Rivian teams up with Volkswagen, driving the rebound of US stocks in the charging pile concept sector! However, the fundamentals of charging piles are difficult to reverse

According to the financial news app Zhitong Finance, the heavyweight cooperation in the electric vehicle charging pile industry between the "electric car newcomer" Rivian Automotive (RIVN.US) and the leading German automaker Volkswagen has caused a strong reaction in the electric vehicle charging pile concept stocks in the US stock market on Wednesday. However, this increase may also be attributed to short covering, as EVgo (EVGO.US) and ChargePoint (CHPT.US) and other charging pile concept stocks have short interest positions as high as 30% or more, compared to only 3% for Tesla, which is mainly held by retail investors, and 19% for Rivian.

Late Tuesday Eastern Time, Volkswagen announced that it will invest up to $5 billion in the once cash-strapped automaker Rivian, and the two companies will jointly establish a joint venture electric vehicle company in the future to develop next-generation electrification architecture and top-notch electric vehicle software technology. Some analysts believe that Volkswagen's massive investment is not only a vote of confidence in the continuously loss-making Rivian (whose market value has plummeted 94% from its post-IPO high), but also increases the possibility of deeper cooperation in other areas to strengthen the production and sales scale of electric vehicles in the future.

Due to the substantial cash consumption required for electric vehicle manufacturing, the "electric car newcomer" Rivian has been incurring massive losses for several quarters. As the company's factory construction and vehicle production require significant cash outflows, its cash flow was once depleted. As a result, Rivian's stock price has been under immense selling pressure from Wall Street investment institutions, with some Wall Street firms covering Rivian requesting the company to continue cutting expenses.

According to the joint announcement by the two automakers on Tuesday, the leading German automaker Volkswagen plans to invest up to $5 billion in the US electric vehicle startup Rivian Automotive (RIVN.US), with an initial investment of about $1 billion and an additional estimated $4 billion by 2026. The plan includes investments of about $1 billion each in 2025 and 2026, followed by a $2 billion investment in 2026, with the subsequent $4 billion related to the expected joint venture company to be established, aimed at jointly creating electrification architecture and software technology.

After the announcement of the cooperation between Rivian and Volkswagen, the concept stocks of electric vehicle charging piles in the US saw a significant rebound. With an increasing number of electric vehicles in the future, the demand for charging piles will also grow. For example, ChargePoint has the largest scale charging network in the US and the West, with 200,000 active public charging ports at up to 30,000 locations. These charging networks are built by ChargePoint but not all owned by the company, instead being owned and operated by businesses looking to attract electric vehicle customers EVgo recently announced the opening of its latest fast charging station in Charlotte, North Carolina, USA, which has also boosted the company's stock price. The company has established a deep partnership with Regency Centers.

This charging station was heavily funded by the North Carolina Department of Environmental Quality and is part of EVgo's cooperation agreement with General Motors (GM.US).

Although the market's instinctive reaction to the electric vehicle industry has pushed up the stock prices of EVgo and ChargePoint, the sustainability of this momentum seems doubtful. Wall Street analysts hold a neutral to bearish view on both, citing factors such as high inflation and interest rates delaying the pace of electric vehicle adoption, increasing layoffs in US small businesses, and consumer preferences for plug-in hybrid vehicles as macroeconomic factors that are currently unfavorable to the industry. Analysts from Seeking Alpha pointed out that the underperformance of North America's leading charging station operator, ChargePoint, is due to flaws in its business model.

Investment firm Stone Fox Capital stated, "ChargePoint has always been the most typical representative of failure in this field." The firm added that the company "has been heavily subsidizing the construction of electric vehicle charging networks out of its own pocket, without any guarantee of a profitable operating model for itself." The company actually needs a significant number of additional customers to generate future profits... the results are quite the opposite," Stone Fox Capital wrote.

It is worth noting that Volkswagen's collaboration with Rivian comes at a time when automakers are trying to shift strategies as the global pace of electric vehicle adoption is far below expectations. Currently, Wall Street analysts' overall view on electric vehicle demand is rapidly deteriorating, which is most evident in Tesla's stock ratings. Tesla's Wall Street consensus rating is only "hold," while tech giants like Microsoft and Google are rated "strong buy."

The average target stock price given by Wall Street analysts is $181.03, significantly lower than Tesla's latest stock price, reflecting analysts' increasingly bearish confidence in the stock's future. The main logic behind these cautious expectations from Wall Street is that signs of slowing electric vehicle sales growth under high interest rate pressure are becoming increasingly significant, and government incentives around the world are gradually drying up.

A recent survey by the global top management consulting firm McKinsey & Co. in the United States shows that due to factors such as inadequate electric vehicle charging infrastructure and high costs, more electric vehicle owners are reconsidering traditional fuel vehicles. The survey found that as many as 46% of US respondents indicated that they may switch back to traditional fuel vehicles