Research Article
Why did Electric Vehicle Stocks Grow Quickly during the COVID-19 Pandemic? An Empirical Explanation Based on the Capital Asset Pricing Model
@INPROCEEDINGS{10.4108/eai.18-11-2022.2327126, author={Yuhan Liu}, title={Why did Electric Vehicle Stocks Grow Quickly during the COVID-19 Pandemic? An Empirical Explanation Based on the Capital Asset Pricing Model}, proceedings={Proceedings of the 4th International Conference on Economic Management and Model Engineering, ICEMME 2022, November 18-20, 2022, Nanjing, China}, publisher={EAI}, proceedings_a={ICEMME}, year={2023}, month={2}, keywords={capm; electric vehicle industry; stock; covid-19}, doi={10.4108/eai.18-11-2022.2327126} }- Yuhan Liu
Year: 2023
Why did Electric Vehicle Stocks Grow Quickly during the COVID-19 Pandemic? An Empirical Explanation Based on the Capital Asset Pricing Model
ICEMME
EAI
DOI: 10.4108/eai.18-11-2022.2327126
Abstract
Despite the overall economic depression, stocks from the electric vehicle sector had a quick growth during the COVID-19 pandemic. This research applies the Capital Asset Pricing Model to investigate whether the quick growth of electric vehicle stocks can be explained from a risk-return perspective. Based on the regressions of the electric vehicle ETF returns on the market returns during three half-year periods, the relatively high R2 scores indicate that the Capital Asset Pricing Model can mostly explain the growth of electric vehicle stocks. Moreover, the increasing beta shows that the electric vehicle ETF was risker, whose growth was partially due to the increased risk. The significant abnormal return in the second half of 2020 was related to the remarkable degree of quantitative easing worldwide. This research shed light on understanding the growth of electric vehicle stocks during the COVID-19 pandemic and confirming the validity of the Capital Asset Pricing Model in the electric vehicle sector.