E-Cars and Stocks

This is the first study that examines the general reaction of investors on the release of an e-car through the market capitalizations of automotive manufacturers. The event study approach, measures the valuation effects of a corporate event, such as a product announcement by examining the response of the stock price around the announcement of the event. The reaction should be taken as a measure of the financial impact of an e-car release, as investors update their expectations about long-term future cash flows, by buying or selling the stock of relevance immediately. In fact, investors react quite negatively to the release of an e-car, as the automotive manufacturer’s market capitalization decreases on the day of the releases and the trading days there after. The negative abnormal returns in case of the release of an e-car show that investors receive a brand extension outside the core business dismissive. This study demonstrates that investors aren’t that positive about e-cars, as governments and business society seems to be and in a climate where money rules the world this could function as a disincentive for auto producers to invest heavier in cleaner technologies.