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Big Market Delusion: Electric Vehicles

This paper applies the “big market delusion” concept developed by Cornell and Damodaran to the electric vehicles market. The hallmark of a big market delusion is when all the firms in the evolving industry rise together even though they are often direct competitors. Investors become so enthusiastic that each firm is priced as if it will be a major winner in the evolving big market despite the fact that this is a fallacy of composition. The sum of the parts cannot be greater than the whole. We present evidence that the electric vehicles market can be characterized as a prime example of a big market delusion. When then draw out the implications of that finding for investors.