What happened

Electric vehicles (EVs) are all the rage with car buyers lately, but do you know what could make them even more popular?

Try adding lasers.

And in fact, two of the nation's biggest laser makers were seeing their stocks surge in Wednesday morning trading -- both for reasons related to the EV industry. As of 11:45 a.m. ET, shares of Coherent (COHR 4.12%) had gained 19.1%, while rival IPG Photonics (IPGP 0.18%) was up a solid 13.5%.

So what

What is driving today's gains? Let's take these one at a time. In the case of Coherent, the company just announced new PH20 SmartWeld+ laser processing heads that are "optimized for precision control of welding depths that are ideal for electric vehicle (EV) manufacturing applications."  

In 2020, industry publication Fastener Engineering noted the increase in the use of laser welding in automotive manufacturing, saying the technology had in fact already become "commonplace" in many applications, and in particular in welding of battery cells, modules, and packs -- helping to speed production, reduce waste, and cut costs.  

Adding to investor enthusiasm in the technology today is a note just out from investment bank Raymond James, which is upgrading IPG Photonics stock to outperform. As the analyst explains today in a note on The Fly, the need to invest in capital equipment (and lasers in particular) to manufacture batteries for electric cars is sparking a "substantial growth cycle" in the laser industry, and the potential for "substantial earnings upside." Lasers for EV manufacturing, says Raymond James, could represent as much as 50% of IPG's revenue stream by as early as 2025.  

In the context of Coherent's announcement today, it makes sense to assume that EVs are becoming a bigger part of Coherent's business as well.

Now what

Gratifying as it is to see the stocks going up this morning, I'd still suggest investors act cautiously before trying to chase this rally. Wall Street's enthusiasm and Coherent's press releases notwithstanding, Coherent stock looks rather pricey at 47 times trailing free cash flow (FCF) and negative earnings currently. IPG stock at 48 times FCF and 55x earnings isn't a whole lot cheaper.

These are pretty steep price tags, even for the chance to invest in EVs and lasers at the same.