Shares of electric vehicle (EV) stocks were on the rise Thursday, including Rivian (RIVN +3.08%) and EV-related power chipmakers Wolfspeed (WOLF +0.00%) and Indie Semiconductor (INDI +1.62%). These stocks were up 5.7%, 14.9%, and 5.1%, respectively, as of 1:30 p.m. ET.
There was no company-specific news for these three stocks today. That means investors were likely reacting to positive incremental news for EVs generally. Plus, given how beaten down these stocks were, even "less bad" news was probably enough to generate short covering.
NASDAQ: RIVN
Key Data Points
Is the EV bear market ending, or is this a dead cat bounce?
While each of these stocks is experiencing a big move today, all three have been beaten down severely. Indie Semiconductor is down 78% from all-time highs, but Rivian and Wolfspeed are down a stunning 93% and 96%, respectively. Meanwhile, short interest in each of these stocks is relatively high: Rivian's short interest as a percentage of shares outstanding is 14%, and Wolfspeed's and Indie's short interest are both around 25%.
RIVN Percent of Shares Outstanding Short data by YCharts.
All three companies are currently losing money as they invest in an attempt to capture their share of the future EV industry. Rivian is attempting to scale its manufacturing plants and best rivals in terms of technology, which is expensive. Wolfspeed has invested huge sums of money in silicon carbide chip-production plants in the U.S., but thus far has little revenue to show for it. And Indie is a small-cap stock that produces both sensors and power chips for autonomy and electrification.
However, with last year's severe slowdown in electric vehicle sales, all three are seeing muted demand for their products after making big investments. The demand slowdown has been especially painful since each stock has to invest capital up front but isn't receiving as much revenue from those investments yet.
It was unclear exactly why beaten-down EV-exposed stocks moved today. The rise could be related to a media story published today that the State Department was planning to buy 400 armored electric vehicles to transport diplomats and other high-level officials. The story is likely getting attention because it was initially reported the contract would go to the Tesla (TSLA 5.46%) Cybertruck. Given CEO Elon Musk's involvement in the Trump Administration, the story highlighted a potential big conflict of interest.
A department official later clarified that in December, the State Department issued a request for information from private companies about building an armored EV and that only one company had responded, likely Tesla. The official then went on to say the next step would be an official solicitation to manufacturers to bid on the project. However, the solicitation is on hold for now.
Still, the news may have spurred buying or short covering in EV stocks, given that investors have thought the current administration was less EV-friendly. Seeing the State Department's interest in purchasing armored EVs would reverse that narrative.
The story is no reason to buy EV stocks
While the story may be considered a positive today, investors should know that this initial request happened in December under the previous administration. Currently, the project is on hold, and a department official said there are no current plans to issue the bidding request. Additionally, in a post on X, Elon Musk denied the $400 million award:
I'm pretty sure Tesla isn't getting $400M. No one mentioned it to me, at least.
-- Elon Musk (@elonmusk) February 13, 2025
Therefore, investors shouldn't take today's EV stock action as a sign of a recovery. It's likely just a dead cat bounce. A real recovery in these stocks will come only from a broader resumption of EV demand growth after a big slowdown last year. That would happen either due to technological innovation that lowers EV prices and spurs demand and/or lower inflation and interest rates.
