The stock of popular electric vehicle company Nio (NIO 4.44%) popped more than 6% yesterday, and the rally continued into Tuesday. Shares gained another 3% early in the day, but the stock, and others, couldn't hold today's gains. Nikola (NKLA 9.49%) and Workhorse Group (WKHS 7.21%) shares were also up as much as 5.6% and 11.8%, respectively, earlier Tuesday. But like Nio, the gains mostly evaporated. As of 2:50 p.m. EDT, these stocks were trading as follows:
- Nio was down 1%.
- Nikola was down 0.5%.
- Workhorse Group was up 4.3%.
Nio didn't come out with any specific news yesterday, and its stock had already been rising prior to this week, with shares more than 15% higher over the last month. That's due to investor excitement over its plans to grow outside of China, including its first shipment of vehicles to Norway. It also is closer to beginning sales of the ET7, its highly anticipated technology-laden luxury electric sedan, early next year.
But yesterday's jump came after word that American start-up Lucid Group is beginning to ship its first luxury sedans. Investors were also stirred by a new big rental car order for Tesla and with its stock passing the $1 trillion market cap milestone.
Nikola, somewhat ironically, is getting tailwinds not from another EV maker, but rather a big announcement in the hydrogen fuel cell sector. Yesterday, Bloom Energy announced a big deal with a South Korean partner that intends to grow the use of hydrogen and its infrastructure. Nikola is counting on that for its fuel cell electric vehicle (FCEV) semitrucks that it plans to begin road testing next year.
Nikola has been working to build a sales and service network for its upcoming FCEV and battery electric vehicle (BEV) semis. It also made an investment in a clean hydrogen production project in the Midwest earlier this year for one aspect of building out the needed hydrogen fueling infrastructure. The company has also said it expects the BEV models to be on the roads hauling customer freight before the end of this year. Investors will get an update from Nikola when it reports its third-quarter update next Thursday, Nov. 4.
Investors are watching the overall global growth in the EV market to see where Nio might find success and profitability. The company has moved into Norway, and it plans to be in Germany next year. The Chinese and European markets are the two biggest for autos and electric vehicle growth globally. The company is also in the midst of doubling its production capacity, so investors likely feel like the coming year could be a very meaningful one for the company, including with the ET7 sedan and two other new products said to be coming.
Workhorse Group has been a beaten-down company and stock. Shares are down more than 66% year to date, and the company announced it had replaced its executive team in late September. That came after it lost a bid for a large United States Postal Service contract and had a recall and suspension of deliveries for its electric delivery trucks. The company will update investors in its third-quarter financial report on Tuesday, Nov. 9.
In the meantime, the EV sector will likely remain volatile for most names. It remains a speculative but growing sector, which helps explain the excitement seen yesterday and early today. The reversal today should just be looked at as normal volatility in the sector.