What happened

Tuesday is turning into a great day to own electric vehicle (EV) stocks. As of 2 p.m. ET, Fisker (FSRN -12.70%) shares are gaining 4.1%, Lucid Group (LCID 0.41%) is up 5.7%, and Rivian Automotive (RIVN 6.10%) is leading the pack higher with a 9.7% gain.

You can thank the U.S. Bureau of Labor Statistics for that.  

So what

The BLS reported this morning that the U.S. Consumer Price Index (which is used to measure inflation) rose 4% year over year in the month of May -- which isn't great because the Federal Reserve is still trying to get inflation down to 2%, but isn't awful, either.

As CNBC reports this morning, 4% is the lowest inflation rate the U.S. has enjoyed in more than two years. It's also a big improvement from the 4.9% rate reported as recently as April.

Searching through the weeds for data of particular interest to automotive investors, it appears that car repair costs and car insurance rates are still rising sharply -- up 19.7% and 17.1%, respectively, from a year ago. Car and truck rental prices saw 12.4% negative inflation (i.e., rentals are getting cheaper). Likewise used car and truck prices are down 4.2% (but new car costs are up 4.7%).

One of the biggest declines in price, meanwhile, is gasoline -- down 20.3%.

Now what

Investors in so-called "risk-on" stocks -- often unprofitable growth stocks such as many of the EV makers -- appear to be taking the inflation report as good news today because it means inflation is cooling down. The Federal Reserve may take this as evidence that its raising of interest rates is working, and as a cue to pause rate hikes this week.

Should such a pause last long enough, or even lead to a lowering of rates in time, it would lower borrowing costs so as to help the economy grow stronger -- and not incidentally, make it cheaper for consumers to borrow to buy cars. That being said, I'm not 100% convinced that today's news is as good for their stocks as EV investors seem to believe it is.

Inflation in auto repair and insurance costs, for example, is still running hot, and may exert downward pressure on demand for cars and trucks as their maintenance costs rise. And the rise in new car costs almost certainly will exert such pressure. At the same time, deflation in gasoline costs may encourage more investors to buy more cars and trucks, but it won't necessarily encourage purchases of electric ones, because it's making ordinary, everyday internal combustion powered jalopies relatively cheaper than their EV counterparts.

All of which is to say, don't put the cart before the horseless carriage just yet, folks. Lower inflation and lower interest rates are both good things. But until these EV companies figure out a way to earn consistent profits, they're not necessarily going to be winning investments.