Electric vehicle (EV) stocks roared on Tuesday. Even as Tesla’s (NASDAQ:TSLA) gains were cut in half, many others flew higher. However, the strong rally is being followed by another decline on Wednesday as volatility remains elevated.
On Tuesday, Rivian (NASDAQ:RIVN) shares exploded higher, rallying almost 14% on the day. That followed its third-quarter delivery results, which produced 7,363 vehicles last quarter. More importantly though, the company said it’s on track to hit its annual goal of 25,000 vehicles.
That’s despite the company running into a supply-chain nightmare, which has been a common theme among automakers this year.
For instance, Tesla reported disappointing third-quarter production results despite reporting record output. The tally ultimately missed analysts’ expectations, which sent the stock lower by 8.6% on Monday. However, shares were rallying again Tuesday, up 6.2% at one point.
Ford (NYSE:F) announced its delivery results on Tuesday too and showed robust strength for its EV units. Shares burst higher by about 7%. For what it’s worth, Lucid Motors (NASDAQ:LCID) and Polestar Automotive (NASDAQ:PSNY) both rallied on Tuesday too, climbing 9.3% and 16.1%, respectively.
Despite the good news from this week though, EV stocks are down hard on Wednesday. What gives?
Why Are EV Stocks Down Today?
First, it must be pointed out that the stock market took quite the beating this morning. The S&P 500 opened lower by 1.22% and fell almost 2% in early trading. The Nasdaq fared even worse, opening lower by 1.4% and falling 2.4% at the low. So that alone is enough to drag EV stocks down after Tuesday’s rally.
Second, despite the recent decline, Tesla stock still weighs in with a $750 billion market capitalization. That makes it the largest automaker in the world and certainly the largest among the EV stocks. It fell 8.6% on Monday, and its gains on Tuesday — while up more than 6% at one point — were halved to just 2.9%. The stock is down 5% on Wednesday. Although that’s largely tied to CEO Elon Musk reportedly moving forward with his acquisition of Twitter (NYSE:TWTR), it’s casting a bearish light over the rest of the industry.
Lastly, some other news that could be affecting EV stocks comes from President Joe Biden’s administration. It stated that batteries coming from China could be involved with child labor. Children have been found in some mining facilities located in the Democratic Republic of Congo where cobalt that is used for electric batteries is mined. Notably, “the Department of Labor said it would add lithium-ion batteries to a list of goods made with materials known to be produced with child or forced labor under a 2006 human trafficking law.”
Put it all together and that likely explains some of the weakness in EV stocks today.
On the date of publication, Bret Kenwell 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.