Reuters): Shares of legacy automakers have outpaced their electric counterparts over the last few weeks, as investors respond to company decisions to prioritize higher-margin, gas-powered models instead of pure battery vehicles.

Automakers, including Ford Motor , General Motors, Mercedes, have scaled back on their ambitious EV plans.

Electric vehicle demand has slowed of late, suggesting the transition away from traditional internal combustion engine vehicles will take longer than expected.

Shares of EV pioneer Tesla surpassed legacy automakers for the last few years, making it the world’s most valuable car company by market capitalization.

But the Elon Musk-led company’s shares are down nearly 20 per cent this year after it warned of slower adoption of EVs.

In contrast, GM, Stellantis have climbed about 10 per cent this year.

Toyota is up 38 per cent as the Japanese automaker has favoured hybrid vehicles over EVs in the last few years.

“Legacy automakers are responding to consumer behaviour and market conditions which very clearly show a lack of interest in most battery EV models,” CFRA analyst Garrett Nelson said.

Part of the challenge for EV makers is that manufacturing and development costs, spurred by pandemic-era supply chain disruptions, have gone up even as their sales have suffered.

Competition in the sector, especially from cheaper Chinese EV brands, has also heated up. In February, Ford and GM executives said that they would consider partnerships to cut EV technology costs to counter Chinese rivals in the U.S. and European markets.

Additionally, higher ownership costs of new vehicles and some models losing the federal tax credits, coupled with increased borrowing rates, have deterred buyers from considering new EVs and hanging on to their ageing vehicles.

EV-only manufacturers, apart from Tesla, have also seen their stock fall. Lucid has tumbled nearly 25 per cent this year, while Rivian’s shares have nearly halved.

Tesla’s stock has a price-to-equity ratio of nearly 61 versus GM’s 4.45.

“EV fuelling is more expensive, though of course it’s not uncommon for new technologies to be more expensive than their traditional counterparts,” said Anderson Economic Group author Patrick Anderson.

Hertz, the largest U.S. fleet operator of EVs, in January said it was dumping 20,000 EVs, including Teslas for gas-powered cars, citing high repair costs and weak demand for the vehicles it offers on rent.

“We think it’s probably going to be at least another couple of years before a legacy automaker puts out a profitable EV,” Nelson said.

The bumpy economic scenario and a Tesla-initiated price war also led legacy automakers to lower prices even more, cutting into already battered margins from those vehicles.