What happened

After big jumps yesterday, several stocks in the electric vehicle (EV) sector are giving back some of those gains today. Electric heavy-truck maker Nikola (NKLA -2.08%), EV start-up Lordstown Motors (RIDE -2.75%), and charging network company Blink Charging (BLNK 0.44%) were down between 5% and 6% early on Friday. As of 2:47 p.m. ET, Nikola shares were still down 3.6%, while Lordstown was positive by 1%, and Blink was off by 1.2%. 

So what

Yesterday's gains came after word that there was an agreement among key Democratic leaders to push a package that would include $369 billion for clean energy investments. The Inflation Reduction Act of 2022 seemingly has a path to passage in Congress, and it also has the endorsement of President Biden. It includes $1 billion for clean heavy-duty vehicles that could benefit Nikola as it ramps up production of its battery electric semi trucks and works toward commercialization of hydrogen fuel cell trucks.

It also includes incentives for consumers of clean energy vehicles, and as much as $20 billion in loans to build new clean vehicle manufacturing facilities across the country. But investors should realize that potential good news needs to be tempered somewhat, and that seems to be driving today's market moves.

Now what

Nikola has begun to commercialize its business, but it has also been focused on a battle with its former chairman to authorize an increase in the number of shares of common stock from 600 million to 800 million. This would give it more financial flexibility, but it has had to postpone the vote on that authorization several times in an effort to obtain shareholder approval. Former chairman Trevor Milton remains the company's largest shareholder and has voted against it. The company has struggled to get enough shareholder votes for approval. The next vote will be held next week, and while the company is adequately funded in the short term, it likely will need to raise further capital for its expansion plans. 

Lordstown has already shifted its strategy to keep its operations moving forward. The company agreed to sell its manufacturing plant to electronics manufacturer Foxconn to raise capital in an agreement that will have the two companies working together on new model designs in the future. 

While passage of the new legislation would help stoke demand with incentives for consumers and includes $10 billion in investment tax credits to build clean technology manufacturing facilities, it may be premature to think it's a material development for Lordstown. 

Growth in EV adoption is what these companies need. And if the investments included in the Inflation Reduction Act come to fruition, it will undoubtedly be a positive development for all EV companies. But it remains premature to know whether the bill will become law, and even more premature to know whether that will help these companies survive and grow. Investors today seem to be acknowledging that reality check.