Batteries included

08/06/21
  • White House, auto industry promote EV targets for 2040
  • Vehicle-charging stocks rallied more than EV stocks in early trading
  • Current players still trading near multi-month lows after winter correction

Did yesterday provide an example of the old saying, “When there’s a gold rush, sell shovels?”

Reports that President Biden would formally announce—with support from US automakers—a “national target” for electric vehicle (EV) sales to account for 40-50% of new vehicle sales by 20401 were initially met by ho-hum trading by two US-based EV makers, Tesla (TSLA) and Workhorse (WKHS). Both stocks lagged General Motors (GM) and Chinese EV maker Nio (NIO) in the first hour or so of trading:

Chart 1: General Motors (GM), Nio (NIO), Tesla (TSLA), and Workhorse (WKHS), 8/5/21 (1-minute chart). Low-voltage EV stocks.

Source: Power E*TRADE (For illustrative purposes. Not a recommendation.)


True, GM sells EVs and has committed to expanding its footprint, but it’s not currently a pure-play US EV maker. Nonetheless, it was up more than 3% around 10:35 a.m. ET, while TSLA and WKHS were struggling to trade above breakeven (although both later solidified their gains).

The picture was much different for three EV-charging companies—Blink Charging (BLNK), ChargePoint (CHPT), and EVgo (EVGO)—all of which were up more than 4% around the same time:

Chart 2: Blink Charging (BLNK), ChargePoint (CHPT), and EVgo (EVGO), 8/5/21 (1-minute chart). EV stocks price chart. EV chargers surge.

Source: Power E*TRADE (For illustrative purposes. Not a recommendation.)


Of course, both charts are just snapshots—one hour of trading on one day—but the shovel-selling metaphor in the electrification space has also been voiced recently by analysts at Morgan Stanley, who argued in favor of investing in companies selling the “underlying equipment” rather than a particular technology or company, while noting growth related to EV charging is expected to top $15 billion by 2030.2

That said, EV-charging stocks—like EV stocks themselves—haven’t displayed much voltage since hitting record highs in December and January. (The three shown here are relative newcomers: BLNK is the grizzled veteran with around three-and-half years of trading under its belt; both CHPT and EVGO launched less than a year ago.) ChargePoint and Blink are interesting in that both have followed a similar path this year—consolidating after forming support levels in the wake of big corrections:

Chart 3: ChargePoint (CHPT), 8/24/20–8/5/21. ChargePoint (CHPT) price chart. Post-correction support.

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)


Checkpoint, for instance, had fallen 58% from its December record close when it tagged $19.50 on March 5—a level that served as support for three more notable swing lows; the stock has formed a slightly higher short-term support level (around $22.40) over the past three weeks.

Regardless of whether recent headlines help jump-start EV and EV-charging stocks, the differences in their responses to yesterday’s news is a reminder for traders to keep an eye on the shovel market, even if the gold mine seems to be getting all the attention.

Note: Both BLNK and EVGO are scheduled to release earnings next Wednesday, August 11.

Today’s numbers include (all times ET): Employment Report (8:30 a.m.), Preliminary Wholesale Inventories (10 a.m.).

Today’s earnings include: AMC Networks (AMCX), Lear (LEA), Norwegian Cruise Line (NCLH), Canopy Growth (CGC).

Today’s IPOs include: Healthcare Royalty (HCRX), Adagio Therapeutics (ADGI), Eliem Therapeutics (ELYM).

 

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1 CNBC.com. Biden pushes for electric vehicles to make up 40% or more of U.S. auto sales by 2030. 8/5/21.
2 MorganStanley.com. Plugging into the Electrification Supercyle. 7/29/21.

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