If you only followed the headlines over the past few years, you’d probably think the electric vehicle revolution was over.
Tesla (TSLA) is well below its all-time highs. Many former high-flying EV stocks are down 70%, 80%, or even 90% from their peaks. The excitement that dominated financial television just a few years ago has largely disappeared.
Yet something interesting happened this week.
New data from the European Automobile Manufacturers’ Association showed battery-electric vehicle sales surged 51% year over year in June.
More than one out of every four new vehicles sold across Europe is now fully electric, while traditional gasoline-powered vehicles continue losing market share at a rapid pace.
In other words, the technology kept moving forward even after investors moved on.
And that highlights one of the biggest mistakes investors make.
When a new innovation first captures the public’s imagination, excitement spreads much faster than the technology itself.
Investors don’t want to miss the next internet, the next smartphone, or the next artificial intelligence boom. Money pours into anything associated with the trend. Valuations climb to levels that assume years - even decades - of future success.
Eventually, reality catches up.
Not because the technology failed.
It’s because expectations became impossible to satisfy.
The stocks correct sharply. The headlines disappear. Investors conclude the entire theme was just another bubble.
But that’s rarely how technological revolutions actually unfold.
The internet didn’t fail after the dot-com crash. Investors simply paid too much for many internet companies before the pullback.
Cloud computing didn’t disappear after its first wave of excitement.
And electric vehicles aren’t failing today, despite what the stock charts might suggest.
In each case, the innovation continued advancing while investors lost interest. The technology matured. Adoption increased. Companies kept investing. Eventually, the fundamentals caught up with the excitement.
That’s the opportunity long-term investors should be looking for.
Global EV adoption continues to rise. Battery technology keeps improving. Charging infrastructure continues expanding. Automakers are investing hundreds of billions of dollars to electrify their fleets because they know where transportation is headed over the next decade - not just the next quarter.
The technology didn’t stop progressing.
The stock prices simply got ahead of the fundamentals.
That distinction is incredibly important.
The world’s two largest EV manufacturers are trading about 40% below the highs even as sales continue to increase. Tesla (TSLA) and BYD (BYDDY) are not necessarily screaming buy opportunities today. But, they are the leaders and will likely continue to hold that title and should not be ignored.
One of the biggest lessons I’ve learned over the past 25 years is that you don’t make money simply by finding the next big technology. Plenty of investors correctly identified the internet, electric vehicles, and gene editing. Where they went wrong was confusing a great technology with a great investment at any price. Valuation and expectations matter just as much as innovation itself.
Sometimes the best long-term opportunities don’t appear when a new innovation is dominating the headlines.
They appear a few years later, after expectations have reset, valuations have become far more reasonable, and the underlying business continues quietly improving.
That’s exactly why I’m writing this series.
Over the rest of the week, we’ll look at four other investment themes that Wall Street largely abandoned after the hype faded:
Gene editing, where the science has continued advancing despite years of disappointing stock performance.
The metaverse, which may have disappeared from headlines but quietly evolved into one of the most important enterprise technologies powering AI, robotics, and industrial automation.
Blockchain, where institutional adoption is accelerating even though the speculative frenzy is long gone.
Autonomous transportation, including robotaxis and eVTOL aircraft, which are finally beginning to transition from ambitious concepts to commercial reality.
Innovation doesn’t stop just because the headlines do.
And history shows that’s often when long-term investors should start paying the closest attention.
Here’s to the future,
Matt McCall
Editor, Market Insights
