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China's Critique of EU Impacts EV Stocks: Tesla and Rivian Face Challenges But Rally On

In the fast-evolving world of electric vehicles (EVs), every twist and turn can send ripples through the stock market. 

Recently, China made headlines as it criticized the European Union (EU) over its inquiry into EV subsidies, and this critique had a noticeable impact on the EV sector. 

In this post, we'll explore how this criticism affected EV stocks, particularly Tesla ($TSLA) and Rivian ($RIVN). We'll also delve into the latest developments in the EV market, including Tesla's Q3 production figures and Rivian's ongoing journey toward profitability.

China vs. EU

The EV Subsidy Dispute China's criticism of the EU's investigation into EV subsidies raised eyebrows in financial markets. While the specifics of China's critique were not detailed in the available information, the dispute underscored the significance of global EV competition and cooperation.

EV Stocks React

Tesla and Rivian The ripple effect of China's criticism was felt in the stock market, particularly among EV manufacturers. Two major players, Tesla and Rivian, witnessed noteworthy developments:
  1. Tesla's Q3 Production Figures: Tesla reported a Q3 production decrease of nearly 8% compared to the previous quarter. This decline was attributed to planned downtime at Tesla's Shanghai factory as the company geared up for a Model 3 refresh. Despite this production miss, Tesla maintained its ambitious 2023 volume target of 1.8 million vehicles.

  2. Cybertruck Delay Concerns: Tesla's long-awaited Cybertruck launch, originally scheduled for 2021 and later expected in Q3, has yet to materialize. The delay raises concerns about its impact on Tesla's growth prospects for 2024 and beyond, potentially affecting the stock's performance.

  3. Inventory Worries: There are also concerns regarding Tesla's growing inventories, which may be linked to rising interest rates and macroeconomic uncertainties in China. The company might be adjusting its production to manage these inventory levels, which has left some investors feeling uneasy.

  4. Rivian's Q3 Production Surprise: Rivian, on the other hand, reported better-than-expected Q3 production data. Despite high production costs and ongoing losses, the company is making strides in improving production efficiency. It aims to achieve profitability through cost reductions, increased production, and potentially higher vehicle prices.

  5. Analyst Upgrades for Rivian: Rivian received upgrades from analysts, with Evercore ISI upgrading the stock to "Outperform" and setting a price target. Robert W. Baird also expressed optimism about Rivian, citing potential cost benefits and improvements in the supply chain.

  6. Rivian's Production Plans: Rivian has ambitious production plans, including a new facility in Georgia expected to start operations in 2026, which could significantly boost its production capacity.

  7. Path to Profitability: While Rivian is making progress toward profitability, uncertainties remain, especially in the face of changing macroeconomic conditions and higher interest rates.
Navigating the EV Market The EV market is undoubtedly an exciting and dynamic industry. China's criticism of the EU serves as a reminder of the global nature of this sector and the complexities involved. Tesla and Rivian, two prominent EV players, are facing their own unique challenges, from production misses and inventory concerns to profitability goals and delays in product launches.

Investors in the EV sector must stay informed and vigilant, as the landscape can change rapidly. While challenges exist, the future of electric vehicles remains promising, with companies like Tesla and Rivian striving to shape the future of transportation while navigating the ups and downs of the market.

As always, it's essential to conduct thorough research and consider the long-term potential when investing in this dynamic and innovative industry.

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