The automobile sector saw some broad selling pressure on Friday after price cuts by Tesla (TSLA) threw a brighter spotlight on the supply vs demand debate, particularly with electric vehicles.
Morgan Stanley also warned again on a tough road for the sector with a "hunker down" year anticipated. "While we continue to see traditional/legacy car companies invest in electrification, we expect a significantly slower pace of investment as the cyclical downturn forces incremental capital discipline," noted analyst Adam Jonas. The worry is also that many of the EV startups hoping to hit profitability in 2023 or early in 2024 may face an extended timeline just as investors are slashing valuations in general on growth bets.
Helbiz (HLBZ) was one of the leading decliners in early action with a drop of 12.71%. Other notable movers included Atlis Motor Vehicles (AMV) -13.22%, Phoenix Motor (PEV) -9.09%, Rivian Automotive (RIVN) -8.90%, Fisker (FSR) -6.95%, Lordstown Motors (RIDE) -4.55%, Stellantis (STLA) -4.40%, Luminar Technologies (LAZR) -3.92%, Polestar Automotive (PSNY) -3.90%, Nikola (NKLA) -3.79%, Electrameccanica Vehicles (SOLO) -3.78%, Aptiv (APTV) -2.35%, and Dana (DAN) -2.27%.
Meanwhile, General Motors (NYSE:GM) showed a 5.45% drop and Ford Motor (F) peeled off 6.65%. The balancing act for the two Detroit automakers is expected to get even trickier in the back half of the year when UAW negotiations ramp up on a new labor contract.
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