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No Pain, no Gain for Big Funds Hunting the next Tesla

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Place your bets! The race to find the next Tesla is on but the search is turning up plenty of clunkers as well as potential superstars.

Fidelity Investments, BlackRock Inc, T. Rowe Price Group Inc and Scotland39;s Baillie Gifford are among the fund houses helping to bankroll the shift from fossilfueled transportation with investments in one or more of 32 electric vehicle industry companies which they believe will be longterm winners in the electrification movement.

In the shortterm, there have been some bumps in the road.

In just three weeks, from late April to midMay, the combined value of those 32 companies has slid more than US200 billion to US810 billion, according to data compiled by Reuters and investor website Pitchbook, with Tesla, the world39;s most valuable automaker, accounting for threequarters of the drop. 

The steep slide in the EV sector is, for some market observers, a natural progression from the skyhigh valuations being doled out in a crowded market to companies, which in some cases have no revenues or even products to sell.

You are going to see some roadkill, said Evangelos Simoudis, venture investor and author of Transportation Transformation.

Of the 32 companies analysed by Reuters, 17 are doing or have done reverse mergers via special purpose acquisition companies SPACs often referred to as blankcheck companies. Of the remaining 15, six are private with the rest publicly listed. Of the four big fund managers, T. Rowe Price has not invested in…

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