What happened
Stocks of emerging EV companies had a good start in market trading today. Battery company QuantumScape (QS -1.65%), heavy truck maker Nikola (NKLA -2.44%), and pickup truck hopeful Lordstown Motors (RIDE 1.11%) popped as much as 7.2%, 6%, and 11%, respectively, in early trading. As of 11:25 a.m. ET, QuantumScape was still near its morning high, while Nikola remained up 0.5% and Lordstown held a 9.8% gain.
So what
Subdued inflation data helped push the market higher in general today. That's especially good news for these EV sector companies that are facing challenging raw material cost increases, just as the companies work to ramp up their respective businesses. Nikola also announced a coming executive change that investors seemed to cheer.
Additionally, the Inflation Reduction Act appears to be getting closer to becoming a law, with expectations that President Joe Biden could sign it as soon as this weekend. That legislation has EV investors hoping these early-stage companies will get a boost.
Now what
QuantumScape is the furthest of this group from commercialization of its solid-state battery technology. But its market cap of $5 billion reflects the potential for its technology. The company recently updated investors on its progress, and that update had both positives and negatives. Citing issues including supply chain dynamics and production tooling requirements, the company provided a new timeline to commercialization that effectively pushed back the timeframe from 2024 to 2025.
Even with that delay, QuantumScape is making good progress on the technology itself, and testing with automotive companies is underway. Passage of the Inflation Reduction Act, and more specifically the billions aimed at promoting clean energy projects, could provide companies like QuantumScape some future aid. The bill provides tax credits for consumers who buy some new and used electric vehicles. It also includes $10 billion for investment tax credit to build clean technology manufacturing facilities that could support QuantumScape and its battery business.
Those same benefits could help Nikola and Lordstown as they work to grow. Nikola also gave investors a clue at its future direction this morning with the announcement that current Nikola Motor President Michael Lohscheller will succeed Mark Russell as CEO at the end of this year. Russell will remain on Nikola's board of directors. Lohscheller was CEO of car maker Opel and joined Nikola in February 2022. In his time as Nikola president, the company began production and sales of its Tre battery electric vehicle and has taken steps in the development of the company's fuel cell electric vehicle.
With the tailwind of expected federal policy support and the progress each of these companies has made, investors are moving some funds back into the EV sector today.
