- A continued sell-off in EV stocks is a "massive buying opportunity" for investors, Wedbush wrote.
- Wedbush analyst Daniel Ives pinpointed 3 factors that are driving the sell-off in EV stocks.
- "This is not the time to panic in EV land … just part of the multi-year ride higher," Ives said.
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The decline in electric-vehicle stocks since the start of the year should be viewed as a "massive buying opportunity" for investors, Wedbush analyst Daniel Ives said in a note on Sunday.
The decline in EV stocks, especially Tesla, has been a "painful risk-off moment" for the sector and is primarily being driven by three factors, the note said: valuation concerns, increase in global EV competition, and chip shortages causing a soft start to 2021 deliveries.
Nio lowered its first-quarter delivery guidance last week and halted production for five days due to a widespread semiconductor shortage that has hit the auto industry hard.
Year-to-date, shares of Tesla and Nio are down 14% and 27%, respectively. Shares of Churchill Capital Corp IV are down 62% since it announced its planned merger with EV startup Lucid Motors.
But according to Ives, "this is not the time to panic in EV land … just part of the multi-year ride higher." Ives wrote that he views the recent sell-off in EV stocks as a short-term pullback in a mult-year upward rally.
An upcoming catalyst to continue the rise higher in the EV sector could be a rollout of President Joe Biden's green agenda, which will likely include EV tax credits and more consumer incentives to drive the adoption of electric vehicles, according to Ives.
Ives wrote that he expects the Biden administration to unveil more details surrounding its green-energy agenda in the coming weeks. The core of Biden's plan will likely be focused on pushing clean-energy and zero-emission vehicles "with hopes of accelerating the deployment of electric vehicles and ~500,000 public charging outlets by 2030," Ives said.
With the increased adoption of EVs likely set to accelerate, investors should stay invested in a $5 trillion market opportunity over the next decade, the note said.
"We compare EV to the early days of the internet boom as the whole ecosystem globally is just starting to get its sea legs with potential to be 20%+ of all auto sales globally by 2030," Ives concluded.