Analysts are predicting slower growth for the electric vehicle (EV) sector in 2022. However, that doesn’t mean that the EV race is going to slow down. On the contrary, it seems to be picking up steam. Tesla (NASDAQ:TSLA) saw some growth this week after a difficult month, but the biggest news out of the sector this morning is from a much smaller company. A recent announcement from Kaixin Auto (NASDAQ:KXIN) has Wall Street buzzing as shares shoot up. Indeed, KXIN stock may be primed to emerge as a EV breakout sensation in the coming year.
What’s Happening With KXIN Stock
This morning it was confirmed that the Chinese auto retailer has entered into a strategic partnership with with Beijing Shencheng Biotechnology Group Limited. The partnership will lead to the production of 10,000 customized new energy trucks over the next five years. The deal is estimated to be worth roughly $250 million. KXIN stock was quick to react well to this news.
Within the first hour of trading, it has shot up by more than 10%. And despite a slight downtick, it is on the rise again. This week has been rough for Kaixin, which saw shares begin to slip after some good news last week. However, with today’s growth, KXIN stock is back in the green for the week by 1.3% and seems prepared to end the year on a high note.
Why It Matters
It would certainly be appropriate for KXIN to end the year in the green after the month it has had, particularly in its final weeks. This announcement marks the second major catalyst for the stock generated by a large order. Last week the company announced that it had entered into a partnership agreement with logistics conglomerate Beijing Bujia International Logistics to produce 10,000 new energy trucks as part of an order worth roughly $500 million. Does that sound familiar?
Kaixin is an interesting company in the sense that it represents the shift that the automotive industry has undergone. It also represents the direction in which it is moving. After years operating in the used car space, Kaixin shifted gears to focus on the emerging EV sector. While the company doesn’t have the same brand recognition of peers such as Nio (NYSE:NIO) and XPeng (NYSE:XPEV), it’s also trading much better than either one today. As of this writing, both NIO and XPEV are in the red.
It’s also clear that the EV sector is moving beyond providing luxury sedans and SUVs to wealthy consumers to fill the growing demand caused by companies implementing sustainability in their shipping operations.
What It Means
Kaixin may well be on its way to gaining a share of this rapidly growing section of the EV market. If that is the case, it certainly bodes well for the years ahead. If large scale industrial consumers continue to take notice and turn to the company for its EV fleet needs, KXIN stock will be well positioned to gain the momentum it needs to soar.
The fact that it secured partnerships with two companies who fall in that category is an excellent sign. Additionally, the supply chain is currently posing complications for all companies in the shipping space. But as these difficulties are gradually resolved, companies will need to expand their fleet operations and will likely take the opportunity to branch into the EV space.
Therefore, KXIN stock should be on everyone’s watch list in 2022.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.