The trading week for electric vehicle (EV) stocks started off explosively as shares of Rivian Automotive (RIVN 2.88%), Lucid Motors (LCID +0.61%), and ChargePoint Holdings (CHPT 0.93%) all moved higher Monday. Thanks for this go to the Biden administration, which is preparing to quadruple tariffs on Chinese electric cars imported into the U.S.
As of 10:50 a.m. ET, shares of electric carmakers Rivian and Lucid are up 12% and 6.8%, respectively, while electric car charging company ChargePoint is up 11.4%.
NYSE: CHPT
Key Data Points
Chinese cars get more expensive
Now, admittedly, Chinese cars aren't a huge part of the U.S. automotive market. In Europe, China-branded EVs make up 8% of all electric car sales, but in the U.S. the only real "Chinese EVs" I can think of are the Polestar 2 and maybe the Volvo S90 hybrid, both built by companies controlled by China's Geely Holding.
This new move by the Biden administration could guarantee things stay that way.
As The Wall Street Journal reported Saturday, the U.S. government is preparing to raise tariffs on Chinese EVs from 25% to 100% (plus a 2.5% tariff levied on all auto imports). This will effectively double the price of any EVs China tries to sell in the U.S.
What it means for Rivian, Lucid, and ChargePoint
The implications for Rivian and Lucid stocks are clear: This will remove the threat of future competition from low-cost Chinese EVs, which in turn will reduce pressure on U.S. companies to lower the prices of electric trucks and cars. It may not be enough to turn Rivian and Lucid profitable, but it should at least prevent their losses from growing even bigger. To this extent, investors are reacting logically to the news.
Why investors are bidding up ChargePoint stock is more of a puzzler. Bringing more and cheaper Chinese EVs to market would logically grow demand for charging services and help grow ChargePoint's business. Chinese EVs being priced out of the market is therefore probably a negative for ChargePoint.
Investors who are buying ChargePoint stock on this tariffs news should probably be selling instead.
