What happened
Shares of EV charging and vehicle makers got a boost from soaring oil prices Tuesday. Included in that bullish surge were charging network companies Blink Charging (BLNK 4.76%) and Volta (VLTA), and vehicle electrification company XL Fleet (XL). As of the close of trading:
- Blink was up 8.3%
- Volta was up 9.8%
- XL Fleet was up 16.2%
So what
There's an old saying in the energy markets that the cure for high oil prices is high oil prices. The implication is that a spike in prices causes a drop in demand, which leads to prices falling. With oil hitting a 13-year high Monday due to global energy supply impacts related in part to Russia's invasion of Ukraine, another possible cure for high oil prices seems to have gotten investors' attention -- expanding the use of alternative energy sources to complement fossil fuels.
Image source: Blink Charging.
Blink and Volta are quickly growing their EV charging station networks both in the U.S. and in Europe, which helps to explain why investors are piling into their shares. For its part, XL Fleet electrifies existing vehicles using both plug-in hybrid and fully electric power trains.
Now what
Neither Blink nor Volta have reported their fourth-quarter results yet. But over the first nine months of 2021, their revenues jumped 244% and 82%, respectively, versus the prior-year period. Blink's sales are coming off a much lower base, which helps to explain its outsized growth.
It's clear that EV demand is already strong, and production from both start-ups and legacy automakers is growing. Companies like Blink and Volta are working to meet the expected demand for fast, convenient charging options. If sustained high oil prices boost the demand for EVs even further, that will provide an even larger runway for growth for the charging station providers. Investors also realize these stocks have come down in recent months. Since mid-November, Blink's shares have lost 46% and Volta has fallen by 65% as investors have rotated away from more speculative sectors.
XL's share price has declined by 55% over that same period. The company recently delivered its quarterly financial update, and investors seemed to think the stock had already dropped too much, as its cash position remained substantial. And increasing tailwinds for a broad conversion to electric transportation can potentially help XL, too.
On Tuesday, most everything related to the renewable energy market was getting investor attention as oil prices spiked. Considering that some of these stocks had dropped significantly in recent months, it wasn't much of a surprise to see them bounce back in this environment.
