Electric vehicle makers Hyliion (NYSE:HYLN), Nikola (NASDAQ:NKLA), Lordstown Motors (NASDAQ:RIDE) and Workhorse (NASDAQ:WKHS) are racing higher Tuesday thanks to a big political catalyst. It is no secret that President Joe Biden means good news for WKHS stock and its peers. But what exactly is happening today to spur such a major rally?
For less familiar investors, Biden has long brought great promise to EV stocks. As part of his campaign, he unveiled an expansive climate proposal that would put alternate energy initiatives first. Perhaps most excitingly, it also called for a $2 trillion investment in clean energy infrastructure including electric vehicle chargers.
With Inauguration Day in the rear-view mirror, Biden is taking the next steps. He scrapped the permits for the Keystone XL pipeline and rejoined the Paris climate deal. Those actions in his first few days in office were enough to spark investor enthusiasm. However, one big move on Monday carries even more potential for EV stocks.
So what is that move? On Monday, Biden signed a new “Buy America” executive order that calls for the electrification of federal vehicles. A major focus of this order is revitalizing American manufacturing, and the way Biden is pushing to achieve this goal will boost EVs. That is because he has a plan to create 1 million new auto industry jobs. To do this, he is calling for the fleet of government vehicles to become all electric. And as of 2019, the U.S. government had about 645,000 vehicles in its garage. These vehicles drove 4.5 billion miles and consumed 365 million gallons of gasoline and diesel fuel.
For HYLN, NKLA, RIDE and WKHS stock, this means there is a huge opportunity to fill that gap.
EV Stocks: WKHS Stock Soars on Biden Plan
So what should you know right now? EV stocks are soaring on Tuesday. WKHS shares are up 30% in intraday trading. RIDE and HYLN shares are up 13%. NKLA stock is staging a nice 24% rally. However, investors should be aware of the details — or lack of details — surrounding the “Buy America” order.
To start, the executive order does not make explicit his plans for buying electric vehicles, or whether hybrid EVs would count toward his goal. Additionally, Biden does not establish a timeframe for the shift, which many experts think would be quite time-consuming.
However, the potential in this order is still evident. Right now, there are only a few automakers producing all-electric vehicles for the American market. Tesla (NASDAQ:TSLA) is the obvious leader, with legacy names Ford (NYSE:F) and General Motors (NYSE:GM) working to catch up. However, a handful of startups and recently public companies are ramping up production to bring their EVs to life. That means Workhorse, Nikola, Hyliion and Lordstown Motors could be serious beneficiaries of such an executive order. Plus, as Michael Wayland wrote for CNBC, the federal government is no small car consumer.
As we wait for more details about the EV future for the federal government, keep an eye on these up-and-coming EV stocks. Biden looks ready to give them the green light at any minute.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.