Electric vehicle (EV) stocks have come bouncing back to life this week, following a rough week for most of the industry to start July. This week, it was both a rising market and falling interest rates that had investors excited about the market.
According to data provided by S&P Global Market Intelligence, shares of Rivian (RIVN 4.45%) rose as much as 22.1% this week; Nikola (NKLA +0.00%) jumped 12.6%; and charging company Blink Charging (BLNK 5.16%) was up 10.6% at its peak. At noon EDT on Friday, the stocks were up 21.6%, 12%, and 18.5%, respectively.
NASDAQ: RIVN
Key Data Points
Delivery news
Most of the industry's delivery news came out last week, and it wasn't all that inspiring when paired with the bankruptcy of Fisker. A shutdown at Rivian's plant has impacted production so far this year, and even Tesla's (TSLA 3.56%) deliveries fell 5% from a year ago.
This week, Lucid gave a little more optimistic view. Production was 2,110 vehicles in the second quarter and deliveries were 2,394, which was a sharp departure from producing 2,173 vehicles in the year-ago quarter and delivering just 1,404 of them.
One of the biggest fears, especially in the high end of the market, was that demand for EVs was falling as the cost of options started to come down. For now, it appears there's some demand but not enough for companies selling vehicles for over $70,000 to be profitable.
Interest rates boost
The other big driver of EV stocks was interest rates. The Consumer Price Index (CPI) inflation reading came out this week and showed prices dropping 0.1% between June and May 2024 and rising only 3% year over year. Traders anticipate that will allow the Federal Reserve to cut interest rates later this year.
Ten-year U.S. government bond yields have fallen 13 basis points over the past months as markets already price in lower rates. Lower interest rates will help auto companies offer loans to customers at lower rates, and that should help sales in 2024.
Tesla's caution late in the week
As positive as the week was for most EV stocks, the week ended on a sour note as Tesla delayed a robotaxi event scheduled for Aug. 8, 2024. According to widespread reporting, the company needs more time to build robotaxi prototypes and will unveil them in October.
Tesla stock had dragged the entire EV market higher over the past month, and this certainly poured some cold water on high expectations.
EV stocks still have a lot to prove
Lower interest rates could be a significant boost to EV stocks because it makes financing the business easier; funding installations of chargers for Blink Charging will be less costly; and buyers can finance at a lower monthly payment.
What this doesn't change is the fact that Rivian, Nikola, and Blink Charging are all losing money.
BLNK Free Cash Flow data by YCharts.
I don't see anything of the last week or the last month that will change this dynamic. Until each of these companies demonstrates the ability to generate an operating profit, I'll stay on the EV sidelines.
