EVs and Lessons in Demand

How many times have you heard a revolutionary industry, product, or market was a “sure thing” or a “can’t miss?” Once the darling of Wall Street, electric vehicles and the cottage industries that sprung up around them are no longer a sure thing.

To witness the falling out of favor of EVs with consumers as well as investors, one only has to look at the fortunes of Tesla, the poster child of EVs. 2024 has not been kind to Tesla. Tesla stock fell 2.9% to $227.24 on Thursday (January 11, 2024) during market action, moving below its 200-day line and marking its ninth loss in the past 10 trading days. TSLA shares were down more than 8% in January. (Investors Business Daily).

Tesla’s struggles are not unique, as demand for EVs has stalled across the board, causing ripple effects across the entire EV landscape, and it’s not just EV sales that are affected. Late last year, Hertz (HTZ) announced it was selling about one-third of its EV fleet. And according to a recent BloombergNEF report, U.S. electric vehicle charging installations fell significantly last year as companies grappled with financial challenges due to diminished demand. (Financial Post). 

Competing auto manufacturers don’t have time to relish Tesla’s woes as they struggle with diminished EV demand of their own. Manufacturers across the board are scaling back their EV ambitions. Just in the past year, Ford delayed $12 billion of its planned $50 billion investment in EV manufacturing capacity, while General Motors delayed production of key EV models and scrapped a $5 billion partnership with Honda to make cheaper EVs. Even Tesla announced it would delay a planned factory in Mexico. Auto executives, who were once trumpeting the potential of electric cars, are even publicly acknowledging that EVs aren’t working. (Business Insider).

Investors are always chasing the “next big thing” or “sure thing,” but what they’re often finding out is that the Kool-Aid everyone, including Wall Street, Corporate America, the financial press, your family, friends, and colleagues, is drinking and hyping is poison to your portfolio.

EVs were touted as the saviors of the environment. As replacements for gas guzzlers, they were supposed to reduce greenhouse emissions. An EV was a “better” substitute for a gas car. You were told it was better for the environment and for your pocketbook since you no longer had to depend on the gas pump. That was the fantasy. The reality is that because of the environmental impact of manufacturing lithium batteries, including the exploration and mining of the rare earth materials that go into them, the net emissions benefit of EVs is no longer seen as positive but rather negative. Once having a squeaky-clean image, EVs are now termed “dirty” because of their true environmental cost. (Zycher, Benjamin (08/07/23), EPA is Ignoring the Glaring Problem with Dirty Electric Vehiclesthehill.com).

Souring demand for EVs has meant souring interest from investors. And it’s not just EVs investors are souring on. They’re turning away from other environment-saving “substitutes” such as plant-based meat, where the demand for the “next big thing” in food was Impossible® and Beyond® brand plant-based protein. Both companies have taken hits in the demand for their products and in their stock prices. 

Investors are always chasing the better light bulb: EVs for cars, Impossible® and Beyond® burgers for meat, and even crypto for currency. 

What investors don’t realize is that the best investments are often the ones where there isn’t a substitute.

There’s no substitute for housing. There may be different types of housing, but people will always need it. You can own housing or you can rent it. Because not everyone can afford a house or chooses to own one, there will always be demand for rentals. 

Unlike demand for EVs or fake meat, demand for multifamily housing is well-established and will never go away. 

Sophisticated investors avoid fake products and fake (often government-subsidized) demand. They chase real products with real demand, and one area of real demand that they have always allocated to is multifamily rentals, especially affordable housing. 

The US is becoming a renter nation, a trend that has become increasingly prominent since the Great Recession, with demand for multifamily housing continually growing and outpacing supply since the housing collapse in 2008.

Don’t chase fake projections!

People invest based on projections, but those projections often come up short, as with EVs. The projections for multifamily are often on point, and the projections are that multifamily will continue to experience strong demand and deliver for its investors in the immediate and foreseeable future.



Mike Ayala has owned and operated mobile home parks since 2007, and has been active in construction and management since he was 15 years old. He graduated from the Associated Builders and Contractors 4-year project management program at age 22 and then became a licensed instructor. He is also the host of the Investing for Freedom podcast.