Very good news for EV stocks like Lucid, Rivian, Polestar, and XPeng
Electric vehicle (EV) stocks have stabilised in the past few weeks as investors started to buy the dip after most of them crashed by double-digits this year. Therefore, an important development in the industry has led analysts to predict a comeback in some popular names.
Tesla stock has surged
The important news in the EV industry that could affect the likes of Lucid Group, Rivian, Polestar, and XPeng is the ongoing recovery of Tesla shares.
Tesla jumped by almost 10% on Tuesday and reached its highest point since January 10th. It has now risen by over 66% from its lowest point this year, a spectacular comeback.
This recovery started after Tesla published weak results in May, which showed that its business was slowing. The company then made headlines after announcing plans to launch cheaper vehicles in the near term, a move that could lead to more sales.
The recovery accelerated this week after the company published weak quarterly deliveries that exceeded expectations. It delivered 443,956 vehicles globally in the second quarter, a figure that was higher than the expected 439,302.
At the same time, these numbers mean that Tesla has maintained its lead as the biggest EV company in terms of deliveries. BYD, its biggest competitor delivered 426 vehicles. In a statement, Dan Ives of Wedbush said:
“While it’s been a difficult period for Tesla, and the company has been through some significant cost reductions to preserve its bottom line/profitability, it appears better days are now ahead.”
Tesla stock price chart
The other good news is based on technicals. As shown above, the Tesla stock price formed an inverse head and shoulders pattern, a popular bullish sign. It has also jumped above the 50-day and 200-day Exponential Moving Averages (EMA) and a golden cross could happen soon.
If this happens, there is a likelihood that the Tesla stock price will continue rising as buyers target the key resistance point at $300, its highest point in July 2023. This target is about 30% above the current level.
Impact on Lucid, XPeng, Rivian, and Polestar
The price action of Tesla stock is an encouraging thing for other EV companies like Lucid Group, XPeng, Rivian, and Polestar. If Tesla continues its recovery, it means that investors will start buying other EV stocks. This is in line with what we saw during the past EV rallies like in 2021.
There are signs that these stocks are stabilizing. Lucid Group’s stock bottomed at $2.31 in May and has moved into a bull market after rising by 20% to the current $2.75.
Similarly, Rivian Automotive’s stock has jumped by over 78% from the lowest point this year as the EV sector recovers. This recovery accelerated after Volkswagen announced a $1 billion investment in the EV company.
XPeng shares have risen by 18% from the YTD low. In a statement, the company said that it delivered 10,668 vehicles in June, a 24% increase from the same period in 2023.
Polestar stock has also risen in the past few days. On Tuesday, the company said that it delivered 7,200 vehicles in Q1 and 20,200 this year. It is also working on growing its retail models and expanding geographically.
Therefore, there is a likelihood that most EV companies will continue rising in the coming months. However, the industry faces substantial risks, as signs show that the industry and margins are slowing.
The next key catalyst to watch will be the upcoming Tesla earnings, which are scheduled on July 19th. If the company releases strong earnings, there are signs that the bull run will continue, a move that will benefit other EV stocks.
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