What happened

The entire electric vehicles industry got all shook up Monday morning -- and remains so as we head into the afternoon -- after the U.S. Departments of Energy and Treasury (rather than the Department of Transportation, as you might expect) basically told investors which car stocks will be winners and which ones will be losers going forward.  

The biggest of the winners, it seems, will be General Motors (GM 2.25%), which as Car and Driver reports today, "not only plans to build all its future EVs in North America but has announced numerous mineral-sourcing contracts and is setting up at least three battery plants as joint ventures with its longtime cell partner LG Energy Solutions." That checks all the boxes on the U.S. government's green energy wish list, and sets up GM to provide $7,500 tax credits to buyers basically all across its EV lineup going forward.

Ford and Tesla are making out pretty well today as well, with the government confirming that most of their vehicles will qualify for at least some taxpayer subsidies. (Both Ford and GM stocks are up nicely, while Tesla is down only a small fraction of a percent.) In contrast, no EVs from Rivian Automotive (RIVN 8.05%), Nikola (NKLA -0.10%), or Fisker (FSRN 5.71%) made the cut for any IRS tax breaks. And yet, Rivian stock is up a solid 2% as of 1:45 p.m. ET today, and Nikola is gaining 3% (but Fisker is down 3.8%).

So what

Why the divergent reactions from investors to the same news? That's a complicated question. Let's break it down.

In the case of Fisker -- today's lonely loser -- it's probably a disappointment to learn that the Fisker Ocean electric SUV, priced under $40,000, will not qualify for U.S. government subsidies. In contrast, Rivian's much pricier R1S electric SUV and R1T electric pickup used to qualify for subsidies (according to data from fueleconomy.gov), but as of April 18, 2023 no longer will.

That sounds like bad news for Rivian, but Rivian's EVs were already pushing the limits of the IRS' $80,000 ceiling price on subsidies for electric SUVs and trucks, and probably many would have been disqualified by MSRP alone. For Rivian investors, the most important part of today's report may be how many potentially competing models from VW, Audi, BMW, and others will not benefit from subsidies either.    

In short, Rivian investors may be taking today's news not as a disappointment at all, but rather as confirmation that the playing field has been leveled somewhat, such that their company will be competing on an even keel with more of its rivals.

Now what

Nikola is a horse of an entirely different color, in a couple of different ways. A start-up specializing in fuel-cell powered and electric long-haul transportation trucks, Nikola wasn't really participating directly in the race for IRS subsidies of consumer EV purchases, and so probably isn't reacting to today's Energy/Treasury news at all.

Instead, Nikola investors are probably taking comfort from a weekend Wall Street Journal report describing how executives from the oil and gas industry are gravitating toward "green hydrogen" start-up companies. The migration speaks to the popularity of hydrogen for fuel cells -- Nikola's chosen field of work -- and by implication, to the potential future success of Nikola's business.

It doesn't hurt, either, that the WSJ noted that "credits and other incentives cover roughly 60% of the average green hydrogen project's cost" -- another factor that sounds promising for companies in this industry, like Nikola.  

Mind you, I actually think investors are wrong to be optimistic about Nikola, which is unprofitable, burning cash, and carries more debt than cash on its balance sheet. Seems to me, a closer examination of today's news -- in particular the government's confirmation that most Tesla consumer EVs will receive subsidies, helping to indirectly subsidize that company's Tesla Semi efforts -- will end up hurting the popularity of Nikola's trucks. The more subsidies Tesla receives from any direction, the cheaper it can afford to make its electric Semi, and therefore, the cheaper the Semi will be relative to any trucks Nikola wants to sell.

Out of all the stock price reactions we've seen today, therefore, I think the bidding up of Nikola stock is probably the worst decision investors are making.