..you have to ask why EV stocks have busted while EV growth...

..you have to ask why EV stocks have busted while EV growth continues?

..is the market so myopic? for so long?

The EV Boom to Bust

https://x.com/wolfofharcourt/status/1804071598192038211

Lets take the case of Rivian (RIVN)

Market cap : $10.28B even after -90% over 5 years
Still at annual loss of -$5.4Bil ! Producing 14k cars each quarter = Market cap/car of $183,571!!

Net Loss:
Net loss for the fourth quarter of 2023 was $(1,521) million as compared to $(1,723) million for the same period last year. For fiscal year 2023, net loss was $(5,432) million as compared to $(6,752) million in 2022.

Fact is that EV stocks had nose bleed valuations then and while EV growth was going gangbusters, no one took notice. Now not only EV growth has moderated, there are emerging challenges that were not anticipated back then:

> Price Competition
> Geopolitics and Tariffs
> Misjudgment about Consumer Adoption
> Range Anxiety/Loss of Power due to cold/Resale value
> High Interest Rates/Cost of Living
> Loosening of Govt Mandates for EVs
> Legacy auto makers deferring full EV rollouts
> Tesla changing business model to Robotaxi
> Donald Trump

Tesla market cap is $579Bil , Toyota's market cap is $262Bil
Tesla market cap is 2.2x Toyota

Tesla annual revenue for 2023 was $96.773Bil, Toyota was $274.9Bil
Tesla revenue is 0.35x Toyota's

You get the picture. But of course Tesla's valuation is not perceived as related solely to EV but that is another story.

The answer lies in EV stocks valuation which remains very high despite having crashed. At surface it looked like a clear disconnect to see EV stocks crashing while EV growth continues reasonably well.

The mean reversion for EV/Lithium stock valuation is to reflect revised lower growth assumptions in the wake of new developments (as pointed out above).

Until there are emerging positive catalysts to change market narrative of a protracted winter hibernation, EV/Lithium stocks would likely scale premium valuations further in the mean reversion process.

LTR can go into production soon, but if 2025 SC6 price averages US1000/Mt, it would possibly be in an annual loss of -$63mil against a market cap valuation of $2.28Bil. At US$1200/MT, they could get into a $31mil NPAT at PE multiple of 74x.
This illustrates the position LTR is in, at least in the short term, and it would have to repay its $550mil loan by late 2025 so if SC6 price does not improve from here, there can be considerable risk to the downside either from (1) a discounted CR or (2) production suspension to preserve cash until pricing improves but that option could nullify its offtake contracts.

It is not the EV growth or lithium demand/supply that holders should be focusing at, it is the SC6 pricing, stock valuation and financing/funding certainty.