What happened
The share price of the electric vehicle (EV) company Canoo (GOEV 1.43%) rose quickly this morning on no company-specific news. Instead, investors may be digesting the latest details from the U.S. Environmental Protection Agency's (EPA) push to boost electric vehicle sales. The Biden administration released more information today about its plan to reduce emissions and increase EV adoption in the U.S. over the next several years.
The EV stock jumped today by as much as 8% this morning but then retreated and was up by just 2.9% as of 10:49 a.m. ET.
So what
The Biden administration is proposing strict new tailpipe regulations on automakers, intending to significantly boost electric vehicle sales. The strict new emissions standards would result in about 67% of all new vehicles sold in 2032 being EVs. The proposed regulations set by the EPA would be stricter than previous regulations and begin for vehicles in the 2027 model year.
Canoo shareholders are likely viewing this latest development and getting excited that stricter tailpipe regulations could result in more demand for the company's EVs. Investors may have been extra eager about the new EPA regulations because they come on the heels of Canoo's announcement that it has secured a new vehicle manufacturing facility.
Now what
Canoo's stock is often volatile as its investors tend to react strongly to any news about the company. But today's share price jump appears to be especially dramatic, considering there's no direct positive news for the company regarding the EPA regulations.
Sure, an overall push toward EVs in the U.S. could help electric vehicle companies in general, but there's certainly no guarantee that it will boost Canoo's vehicle sales. Additionally, Canoo is still in the very early stages of getting its vehicle production up and running, so it makes the proposed regulation news even less relevant for Canoo than it does for other EV makers that are already in full production mode.
