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4 Factors That Are Popping the EV Stock Bubble

Electric-vehicle investors are going through a brutal stretch after an epic year.

By Al Root
Thu, May 13, 2021 11:55amGrey Clock 2 min

Shares fell hard across the sector on Wednesday as concern about inflation joined the list of worries dragging on the shares. Stock in Tesla (ticker: TSLA), the leader of the EV pack, dropped 4.4% Wednesday, closing below $600 a share for the first time since early March. Shares closed near the low of the day.

The average drop among the EV stocks Barron’s tracks was about 3%. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite dropped 2.1%, 2% and 2.7%, respectively.

Behind all those declines was news early in the day that consumer prices increased 4.2% year over year in April, far higher than the Federal Reserve’s 2% target. In April 2020, of course, things were falling apart, sending prices lower, amid Covid-19 lockdowns, so the gain was relative to a low base. But the March to April pickup in prices, excluding food and energy, was 0.9%. That rate equals full-year inflation of more than 11%.

Inflation that high is like a parasite, eating into savings and sucking energy out of the economy. It also tends to hurt stock valuations, especially those of expensive growth companies that are expected to generate most of their cash flows far in the future. Higher inflation means higher bond yields, which reduce the current value of future cash flows, partly because higher rates give investors options to earn more interest on their money right now.

Wednesday’s inflation-fueled declines are just the tip of the iceberg, though, for EV companies. Tesla stock is down about 34% from its January 52-week high of more than $900 a share. The average drop from 52-week highs for the rest of the EV names is about 70%. Investors just don’t have the appetite for more speculative, higher-growth stocks in the current environment.

Stock in Churchill Capital Acquisition Corp. IV (CCIV), the SPAC merging with Lucid Motors, is down about 73% from its 52-week high. Hyliion (HYLN) shares are down about 86%. And the Chinese EV makers NIO (NIO), XPeng (XPEV) and Li Auto (LI) have fallen an average of about 45% from their 52-week highs.

Inflation is just the latest problem for the stocks. More competition in the EV business, with traditional auto makers pouring billions into developing vehicles, is one problem. At the same time, the global shortage of semiconductors is constraining automotive production around the globe, making it hard for EV makers to benefit from red-hot demand for cars and rising gasoline price.

What is more, many of the new EV companies became public by merging with special-purpose acquisition companies. Many SPAC stocks, not just the EV-related ones, are struggling. The Defiance Next Gen SPAC Derived ETF (SPAK) is down 34% from its February 52-week high.

A dozen EV-SPAC companies Barron’s tracks are now down 15% over the past year on average. Only five remain above their SPAC merger price of $10 a share: Lucid, Fisker (FSR), Arrival (ARVL), QuantumScape (QS), and Nikola (NKLA).

Investors might believe that means those are the long-term winners among the EV SPAC stocks. But it is also possible their higher prices mean there is still further to fall.

Reprinted by permission of Barron’s. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: May 12, 2021.



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3 Reasons You Should Buy a Stick Vacuum—And 3 Reasons They Suck

Convenient, compact and light, cordless vacuums from companies like Dyson and Samsung have become covetable status symbols for some. But they come with some negatives, too.

By KATE MORGAN
Fri, Dec 8, 2023 3 min

JILL KOCH, 39, bought her first cordless vacuum because it was pink. “I didn’t look at the brand, I didn’t look at the price. I saw the colour and was like, ‘I have to have it,’” said the Cincinnati-based home organisation and cleaning blogger. Koch, who owns almost a dozen vacuums, says her newest cordless stick, the Shark Wandvac, gets the most use. She finds its motor powerful enough to handle most tasks. But more important, because of its sleek look, “it’s not even weird to store it in plain sight,” she said. Whenever she sees something that needs cleaning, that vacuum is within reach. She can clear the mess, dump out its dustbin into a trash can, and re-dock the vacuum in a minute or two.

Cordless stick vacuums aren’t new—British manufacturer Dyson released its first cordless stick vacuum in 2010—but the battery-powered, bagless models have become more popular, largely due to their convenience. In 2018, a year after telling Bloomberg that cordless vacuums were driving his namesake company’s growth, James Dyson announced it would no longer bother developing corded models. Convenience, however, isn’t cheap. While you can find excellent corded upright vacuums for under $200, the latest cordless option from Dyson, its Gen 5 Outsize, costs $1,050.

Some experts say ditching your corded model is unwise. Cordless vacuums have a place in your cleaning arsenal, but they aren’t a replacement for a more powerful machine like an upright model with a bag, said Ken Bank, a third-generation vacuum expert and president of Livonia, Mich.-based Bank’s Vacuum Superstores. “The technology has improved a lot,” he said, “but [stick vacuums] aren’t anywhere near as powerful as a vacuum cleaner with a cord and a real motor in it.”

Here’s what to consider before going cordless.

The Pros

Cordless vacuums are light and maneuverable

They are a great choice for folks with strength or mobility issues, or those who just don’t want to push around a heavy vacuum.

Cordless vacuums are supremely versatile

Most vacuums come with multiple heads and attachments, but cordless vacuums make them easier to use. Once you’ve swapped out the long wand for a dust brush, crevice tool or upholstery cleaner, your vacuum easily fits in hand. It’s ideal for cleaning the inside of a car or drawers.

Cordless vacuums let you clean more spontaneously

Since they can be stored on docks or stands, a cordless vacuum is always within reach. If you see a mess, you can have cleaned it before someone with a corded vacuum might have time to locate a plug.

The Cons

Cordless vacuums don’t contain dirt that well

When it comes to filtration and dust containment, nothing beats a classic vacuum with a bag, says Bank, “The cordless ones [are] not sealed up tight,” Bank said. Each time you open your vacuum’s dustbin to dump it out in the trash, he says, you release dust.

Cordless vacuums require you to clean within a time limit

Stick vacuums are battery powered. Batteries die. That means an all-day deep clean might require multiple charging stops. While some cordless vacs can run for up to an hour at a time, estimates shorten when you’re using stronger suction settings.

Cordless vacuums can be tough to fix

Bank doesn’t just sell vacuums; he repairs them, too. He says most stick vacuums are a service nightmare. “They’re hard to maintain, you can’t really take them apart to clean them, and if they break, most companies don’t make parts for them,” he said.

Don’t Get Left In the Dust

For spills, quick pick-ups, and in-between the deep cleans, it’s tough to beat a stick. Two to consider:

A sweeper with storage

Samsung’s Bespoke Jet AI Cordless is not designed to be hidden away in a closet. Its sleek, free-standing docking station doubles as a charger and a canister that auto-empties the vacuum with enough capacity for a few days’ worth of dirt. The company says a battery charge can last for 100 minutes, though that might vary as the vacuum’s software adjusts the suction level based on the floor surface it detects underneath. $US999, Samsung.com

Dust disrupter

Designed by two former Dyson R&D experts, the Pure Cordless by Lupe (pronounced “loop”) has a beefy, 9-cell battery and a 1-litre dust bin. Though one charge lasts around an hour when the vacuum is set on low suction, and just 15 minutes on max, you can buy a second battery ($149) and keep it charged for longer cleaning sessions. Unlike many other models, the Lupe is easily serviceable: You can buy an affordable replacement for basically every component. It also comes with an industry-leading five-year warranty. $US699, LupeTechnology.com

The Wall Street Journal is not compensated by retailers listed in its articles as outlets for products. Listed retailers frequently are not the sole retail outlets.

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