What happened
Shares of a diverse mix of electric vehicle (EV) makers are starting the week off on a high note. The stocks of Lucid Group (LCID 0.84%), Rivian Automotive (RIVN 3.19%), and Nio (NIO 2.38%) soared by between about 11% and 13% early Monday. As of 1 p.m. ET, Lucid and Rivian were still higher by 9.1% and 9.7%, respectively. Nio's American depositary shares also remained up by 8.6%.
So what
All three stocks are bouncing back from a losing week last week, and a new analyst rating is helping that boost. Much of the negative sentiment over the last week came after sector leader Tesla expanded the vehicle price cuts it previously implemented in China to Europe and the U.S. markets.
Many investors felt that Tesla's price cuts could hinder the efforts by Rivian, Lucid, and Nio to continue to ramp production and sales -- or at the very least, extend the runways to reach profitability, as these companies have to compete with lower selling prices.
Image source: Lucid Group.
But one sector analyst from Citigroup thinks at least the drop in Lucid shares makes for a compelling buying opportunity. Analyst Itay Michaeli just put a buy rating on Lucid stock with a price target of $12 per share, reports Barron's. That share price would represent a 53% gain from Friday's closing price. That analyst call, along with further evaluation of last week's news from Tesla, has Rivian and Nio also recovering from last week's declines.
Now what
Michaeli's call was specific to Lucid, but the positive reaction is carrying over to Rivian and Nio, too. That's because all three companies are in a similar position in the burgeoning EV sector: They are all working to ramp up production quickly, and are battling to take market share from Tesla. And production has, in fact, been growing quickly for these companies.
Reports on Tesla's price cuts, including from The Wall Street Journal over the weekend, assumed the move would put significant pressure on competitors and cost them sales. But EV sales only represented 10% of new car sales globally last year, so there is a long runway ahead for the overall market.
Rivian, Lucid, and Nio have started proving that, with their updates on how vehicle production increased at the end of last year. Rivian came up slightly short of its target to make 25,000 new vehicles last year. But it did produce over 10,000 in just the fourth quarter, representing more than 40% of the year's total production. Lucid exceeded its most recent estimate with a strong fourth quarter as well. And Nio ended 2022 with two consecutive months of record vehicle deliveries.
Investors today decided that lower stock prices after last week might make it a good time to buy, especially after one analyst saw such big gains possibly ahead for Lucid.
