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REE Stock Pops 8% on Plans to Build Electric Vehicle Facility in U.K.

  • REE Automotive (NASDAQ:REE) is one of the big gainers in today’s market, up more that 11%
  • This comes as the electric vehicle (EV) company announced a new production facility in the U.K.
  • The facility will likely increase output and production efficiencies for the company
A hand holds an electric vehicle battery charger up to a car.
Source: Shutterstock

REE Automotive (NASDAQ:REE) announced plans to build a commercial EV plant in the U.K. today, sending REE stock up more than 11%. In the EV space, this is one of few bright spots investors have to look to today. As we pointed out in a recent pieceTesla (NASDAQ:TSLA) is down big today, albeit on its own unique headwinds. However, for investors in REE Automotive, it’s all sunshine and rainbows.

While the size and scale of this investment in a new EV plant is still unknown, it’s a step in the right direction. This is especially true for growth investors wondering when REE will be able to meet its annual production targets.

According to recent reports, REE’s new production facility will accommodate an annual production capacity of around 10,000 EV chassis. For the Israel-based company, this is a big step forward. REE happens to be a major producer of various drive components, making REE stock a “behind the scenes” play on EV growth.

Let’s dive into why this announcement is getting so much love from the market right now.

What’s Behind Today’s Big Move in REE Stock

REE has stated that this U.K. production facility will allow the company to scale to 10,000 vehicle sets by the end of the year. Additionally, this capacity is expected to double by 2023. This announced production expansion is a big deal, and not only with respect to the company’s production targets.

Looking at the finer print of this announcement, the plans for what’s going to be inside this production facility appears to be impressing investors. Recent reports suggest that this will be the “first highly automated integration center in the U.K.” Via “novel cloud-based robotic manufacturing” processes, REE aims to improve its cost structure while creating production efficiencies.

Sounds good. And expensive.

Accordingly, until we have a price tag for the costs of this automated facility, investors may want to tone down their excitement. From what’s been released thus far, this production facility may take time to build. Accordingly, timeline and price are two factors I’ll be waiting for before giving my verdict on this news.

That said, I can understand why the market is growing bullish on REE stock. For now, this is one I’m going to put on my watchlist.

On the date of publication, Chris MacDonald 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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

Article printed from InvestorPlace Media, https://investorplace.com/2022/05/ree-stock-pops-8-on-plans-to-build-electric-vehicle-facility-in-u-k/.

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