7 EV Stocks to Avoid Like the Plague Heading Into April 2023

While electric vehicles may be the future of transportation, I’m afraid these EV stocks to avoid might not make the cut. Fundamentally, as a burgeoning sector, the price for entry for arguably most consumers is simply too steep. With a smaller addressable market for a wide array of competitors, it’s inevitable that many if not most enterprises will fail.

Plus, investors must consider the obvious point: who’s going to fork over so much cash for an unproven automotive brand? After all, we’re living in a paradigm where consumers are considering pulling their money out of their bank accounts due to fears of broader economic catastrophes. That’s hardly a recipe for success. So, below are the EV stocks to avoid.

Faraday Future (FFIE)

While Faraday Future (NASDAQ:FFIE) initially started off as an exciting venture, here’s where the wheels fell off for me: the vehicles simply command too high of a price tag. We’re talking about a new brand that will launch a car with a starting price of $180,000. Other sources suggest that the price will be around $200,000. I’m sorry but I don’t see how this is going to work.

Don’t get me wrong. Because of the wealth gap that expanded during the Covid-19 crisis, plenty of uber-rich folks exist. However, these folks also want pedigree. Therefore, I don’t begrudge an enterprise like Ferrari (NYSE:RACE) charging six figures (or more) for their rides. Frankly, the Prancing Horse earned the right. But a debutante like Faraday Future? Again, I just don’t see it which is why I place FFIE as one of the EV stocks to avoid.

Another factor to consider is that the underlying financials don’t provide much confidence. On the balance sheet, Faraday carries more debt than arguably most investors would like. As well, it’s a pre-revenue enterprise, making it highly speculative.

Lordstown Motors (RIDE)

Although it was my choice to put Lordstown Motors (NASDAQ:RIDE) on this list of EV stocks to avoid, you should be aware that it’s more of a consensus opinion. In the past month, the only Wall Street analyst covering RIDE stock is Emmanuel Rosner, who pegs it a hold. To be fair, the expert’s price target hits $1, implying over 71% upside potential.

However, from five to 11 months ago, three analysts covered RIDE and all three pegged it as a sell. Usually, the suits on the Street avoid issuing sell recommendations for diplomatic reasons. In addition, you don’t want to tick off enterprises and lose the relationship. Therefore, if analysts are willing to ruffle feathers, you know something’s gone wrong.

In fairness, Lordstown benefits from a no-debt balance sheet, affording management flexibility during rough times. However, with so many other key metrics deeply in the red, investors must call a spade a spade. Simply, RIDE represents one of the EV stocks to avoid.

Workhorse (WKHS)

Unfortunately, one of the drawbacks of discussing EV stocks to sell – or pick any other investment category – is that you risk drawing the ire of internet soldiers ready to defend the honor of targeted publicly traded companies. However, when it comes to Workhorse (NASDAQ:WKHS), I really, truly do not want to hear it. And that’s because I warned everyone it wasn’t a shoo-in for the much-discussed U.S. Postal Service (USPS) contract.

To make a long story short, the USPS wanted to replace its aging fleet of long-life vehicles (LLVs). With Workhorse being the only EV candidate, the consensus of public opinion stated that it would easily win out. Wrong. As I stated in my warning to InvestorPlace readers, EVs represent a new technology. In contrast, everyone knows what to expect from a combustion-powered platform.

Now, I can’t guarantee what will happen to WKHS moving forward. However, it seems rudderless without an exciting production contract in the pipeline. Therefore, it’s one of the EV stocks to avoid.

ElectraMeccanica Vehicles (SOLO)

To be upfront, I didn’t quite see the point in ElectraMeccanica Vehicles (NASDAQ:SOLO). Yes, many folks – including some of my InvestorPlace colleagues – recognized the viability of a single-seater electric commuter vehicle. Personally, this is just my opinion, I thought the concept was stupid and a waste of money. Honestly, if you’re going to get an EV, why not get a “real” EV, not a single-seater trike?

Ultimately, it doesn’t matter what I think – SOLO would rise or fall based on investor demand. So far, SOLO ranks among the EV stocks to avoid. Since the January opener, shares plunged 18%. In the trailing year, they’re down 75%. Regarding its lifetime return, data from Google Finance reveals that ElectraMeccanica lost nearly 83% of its equity value.

Financially, along with being a possible value trap, Gurufocus notes that ElectraMeccanica suffers from four red flags. Among them, its Altman Z-Score sits at 0.06, which signifies a distressed enterprise. Additionally, such a low score implies bankruptcy risk in the next two years.

Canoo (GOEV)

Another name among EV stocks to avoid that initially started off as an intriguing concept, Canoo (NASDAQ:GOEV) attracted several believers. Unlike other auto manufacturers, Canoo stepped forward with an electric-powered van, which it viewed as a lifestyle vehicle. Although funky looking (at least in my opinion), the vehicle offer plenty of space and thus versatility.

Unfortunately, GOEV hasn’t resonated with investors, making it one of the EV stocks to avoid. Sure, speculative fervor can easily spike shares up temporarily. That goes for Canoo and all other entities on this list. However, GOEV fails to gain any type of sustained momentum. For example, since the January opener, shares hemorrhaged 56% of equity value. In the past 365 days, they’re down 90%.

According to Gurufocus, Canoo printed $3 million in revenue in 2020 against a net loss of $87 million. And that’s all she wrote for sales. Last year, Canoo generated zero sales and $488 million in net losses. If that sounds like a recipe for success, be my guest and buy GOEV. For everyone else, stay away.

Mullen Automotive (MULN)

Writing various news articles for Mullen Automotive (NASDAQ:MULN), I don’t necessarily want to speak ill about it. Bluntly speaking, I know that MULN carries almost religious loyalty among its fans. However, for anyone who doesn’t have many feelings for Mullen, it’s best to consider it one of the EV stocks to avoid. I mean that in the purest sense possible. Don’t start and you won’t find out.

Anyone intrepid enough to hold MULN for the long haul knows how painful this investment is. Earlier this year, Mullen got off to an auspicious start, popping quickly to 42 cents. At the time of writing, however, shares trade hands for a dime. Against a year-to-date framework, MULN cratered over 68%. In the past 365 days, it’s down over 96%.

If I had to summarize Mullen in one neat sentence, it would be this: the company issues plenty of promises but fails to deliver. For all the rhetoric, Mullen remains a pre-revenue enterprise. With mounting losses, the company must start delivering or risk total failure.

Arcimoto (FUV)

In fairness, what glimmer of hope Mullen Automotive and some other EV stocks to avoid might have centered on retail trader popularity. No matter what, some folks will always want to speculate on MULN. Unfortunately, it doesn’t appear that Acrimoto (NASDAQ:FUV) shares the same level of grassroots enthusiasm. Thus, FUV stock could be the riskiest name on this list.

Honestly, you just need to look at the charts. Since the start of the new year, FUV plunged almost 59%. In the trailing one-year period, FUV gave up nearly 99% of its equity value. As I’m writing these words, I’m going through various time periods: one day, one week, one month, and six months. No matter where I click, I see nothing but crimson stains.

Specializing in vehicles geared mainly for personal entertainment, it’s difficult to see broader relevancies. If that wasn’t enough, Arcimoto suffers from poor stability in the balance sheet and deeply negative margins. So, if you care about your money, you’ll treat FUV as one of the EV stocks to avoid.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.