Thank These 3 Red-Hot Auto Stocks for Helping Save the Stock Market on Monday

The stock market spent much of Monday sharply lower, with investors initially reacting poorly to news of a new strain of coronavirus in the U.K. and nervousness about whether the stimulus package agreed to in Washington will be enough to keep Americans afloat financially. However, by the end of the trading session, investors felt a lot better about the current situation and were looking forward to 2021. The Dow Jones Industrial Average (^DJI 0.69%) managed to gain ground on the day, and although the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) couldn't follow suit, their losses were relatively modest.

Data source: Yahoo! Finance.

Until recently, most investors saw the auto industry as being quiet and relatively boring. But the rise of electric vehicles and autonomous driving has turned cars into high-tech machines, and that's made people really excited about some of the up-and-coming players in the space. Today, Luminar Technologies (LAZR 12.31%), QuantumScape (QS 3.71%), and Pivotal Investment (PIC) were among the top performers. Let's look at what each one of these companies is doing and why their stocks were on the rise Monday.

Image source: Getty Images.

Different angles on the same concept

The general idea behind all the interest in innovative auto stocks  is that the nature of the car business is changing. No longer is it enough to have vehicles that perform well mechanically. You also have to give drivers and passengers a better experience and incorporate cutting-edge technology into every facet of that experience.

Take Luminar, for example. The automotive lidar specialist saw its stock jump another 27% on Monday, bringing its total gains to around 250% just since mid-November. Luminar became public through a merger with a special purpose acquisition company (SPAC), and investors are excited about key partnerships it has forged with Intel (INTC -0.38%) unit Mobileye toward putting its lidar-based sensor technology to the test on the open road.

QuantumScape had an even bigger rise on Monday, climbing 29%. The company is focusing on improving the battery technology that goes into electric vehicles with a solid-state EV battery that QuantumScape believes should be able to run for seven hours while recharging in just 15 minutes. That's putting even industry giant Tesla (NASDAQ: TSLA) to the test with its battery technology, and major automakers looking to get more seriously into EVs are taking notice.

New players coming all the time

Meanwhile, the pipeline for companies in the EV and autonomous-driving space just seems to get more crowded. Pivotal Investment shares were up 28% on Monday, with the SPAC getting set to complete its merger with XL Fleet, a specialist in doing EV conversions of existing commercial and municipal vehicles using internal combustion engines to become hybrid-electric vehicles. With a shareholder meeting today to approve the merger, it won't be long before shareholders are directly exposed to XL's business going forward.

Many people have always been interested in cars and trucks, but it hasn't always been a hot area for investors. Now, though, the high-tech component of the auto industry is drawing a lot of attention, and it could keep driving interest in stocks into 2021 and beyond.