[Editor’s note: “5 EV Stocks to Sell Before the ‘Great EV Consolidation’” was previously published in September 2022. It has since been updated to include the most relevant information available.]

We’ve all heard the saying, “those who don’t know history are destined to repeat it.”

But did you know that this saying applies very pertinently to the electric vehicle industry? In fact, knowing the history of automobiles could save you from losing your shirt on zombie EV stocks.

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It’s true. So, let’s start with the history of the automobile.

In 1893, bicycle mechanics (and brothers) J. Frank and Charles Duryea of Springfield, Massachusetts designed the first successful American gasoline automobile. An automotive gold rush ensued. A decade later, some 485 companies entered the automobile manufacturing business, all of them hoping to strike it rich as the gas-powered car redefined the world of transportation.

It was a “gas-powered car boom” – much like the “electric vehicle boom” of today. 

What happened next?

Well, the gas-powered car did go on to redefine the world. Today, around 70 million new passenger cars are sold every single year.

But practically none of those 485 companies that popped up back in the early 1900s turned into a success story.

Actually, less than 50 of them were still in operation by 1930 – and just three of them accounted for 80% of the market.

In other words, gas-powered cars did redefine the world in the early 1900s. But 9 out of every 10 companies that emerged at the dawn of the gas-powered car didn’t even survive to see those cars redefine the world.

And less than 1 in 100 turned into auto industry titans.

The EV Revolution will play out similarly.

Startups Will Shut Down

Today, there are hundreds of EV makers in the world, all hoping to strike it rich as EVs redefine transportation.

They are all making the right bet. EVs will take over the world over the next 20 years, just as gas-powered cars did in the early 1900s.

But, similar to what happened in the gas-powered car boom, the EV boom of the 2020s and ‘30s will comprise a few top players differentiating themselves from the pack in terms of some major value-add, whether it be cost, design, performance, or branding. Those top players will attract all the consumer demand, reap all the rewards of the EV Revolution, and squeeze out the other 90% of companies in the industry.

So, when I look at the EV landscape today, I see a graveyard with a few shining stars.

The key to striking gold in the EV Revolution, then, is to find those shining stars… And avoid the companies doomed for what will soon be a crowded EV graveyard.