum level. As of 10 a.m. ET Friday, shares were down 25.4%, 29.9% and 13.9% for the week.

Gains hit EV shares

There wasn’t much good news from the earnings reports for Blink, Luminar or Solid Power. They all have different business models and products, but they are all affected by the same trends.

Blink Charging said product revenue rose just 1.3 percent in the second quarter to $33.3 million, and the company lost $20.1 million, or $0.20 per share.

Solid Power’s revenue was up only slightly to $5.1 million, and the net loss was $22.3 million, or $0.13 per share. Management also lowered its revenue outlook to between $16 million and $20 million.

Luminar’s revenue rose just 2% in the second quarter to $16.5 million, but it fell 22% sequentially. The net loss was $13.7 million. Like Solid Power, management said revenue will be in the mid-$30 million range in 2025, rather than in the second half of this year.

Funding is getting desperate

In addition to the losses, Luminar announced that debt holders have agreed to restructure $422 million of senior convertible notes due 2026 in exchange for $274 million of senior convertible notes due 2030. The investors will also invest other $100 million in new senior secured non-convertible notes due 2028. .

This will extend Luminar’s runway, but it also shows how desperate the company was to liquidate cash and debt. It’s not clear when the company will reach profitability given the long time it takes to get car projects off the ground, so that’s a clue but no guarantee of success.

BLNK Free Cash Flow Data by YCharts

The problem for each of these companies is their cash consumption and lack of visibility of positive cash flow with their current balance sheets.

If EV demand and new technology launches are slower than previously expected, a downward spiral may continue. Balance sheets become stretched, and as share prices fall, it becomes harder to raise capital through debt or equity. It is an unbearable situation without a sustainable business.

Stocks to avoid

I don’t think there’s any reason to jump into these stocks right now. The market for electric vehicles and autonomy is becoming increasingly competitive, and suppliers are being squeezed as a result. I don’t see that changing anytime soon and a downward spiral for these stocks and businesses may have already begun.

These companies offer promising technologies, but that doesn’t mean they have good businesses. Investors are seeing that difference in the market’s reactions to them this week.