Some of the early winners in the post-election stock market rally are companies connected to the electric vehicle industry. Investors are betting that electric vehicles will benefit from Presiden-elect Joe Biden’s proposed $1.7 billion green energy infrastructure plan, as well as his “Build Back Better” economic policy that focuses on clean energy and manufacturing, providing a boost to U.S. electric vehicle stocks.
Highlights of Biden’s plan include building out electric vehicle charging infrastructure and adding at least 500,000 more electric vehicle charging stations across the U.S. This will create one million new jobs in the U.S. automotive industry, replace the federal government’s vehicle fleet with electric vehicles (EVs), surpass China in the manufacturing EVs (including materials and parts), and increase battery-related research and development.
Here are seven electric vehicle stocks counting on President-elect Joe Biden to rev them up.
- Tesla (NASDAQ:TSLA)
- Nikola (NASDAQ:NKLA)
- Workhorse Group (NASDAQ:WKHS)
- Diamond Peak Holdings / Lordstown Motors (NASDAQ:RIDE)
- Albermarle (NYSE:ALB)
- Switchback Energy Acquisition / ChargePoint (NYSE:SBE)
- Plug Power (NASDAQ:PLUG)
Electric Vehicle Stocks: Tesla (TSLA)
Electric vehicle leader Tesla already benefits from federal government policies and incentives. In its most recent third quarter earnings, Tesla reported $397 million in revenue from federal environmental regulatory credit sales.
Tesla has reported five consecutive profitable quarters that have largely been enabled by those government credits. Going forward, any Biden policies that incentivize American consumers to purchase electric vehicles will further boost Tesla sales and the company’s bottom line.
Beyond the benefits that Joe Biden’s administration could provide, Tesla continues to fire on all cylinders. News of an impending vaccine against Covid-19 can only help the company, ensuring that it won’t have to shutdown production again as it did this past spring. The automaker recently raised its guidance for Tesla vehicle deliveries to half a million this year, up from a forecast of 368,000 deliveries previously.
TSLA stock has been choppy since it split at the end of August and currently trades at just over $420 a share. However, the company’s share price is still up 483% from its March low. Our advice? Buy the dip.
It’s been a rough road lately for shareholders of electric vehicle stocks like Nikola Motor Company. No sooner had the company announced a partnership with auto giant General Motors (NYSE:GM) than Nikola was accused by an analyst of exaggerating its technology and production capabilities, and of outright fraud. While the company has vigorously denied the accusations, NKLA stock has nevertheless fallen 76% since June, from a high of nearly $80 a share to just under $20 today.
The good news for shareholders of Phoenix, Arizona-based Nikola is that its agreement with General Motors has not been officially terminated. At least not yet.
The two companies continue to talk in hopes of formalizing a deal that would see GM supply Nikola with its new Ultium lithium-ion battery and Hydrotec fuel cells for the start-up company’s semi-trucks.
Inking the deal with GM would significantly help Nikola moving forward. And while Nikola is not profitable, its third quarter results were better than expected. Investors with patience may find that there is life left in this electric vehicle maker.
Workhorse Group (WKHS)
Workhorse Group is an exciting new player in the electric vehicle market. The Cincinnati, Ohio-based company is focused on electric powered delivery and utility vehicles. It’s a strategy that has paid off for the company and its shareholders.
Workhorse stock has risen more than 700% this year. The share price has rocketed to a high of $30.99 in September from $1.47. While the stock has since given up some of those gains, it is currently trading close to $20 a share.
Workhorse Group is a small company that’s competing for some big federal government contracts. Notably, Workhorse is in the running for a U.S. Postal Service contract to purchase 180,000 new trucks to upgrade its national delivery fleet. Workhorse is on a shortlist of just three companies to win the lucrative Postal Service contract, estimated to be worth $6.3 billion.
Some analysts feel that Workhorse Group is one sizable contract win away from becoming an electric vehicle leader. The median price target on WKHS stock is $26 a share, suggesting a nearly 40% upside. And more federal government contracts could be forthcoming under the administration of President-elect Joe Biden.
DiamondPeak Holdings / Lordstown Motors (RIDE)
DiamondPeak Holdings is in the process of taking electric truck maker Lordstown Motors public through a special purpose acquisition corporation (SPAC). Lordstown Motors has announced plans to manufacture an electric pick-up truck called the “Endurance.” Lordstown has a manufacturing plant up-and-running and has said that it has received tens of thousands of pre-orders for its electric truck.
Investors seem to be excited about the Lordstown Motors deal. After the SPAC deal was announced, DiamondPeak’s share price jumped 63% to $31.40 a share. While RIDE stock has come down since then, it is still up 80% year-to-date at just under $18 a share.
Momentum for SPAC deals and the companies behind them has been building this year. Despite the global pandemic, there have been more than 80 SPAC deals so far in 2020. Investors can expect Lordstown Motors stock to rise following its market debut.
Albemarle isn’t an electric vehicle manufacturer, but it is well-positioned to capitalize on the electric vehicle revolution. That’s because Albemarle is the world leader in lithium mining and accounts for 21% of global lithium production. Lithium is the central ingredient in the lithium-ion batteries that power electric vehicles.
As demand for lithium rises and prices for the commodity increase, Albemarle’s earnings and its stock price are sure to follow.
Investors should note that, like most commodity stocks, ALB experiences extreme price moves. In the past five years, ALB stock has fluctuated from a low of $42 per share to as high as $140.78 a share. The stock is currently trading at about $116.73, more than double its March bottom of $52.70.
Patient investors should be rewarded in coming years as the company forecasts that lithium demand will increase 25% each year through 2030 as more automakers develop electric vehicles.
Switchback Energy Acquisition / ChargePoint (SBE)
Another exciting upcoming SPAC deal involves Switchback Energy Acquisition, which is looking to bring ChargePoint to the stock market. Like Albermarle, ChargePoint is not a vehicle manufacturer. Rather, ChargePoint is building the network of publicly available electric vehicle charging stations that will power the transition from gasoline-powered vehicles to electric powered cars, trucks and sport utility vehicles (SUVs).
Increasing the number of electric vehicle charging stations throughout the U.S. is a stated priority of President-elect Joe Biden.
Electric vehicles replacing gas powered automobiles will require a robust build out of infrastructure. And charging stations are the key to success. The global electric vehicle charging infrastructure market is forecast to be worth $56.9 billion by 2026, and could be worth $190 billion by 2030.
ChargePoint can provide investors with exposure to the fast-growing electric vehicle market without having to take on the risks associated with young, unproven automakers. ChargePoint is expected to begin trading shares by year’s end.
Investors should view purchasing shares in SBE stock as an opportunity to get in on the ground floor of ChargePoint. SBE shares are up 80% this year to $16.88 each. Look for the stock to receive a charge following its market debut.
Plug Power (PLUG)
Plug Power is a manufacturer of hydrogen fuel cell systems that replace conventional batteries in equipment and vehicles that are powered by electricity. The company is already benefiting from the rise of electric vehicles.
PLUG stock is up a massive 580% since March to about $20 a share. The prospect of a Biden presidency led the stock to jump 13% on Nov. 5 to its current level.
Driving Plug Power’s business currently is its development of electric indoor forklifts that are being used by leading companies such as Home Depot (NYSE:HD), Nike (NYSE:NKE) and Kroger (NYSE:KR). Leading automakers such as Toyota (NYSE:TM) are also knocking on Plug Power’s door looking to use its hydrogen fuel cells in their EVs.
Plug Power says its fuel cells can be used in the transportation, telecommunications and utility sectors.
On the date of publication, Joel Baglole held shares of TSLA.