What happened
With the third quarter in the rearview mirror, automotive companies are starting to report production and delivery results. All eyes are on how the electric vehicle (EV) category is doing, and many stocks in that sector are pushing higher today, including Ford (F 0.08%), solid-state battery maker QuantumScape (QS -1.97%), and charging station maker ChargePoint Holdings (CHPT -3.73%). As of 1:50 p.m. ET on Monday, Ford shares were 2.8% higher, QuantumScape had jumped 7.1%, and ChargePoint held on to a 2.5% gain.
So what
The boost is a welcome one for Ford shareholders. Since the company warned investors on Sept. 19 that supply chain disruptions and inflated raw material costs would hurt third-quarter results, shares have dropped over 20%.
After rivals Tesla and General Motors provided their third-quarter sales updates, many investors are getting more excited to be in EV stocks today. Tesla shareholders didn't respond positively to that company's report, and that could be a sign that investors want to move to some of the more beaten-down stocks in the sector.
Now what
Ford is just beginning to ramp up production of its new EV models, and GM is in a similar position. GM said sales of its Chevrolet Bolt EV and Bolt electric utility vehicle (EUV) hit a record in the quarter, and the company is boosting production to meet demand. Management said it sold almost 15,000 units of both models combined in the quarterly period, and forecasts increasing production of them by 60% in 2023 versus 2022.
If that's an indication of overall strong demand for EV models from automakers beyond just Tesla, it's great news for Ford, too. It isn't going all electric, but it is counting on its EV segment (named Model e) being a strong long-term contributor to the company's profitability. Earlier this year, CEO Jim Farley said the company plans to invest $50 billion to grow its EV production to an annual run rate of 600,000 by the end of 2023 and 2 million just three years later.
QuantumScape and ChargePoint are counting on growth in EV adoption just to attain profitability. The former is working to commercialize its solid-state battery technology that, if successful, should provide a safer, fast-charging, longer-life battery that the current lithium-ion batteries. And the latter is investing to grow its charging network infrastructure, and expects to double its annual revenue in its next fiscal year.
But investors haven't been keen recently to invest in more-speculative names like QuantumScape and ChargePoint. While those stocks haven't dropped quite as much as Ford in the last month, they are down 59% and 45%, respectively, year to date. Investors today seem to feel like these names have been beaten down enough, especially as it appears that demand in the sector remains as strong as many had hoped.
