What happened
The stocks of several companies in the electric-vehicle (EV) sector are on the rise today. Shares of Rivian Automotive (RIVN +1.25%) and Lucid Group (LCID 2.17%) both jumped about 5% in early trading Wednesday; QuantumScape (QS +2.91%) stock rose almost 9% this morning. As of 2:35 p.m. ET on Wednesday, Rivian and Lucid were still 1.7% and 2.8% higher, respectively. Shares of solid-state battery company QuantumScape were up 6%.
So what
With no specific news or filings from any of these companies today, the spike in shares looks to be a rebound after several days of declines that also weren't driven by company-specific news. All three of these stocks had dropped about 10% since Friday heading into Wednesday's trading. Today's gains also come with investors looking on as Tesla's latest stock split takes effect after the close of trading today.
NASDAQ: RIVN
Key Data Points
Now what
Another recent catalyst for these stocks is the portion of the Inflation Reduction Act addressing climate change. Several aspects of the legislation are designed to bolster investments in the EV sector as well as consumer demand for EVs.
But investors are trying to balance recent struggles reported by these companies with those potential longer-term tailwinds. Rivian and Lucid both cut 2022 production forecasts earlier this year as the start-ups work to ramp up initial production volumes in the midst of supply chain disruptions.
NASDAQ: LCID
Key Data Points
Lucid slashed its 2022 production forecast another 50% in its second-quarter earnings report, causing shares to take another hit earlier this month. Although Rivian kept its previously reduced forecast, it also noted continued challenges with supply as well as rising costs.
In a step to boost revenue and production, Rivian told customers in an e-mail that it would no longer offer the cheapest models of its R1T electric pickup and R1S SUV. The company said there wasn't a large number of orders for these versions, and consolidating the production with its other models would boost productivity. Some customers were unhappy with being forced to either cancel orders or pay up to an additional $5,500 for a different model.
NASDAQ: QS
Key Data Points
Rivian and Lucid still see strong demand in the form of pre-orders and reservations, and have started to bring in revenue from the initial year of production. QuantumScape, though, has yet to commercialize its business. Its making progress with its solid-state EV battery technology, but the company is still close to two years away from recognizing any revenue.
Incentives and credits included in the Inflation Reduction Act should bolster the EV sector. But not every company in the business will benefit due to some restrictions included in the package. All of Lucid's luxury vehicles and most current Rivian models, for example, are too pricey for consumers to qualify for tax credits.
Investors can expect the stocks of these early-stage companies to continue to be volatile. The drop and pop this week are examples of what that could look like for some time.
