2 Red Flags Facing Tesla and EV Stocks Right Now

As the advanced technology of electric vehicles (EVs) continues to develop, investors are taking advantage of the surge in EV stocks. However, two red flags are emerging that investors should be mindful of before investing in Tesla or other EV stocks.

Firstly, the majority of EV stocks are highly volatile, as evidenced by Tesla’s recent stock plummet. Tesla’s stock has dropped by over 10% in the past week, despite a strong start to 2020. This drop highlights the inherent risk of investing in EV stocks, which can be subject to sharp price fluctuations.

Secondly, many EV stocks are heavily dependent on government subsidies. For instance, Tesla receives $7,500 in federal tax credits for each of its vehicles sold in the U.S. As these subsidies are slowly phased out, many investors worry that EV stocks will suffer.

In conclusion, while EV stocks offer investors the potential for high returns, they also present two red flags: volatility and dependence on government subsidies. Investors should be aware of these issues before investing in Tesla or other EV stocks.