What happened
Electric vehicle (EV) stocks saw a broad-based correction in January. Workhorse Group (WKHS -1.80%) stock fell 22.5% for the month, according to data provided by S&P Global Market Intelligence. Nikola (NKLA -2.08%) stock fell 18.6%, and Lordstown Motors (RIDE -2.75%) stock fell 13% in January. Workhorse and Lordstown stocks are down roughly 90% in a year.
Almost all electric vehicle stocks have witnessed some correction in the new year. EV stocks rose significantly in the last couple of years, thanks to investors' euphoria for electric vehicles. Supportive governmental policies, environmental concerns, innovations in EVs, improved technology, and falling costs are among the top reasons behind the rapid growth in EVs. Recognizing this trend, investors went all out for EV stocks sending their prices higher. However, investors got a little ahead of themselves as the transition to EVs isn't happening overnight.
So what
Though the long-term growth story remains intact, the misalignment between EV companies' fundamentals and their stock prices is now correcting. Yet, apart from the broader correction, Workhorse, Nikola, and Lordstown Motors is each facing some company-specific issues.
Image source: Getty Images.
Workhorse Group has long been facing challenges. The company could deliver just a handful of electric vans in the years 2020 and 2021, well behind its targets. What's more, it had to recall all 41 vans it had delivered to customers in November last year due to those being non-compliant with Federal Motor Vehicle Safety Standards. The company also lost a major order from the U.S. Postal Service. Workhorse does not have any model in production right now, but it plans to announce new models in this quarter. Notably, there was no specific news from Workhorse in January, but the stock fell steeply as investors shunned more risky EV names.
Nikola stock's fall in January is, again, largely attributed to the broader sell-off in the EV sector. In fact, the electric truck maker announced several positive developments in January. Nikola recently entered an agreement with Proterra to purchase batteries for its Tre semis. Furthermore, the company got some significant incentives from the California Air Resources Board. Earlier in January, Nikola announced initial agreements for small orders from three companies: Covenant Logistics Group, Saia, and USA Truck.
Like Nikola, Lordstown Motors also had some positive news, though it came from the company's partner Foxconn. On Jan. 23, Nikkei Asia reported that Foxconn expects to start shipping Lordstown's pickup trucks in the second half of 2022. Lordstown sold its Ohio factory to Foxconn, which is making the electric pickup truck Endurance for Lordstown under the agreement. Lordstown Motors stock rose more than 20% on Jan. 31.
Lordstown Motors has been struggling for a while. After a short-seller alleged the company's management was exaggerating preorders, the company's CEO had to resign.
Now what
Investors will be looking forward to any announcement of new models from Workhorse Group's new management.
Nikola seems to be progressing well. While it's too early to say whether the company will succeed in its plans, it seems to have come a long way from its past troubles that led to its founder's ouster. The company has reported several positive pieces of news in January. Not only is it getting customer interest for its trucks, but it is also working to secure battery supply, and has secured some significant incentives in California. Investors will get more insight into Nikola's progress when it reports its fourth-quarter results on Feb. 24.
Lordstown Motors also has some positive development after a string of troubles in the past. All in all, EV investors would keep a close watch on the developments in these three companies in the coming months.
