In the rapidly growing U.S. electric vehicle (EV) industry, only Tesla (NASDAQ:TSLA) has a large amount of credibility, due to its huge market share. For now, Lordstown Motors (NASDAQ:RIDE) lacks such credibility, but that’s not a reason to avoid RIDE stock.
During a brutal stretch for a slew of EV stocks, Lordstown slumped 11.5% in the first week of December, pulling the name 26% below its 52-week high. Undoubtedly, those are gloomy statistics, but that pullback may prove to be a buying opportunity.
The manufacturer of the Endurance electric pickup, Lordstown is focusing on the commercial market for electric trucks. That niche could pay off for investors over the long-term.
Not only does Lordstown use a plant previously utilized by General Motors’ (GM), but GM has invested in Lordstown. The relationship may seem unusual, but it will help Lordstown as it looks to develop its electric pickups.
RIDE Stock Has the Goods
Lordstown, like so many of its EV brethren, hasn’t actually brought its flagship product to market, but its on pace to start delivering the vehicle in September 2021. Important to the RIDE stock thesis is the fact that the company is already racking up orders for the Endurance. According to Lordstown:
“Lordstown Motors has received approximately 50,000 non-binding production reservations from commercial fleets for its Lordstown Endurance all-electric pickup truck, with an average order size of approximately 500 vehicles per fleet. This figure does not capture interest the company has received from organizations that are not in position to be able to place pre-orders, such as federal, state and municipal governments, and military fleets.”
Those 50,000 orders are impressive, even though they are non-binding. It’s possible that Workhorse already has many customers. It isn’t Workhorse Group (NASDAQ:WKHS) waiting on a deal from the U.S. Postal Service.
For now, Workhorse looks like a one-trick pony, but that isn’t the case for Lordstown.
Rather, Lordstown’s total addressable market is large and lucrative. Consider the deals that the company can obtain from state and local governments, which are major buyers of vehicles.
The owners of renewable-energy stocks are excited about Joe Biden becoming the next president. But states, such as California, often set their own clean-energy policies.
And as charging infrastructure becomes more prevalent, Lordstown’s products could be more appealing to environmentally conscious states and cities.
Not to mention the obvious benefit of reducing fuel costs, which is a legitimate consideration as state and local governments grapple with sliding revenue amid the Covid-19 pandemic.
Lots to Like About Lordstown
Lordstown’s 50,000 pre-orders are exciting, but there are other signs that it is trending in the right direction.
For example, the company is building new prototypes of the Endurance, and it said it expects to have 1,500 employees by the end of 2021, up from 500 now.
It’s clear that new prototypes and more staff cost money. It’s reasonable to speculate that Lordstown wouldn’t make those moves if it didn’t think that a fair percentage of the 50,000 orders were going to be fulfilled.
The Bottom Line
Lordstown may not be the next Tesla, but over the near- to medium-term, it’s less risky and has more tailwinds than some of the other players in the U.S. EV arena.
On the date of publication, Todd Shriber did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Todd Shriber has been an InvestorPlace contributor since 2014.
