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The electric vehicle (EV) market has been growing at an unprecedented pace, with more and more companies entering the market. It’s expected that it will be one of the world’s fastest-growing sectors. Beyond Market Insights estimated a compound annual growth rate of 22.5% for the worldwide EV market between 2022 and 2030 in a research issued last year.

However, not all EV stocks are created equal, and investors need to be careful when choosing where to invest their money. After the recent quarter-four 13F fillings, it provided a snapshot of the billionaire money managers and brightest minds on wall street have sold this quarter.

Here are the stocks billionaires are avoiding:

Rivian Automobile

One reason for top-tier money managers’ dissatisfaction with Rivian is the company’s diminishing cash hoard. Despite having slightly more than $12 billion in available capital by the end of 2022, it had been burning through more than $1 billion every quarter. Rivian is also investing $5 billion in the construction of a manufacturing factory in Georgia, which is set to open next year. While management anticipates the firm will generate a gross profit by 2024, the cash burn is a major concern for the time being.

Moreover, the investors were also concerned about supply chain challenges. This created production problems. The forecasted production was not met, which was 25000 vehicles. The company stuck at 24337 EV’s in 2022.

During the fourth quarter, billionaires Philippe Laffont of Coatue Management, George Soros of Soros Fund Management, and Ole Andreas Halvorsen of Viking Global Investors were also large sellers. Coatue and Soros liquidated 11.27 million and 2.02 million shares of their existing interests, respectively, while Viking Global sold its whole 1.6 million-share investment.

Nio

This scepticism among billionaire investors about Nio is most likely due to persistent supply chain challenges and a lack of meaningful production increases. EV deliveries predictably decreased significantly in January owing to plant closures associated with the Chinese New Year, but Nio has basically been locked between 10,000 and 15,000 monthly EV deliveries since June 2022. With a variety of SUVs and sedans at its disposal, investors would want to see Nio significantly increase output.

Moreover, China’s zero-COVID policy, combined with the possibility of its shares being delisted by US regulators, has made China equities a riskier investment. The good news is that China has abandoned its zero-COVID plan, and US authorities now have access to audited financial records for publicly traded Chinese firms. In other words, the headwinds are no longer present.

Billionaires Jeff Yass of Susquehanna International, Jim Simons of Renaissance Technologies, Ray Dalio of Bridgewater Associates, and John Overdeck and David Siegel of Two Sigma Investments all sold considerable amounts of Nio stock in the fourth quarter. These billionaires sold about 4.45 million shares, 1.87 million shares, 1.64 million shares, and 0.62 million shares, in that order. 

Tesla

However, there is one stock billionaires are buying: Tesla

The billionaires include Susquehanna’s Jeff Yass (bought 11.48 million shares), Citadel Advisors’ Ken Griffin (bought 4.82 million shares), Renaissance’s Jim Simons (bought 3.4 million shares), Two Sigma’s John Overdeck and David Siegel (bought 1.18 million shares), Point 72 Asset Management’s Steven Cohen (bought 878,000 shares), and Millennium Management’s Israel Englander (bought 878,000 shares) (bought 796,000 shares).

The most likely reason for the growing interest is the three consecutive years of profits. The company is shining when compared to the industry, wherein others are in the red, while Tesla is registering profits. Moreover, the EV maker is set to ramp up its production to about 1.8 million after a production run and delivery of 1.3 million vehicles.