What happened

May was a good month for growth and technology stocks. The Nasdaq Composite index jumped by 5.8% last month. So it shouldn't come as a huge surprise that some electric-vehicle (EV) company stocks also moved higher over the course of the month. In fact, Tesla (TSLA -3.40%) and Rivian Automotive (RIVN 1.85%) far outpaced the index itself, soaring by 24.1% and 14.9%, respectively, according to data from S&P Global Market Intelligence.

But not every EV maker's stock had a good month. Investors have some specific, and serious, concerns with Nikola (NKLA -2.08%) -- maker of electric semi-trucks. That caused Nikola shares to plunge 29.5% in May. 

So what

Both Tesla and Rivian rebounded in May after declines in the prior month spurred by concerns stemming from Tesla's first-quarter earnings report.

Tesla's profit margins dropped precipitously in the first quarter as price cuts amid growing competition took their toll on the leading EV maker's profitability. Tesla's operating margin plunged from an average of 16.8% in 2022 to just 11.4% in 2023's first quarter. 

But CEO Elon Musk told investors there's a strategy behind the price moves, and he expanded on that message at the company's shareholder meeting in May. Musk said he's willing to sacrifice some profits now to get as many Teslas on the road as he can.

He expects to be able to sell autonomous-driving software upgrades in the near future that will come with recurring revenue and extremely high profit margins. He hopes Tesla owners will want to gain income using vehicles as driverless taxis in what would otherwise be vehicle downtime, such as when owners are at work. Musk told investors that he expects the company's autonomous-driving platform to begin rolling out "maybe if not this year, I'd say no later than next year."

Now what

Other items that generated excitement among investors were Musk's statement that Tesla will begin advertising for the first time, alluding to two new models being launched that he thinks can sell in high volumes, and confirming that Cybertruck deliveries will begin later this year. The Cybertruck will be Tesla's first pickup truck and will compete with Rivian's R1T electric truck. 

The rally in Rivian shares in May came for a different reason. The company reported its first-quarter results on May 9, and shares subsequently moved higher from near all-time lows. 

Rivian's revenue of $661 million in the first quarter represented a nearly 600% increase over last year. The company also stressed that it has plans for profitable growth, which is what investors want to hear. One path it's taking is to lower manufacturing costs as it develops and utilizes new technologies like lithium iron phosphate (LFP) battery packs and its in-house Enduro motor. The company expects to ship its initial dual-motor pickup trucks using the Enduro technology in June after beginning production in the last week of May. 

That progress in production and cost control helped Rivian shares, but the same couldn't be said for heavy-truck maker Nikola. That's because even as Nikola ramps up production of its battery-electric trucks and gets closer to delivering its hydrogen fuel cell-powered version to customers, the company is low on capital.

In its first-quarter report, the company announced a restructuring to raise needed capital and narrow the focus of its business. Nikola sold its share of a joint venture to its partner in Europe and will instead focus its efforts on its hydrogen trucks and related fueling infrastructure in North America.  

It also raised $100 million by selling stock even as shares plunged to below $1 per share. Nikola is also hoping shareholders approve a new proposal at its upcoming shareholder meeting to increase the authorized number of shares of the company's common stock to allow it to raise even more capital. 

Investors are sensing desperation in these moves, and many aren't willing to risk their own capital on Nikola's business prospects. Some of those investors seem to have shifted from the uncertainty in Nikola's business to the more established EV makers like Tesla and even Rivian in May.