What happened
Shares of several U.S. companies in the electric vehicle space were trading higher on Tuesday, after the Biden administration announced measures to speed the adoption of electric vehicles in the United States.
Here's where things stood for these three companies as of 10:45 a.m. EST on Tuesday, relative to their closing prices on Monday.
- Lordstown Motors (RIDE 1.11%) was up about 18.3%.
- Nikola (NKLA -2.44%) was up about 10.5%.
- Romeo Power (RMO) was up about 10.3%.
So what
President Joe Biden on Monday said that he will move to replace the U.S. government's fleet of roughly 650,000 vehicles with zero-emissions electric models made in America, and to build 550,000 new electric-vehicle charging stations, as part of a broader shift to clean energy.
That news triggered a new wave of interest in electric-vehicle stocks that could benefit, sending these three names -- and others, including Workhorse Group (WKHS 5.84%) -- higher in trading on Tuesday morning.
But which companies really stand to benefit here? I think there are two parts to the answer to that question.
Lordstown's Endurance, an American-made electric pickup designed for fleet use, could draw interest from U.S. government fleet managers. Image source: Lordstown Motors.
First, let's look at what's actually in the government's fleet. About 35% of those 650,000 vehicles are trucks and vans operated by the U.S. Postal Service; the remainder is split (roughly equally) between trucks and SUVs, and passenger cars.
If the government is serious about buying vehicles that are made in America, their choices are limited. Tesla makes lots of EVs in the U.S., but it probably won't be a factor here; expensive luxury sports vehicles aren't a politically prudent choice.
The affordable electric car that comes to mind first is General Motors' (GM -0.17%) made-in-Michigan Chevrolet Bolt EV, which seems well suited for government work, and which GM could certainly produce in the numbers necessary without trouble.
For trucks and vans, we could see Workhorse and Lordstown get some business -- but realistically, I think the bulk of it is likely to go to GM and to Ford Motor Company (F 0.66%), which will be making battery-electric versions of its F-150 pickup and Transit commercial van in the U.S. next year.
Now what
But even if the companies here don't get a lot of direct business from the U.S. government, they all stand to benefit indirectly, not only from those new charging stations, but also from the increased exposure that the measures give to EVs generally.
If you've driven an EV, you know that they can be a lot of fun to drive, and they're not really hard to live with. Think about all those government employees getting first-hand experience with EVs at work, many for the first time. Now think about them telling their friends and relatives about those experiences: That will be a rising tide of consumer -- and commercial -- interest in EVs that seems likely to lift many boats.
