What happened
Many stocks in the electric vehicle (EV) sector have been out of favor with investors so far in 2021. Three that have rebounded sharply in the past week are NIO (NIO), Nikola (NKLA -2.42%), and U.K.-based Arrival (ARVL). That continued today with NIO shares up 4.6%, Nikola up 7.9%, and Arrival higher by 8.6% as of 3:20 p.m. EDT.
So what
There is no company-specific news that came out today for these names. An overall positive sentiment has been pushing EV stocks higher recently. In the last week, the gains in these stocks have been noteworthy.
NIO data by YCharts.
That's partly because there has been recent news from all three that bodes well for the future investment cases. NIO just produced its 100,000th vehicle earlier this month, and is about to begin construction on a new factory. And last week, Nikola announced progress on its hydrogen fueling infrastructure plans, and Arrival delivered its first prototype electric delivery van to investor and customer United Parcel Service (UPS -1.55%).
NIO ET7 luxury electric sedan. Image source: NIO.
Now what
In addition to announcing its production milestone this month, NIO reported its first-quarter 2021 EV deliveries exceeded 20,000. That was significant to investors, as NIO had suspended production at a plant in late March due to the global semiconductor shortage. At the time, the company said the halt would reduce first-quarter deliveries to approximately 19,500 vehicles, compared to the prior estimate of 20,000 to 20,500. The fact that it hit the original predicted range was a hopeful sign that the impact would be less than originally feared. NIO reports its first-quarter financial results this Thursday, and the company should add updated information on production as well as the start of the new plant construction scheduled for that same date.
Though Arrival is based in the U.K., the company touts a decentralized production strategy. It will construct "microfactories" near customer facilities, which will cost less to build (even using existing warehouses as a base) and allow more flexibility for its business model. It has already announced two in the U.S., including one that plans to supply UPS with the 10,000 electric delivery vans it has ordered.
Nikola is arguably the most speculative investment of this trio. In addition to trying to become a manufacturer of battery-electric vehicles, and electric semi trucks powered by hydrogen fuel cells, the company's business model depends on the buildout of hydrogen fueling infrastructure. Recent news of a collaboration with TravelCenters of America (TA) and plans to have two hydrogen fueling stations commercially operational by the end of next year are potentially good signs. But there remains much more for Nikola to accomplish to grow into its $4.5 billion market cap. For now, investors who believe in hydrogen as a fuel source seem content with any positive news along the way.
