The Electric Vehicle Bubble

The Electric Vehicle Bubble

The Electric Vehicle (“EV”) valuation bubble is one of many asset bubbles enabled by dovish fiscal and monetary policy and pursued by speculators (both retail traders AND large asset managers such as Fidelity).

The EV bubble seems to be largely driven by the presence of a large total addressable market (“TAM”) regardless of whether it may take 100 years to get there if at all. The Federal Reserve enabled this EV “hope” trade by pumping trillions of dollars into the economy. Rather than being allocated toward productive means, a large portion of that taxpayer-funded capital allocation ended up in the hands of unsophisticated retail traders. Those traders have pumped dollars into speculative equites – including SPACs and bankrupt companies – as well as options. Thank promotors of new financial services products such as fractional share trading and commission-free trades, for helping to inflate this asset bubble.

Thankfully, the EV bubble appears headed back to Earth. Institutional investors are taking profits having benefitted enormously from the Fed’s moral hazard-inducing actions. Here are a few of this year’s EV/auto bubble participants, several of which have zero or negligible revenues, one of which is under investigation by the DOJ: