The electric car industry has grown by leaps and bounds in the past decade, but the share price of Tesla, Inc., the leading company in the electric car industry, has plummeted in 2022. At the end of the year, Tesla, Inc. 's annual sales fell short of expectations and started a price war against a backdrop of strong recession expectations. Industry analysts believe that the real test of whether the streetcar market is in recession has come.

Like the Internet industry at that time, the electric vehicle industry also had some leading companies, such as Tesla, Inc.. Leading companies are seen by the market as long-term winners, and they gain long-term industry status through industry and macroeconomic cycles. But like any other industry, the streetcar industry has many followers whose fate depends on the extent of the industry recession and macroeconomic recession.

Tesla, Inc. first cut prices sharply in China, and then announced price cuts in the United States and Europe on January 13.

Analysts such as Ronald Jesikow of Guggenheim Securities say this could make Tesla, Inc. 's profit margin below the 25 per cent consensus on wall street and drain profits from all of Tesla, Inc. 's competitors. But optimists like Dan Ives, an analyst at Wedbush, believe that in the face of macro uncertainty, starting the transformation of electric vehicles is the right and positive move.

"in the era of the rise of the Internet, a lot of companies have failed," Dan Ives said. For an industry in its infancy, there are no stress tests for some companies in a severe recession. "

In the US, most economists and chief executives believe there could be a recession this year, although last week's market rally may reflect a change in the investor outlook, with more people believing in a "soft landing" for the economy.

Mark Zandi, chief economist of Moody's Corporation Analytics (Moody's Analytics), predicts that the economy will experience a "slowdown" for several months if economic growth does not turn completely negative. Both scenarios are likely to have an overall impact on car sales, and last year was the worst in the US in nearly a decade, or some car executives are now slightly confident of a rebound, although carmakers' electric car prospects have become more cautious in the short term. But if the economy reacts positively to the current slowdown in inflation, both may be too pessimistic.

Tesla, Inc. 's 2023 is like the year 2000 of Amazon.Com Inc and Ebay.

If a recession occurs, it does not necessarily mean that electric car sales will decline. Sales of most models rose sharply in the United States and Asia last year. The more question is whether electric car companies are growing fast enough to continue to create jobs, and whether companies other than Tesla, Inc. can make money when investors expect to make a profit, or before the money they raise for start-up losses runs out.

Internet companies such as Amazon.Com Inc and eBay experienced the same situation when they entered 2001 in 2000. Internet-related corporate tickets were being sold at the time, but at the same time, Internet companies' revenues were still growing rapidly, and businesses destined to survive began to turn a profit between 2001 and 2003.

Electric car companies such as Tesla, Inc., Fisker and Lucid also fell sharply last year. Tesla, Inc. fell 65% in 2022 and 54% in the same period. Then, as now, weaker companies such as today's electric carmakers Lordstown Motors, Faraday Future and Canoo were scrambling to avoid running out of cash by cutting costs or raising more money from investors in the run-up to an economic slowdown.

The same is true of the tram market, where vehicle sales are growing. In 2022, electric vehicle sales in China are still growing, with electric vehicle sales in the United States growing by 52%. At the end of the year, electric vehicles accounted for 6% of the u.s. light vehicle market, compared with only 1% of u.s. retail sales at the end of 2000.

Greg Bissuk, chief executive of AXS Investments in New York, said: "We are focused on the combination of balance sheet stability and the ability to raise more capital, which we think will be difficult, especially for mid-range electric car manufacturers."

For electric carmakers, the impact of the recession is likely to be slower growth, not the negative growth experienced by the economy as a whole during the downturn, as new technologies continue to gain market share.

Garrett Nelson, an analyst at CFRA Research, said that the best electric car maker is still Tesla, Inc., who thinks the stock market has rebounded quickly this year.

Dan Ives said that although it still expected to generate about $4 billion in cash flow by the end of 2022 when it released its fourth-quarter earnings report on January 25, and had received about $21 billion at the end of the third quarter, it was not in danger of running out of cash.

How do the electric car companies that are still burning money create the cycle?

Electric car startups such as Lucid, Rivian and Fisker will experience high-risk moments. Tesla, Inc. 's price cut could cause problems for them: Fisk's share price fell nearly 10% after competitors announced the news, as Tesla, Inc. 's move brought the price of Model Y close to that of Fisker Ocean, with a median price of $50, 000.

Rivian has the most cash, with short-term investments of $13.3 billion at the end of the third quarter. Fisker has $829 million in cash and Lucid has $3.85 billion. The three companies are still burning money, and it is questionable whether they have enough money to weather the recession. Fisk lost about $480 million in cash flow and invested another $220 million in the 12 months to September, meaning it will run out of cash within a year or two if losses and investments do not slow.

Companies like Faraday's future have no products on the market and their cash flow has been tight, making it particularly difficult to survive in a period of slowing industry growth. "they have a business plan, but they have no business, and they get ridiculous funding," Garrett Nelson said. In our view, we will see more bankruptcies, but the market will regain balance. But it's hard to imagine that we've seen the bottom. "

It is important to note that even if the share price of the head electric car is close to the bottom, it may take a long time for investors to buy at the top to make a profit. Take the bursting of the dotcom bubble as an example. Amazon.Com Inc rose from a low in 2002 to a tenfold increase in 2008, but did not surpass the 1999 high until 2010.

Edit / lydia