By Medha Singh
(Reuters) – Shares of Tesla climbed for a second day on Wednesday, gaining 4% after Chief Executive Elon Musk sold more of his shares, while other high-flying electric vehicle makers hit the brakes on a euphoric rally.
Luxury electric car maker Lucid Group Inc tumbled 8%, while Rivian Automotive Inc dropped about 15%, down for the first time since its blockbuster market debut last week made the company the second-most valuable U.S. automaker.
Lucid’s market value eclipsed that of Ford on Tuesday after the company said it is confident of producing 20,000 of its upcoming Lucid Air sedans in 2022.
Analysts said Rivian’s stunning show in its initial public offering lifted demand for other EV stocks.
Tesla shares climbed 4% in a second day of gains as investors appeared to take in stride Musk’s sale of another $973 million in stock to pay taxes after exercising options.
Musk has now sold a combined 8.2 million shares since Nov. 8, making up about half the 10% of Tesla shares he pledged to sell earlier this month. Gross proceeds of his stock sales are about $8.8 billion. [L4N2S23GH]
EV manufacturers could benefit from significant, new EV subsidies from governments, including U.S. President Joe Biden’s “Build Back Better” spending plan which calls for expanded tax credits for individuals and businesses to buy electric vehicles.
Sono Group NV, which makes electric cars integrated with solar panels, surged 80% in its Nasdaq debut.
Canoo jumped 7.3% after the electric pickup truck maker said it would start U.S. production in the final quarter of 2022, sooner than previously announced 2023.
Lucid, Tesla and Rivian were among the top-most discussed stocks on investor-focused website stocktwits.com, signaling interest from small-time investors.
Electric vehicle makers have also drawn huge interest from options traders.
Tesla, Lucid, Rivian and blank-check company Gores Guggenheim, which is in a deal to take Swedish electric-car maker Polestar public, were among the top 20 most actively traded names in the options market this week, according to Trade Alert data.
“What you’re seeing is these unbelievable valuations when you don’t have any profitability,” said Stephanie Lang, chief investment officer at wealth management firm Homrich Berg.
“You have to be careful here because oftentimes when valuations really are stretched and have no basis, that’s going to end badly.”
Graphic: Three of the most valuable U.S. carmakers are EVs now Three of the most valuable U.S. carmakers are EVs now – https://graphics.reuters.com/TESLA-MUSK/zgpomkyaopd/chart.png
(Reporting by Medha Singh and Devik Jain in Bengaluru; additional reporting by Noel Randewich in Oakland, California and Saqib Iqbal Ahmed in New York; Editing by Maju Samuel and Bernadette Baum)