EV stocks have been on a good rally. Lucid Group (LCID) have led the way after the hype built up surrounding their Air sedan and their progression for 2022 production. What is driving the move and can the EV sector stay in this lane?
One recent IPO that created a lot of hype was the Rivian (RIVN) release on November 10th. The debut shares were originally priced at $78 but rocketed ~50% before ending their first trading day up 30% at the ~$100 mark. Further progress in the following days saw the price hit a high of $179.47. The market cap surpassed $150B, surpassing Ford and General Motors.
Sono Group (SEV) is another recent EV IPO, although a much smaller market cap than Rivian, only $2B. The price released at $20 and reached a high of $47.49 the next day.
Biden’s $1T infrastructure bill
President Joe Biden’s $1 trillion infrastructure bill is now law. Democrats are setting their sights on his Build Back Better Act to further advance the administration’s electric vehicle agenda. Officials view tax incentives of up to $12,500 per vehicle in the new bill as a much needed second step to spur the adoption of electric vehicles. Under the Bipartisan Infrastructure & Jobs Act there is $7.5B for EV chargers. But that’s only about 15% of the $50 billion AlixPartners has forecast will be needed to reach Biden’s goal of 500,000 EV charges nationwide by 2030. There are views for both sides of this bill, but it has helped boost the EV market in the short term.
Ready to continue?
The rally has been over the past few weeks. But the past two days have seen a needed pullback for most stocks. We think they look set to recover and make another move in the coming days. Stocks such as FSR and LCID have retraced back to the daily 9EMA and have opened green today. Tesla was one stock that was gaining in recent days as other pulled back. Tesla had lost 20% following Elon Musk creating a Twitter poll to sell $25B worth of stock. However, we believe this could recover to $1,200 next week. We have been keeping an eye on different stocks for potential moves. Smaller market caps will return more in the short term. Some stocks to watch are LCID ($80B), LI ($30B), FSR ($6B), GOEV ($2B) and MULN ($56M).
This is a very short term view of what we think EV stocks may do. Momentum is always good to find for swing trades and EVs have that at the moment. The longer term view for electric vehicles is different. Is there an argument to say they are extremely overvalued? Does Rivian’s IPO valuing them larger than Ford and General Motors create a concern for the sector? We’ll leave that debate for another time.