Electric-vehicle stocks jump after Biden infrastructure plan includes $174 billion investment in sector

EVgo charging
Levy, of EVgo, said there is a such thing as moving too quickly.

  • Electric-vehicle stocks moved higher on Wednesday following the release of Biden’s $2 trillion infrastructure plan.
  • The plan would invest $174 billion in the electric-vehicle market to better compete with China.
  • Shares of Tesla, Fisker, and Lordstown Motors were higher by as much as 4% in Wednesday trades.
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The electric-vehicle sector got a boost on Wednesday with the release of President Joe Biden’s $2 trillion infrastructure proposal.

The bill would carve out $174 billion for the EV sector, as Biden aims to better equip US companies to compete with China, which has a bigger market share of plug-in electric vehicle sales.

Biden’s plan would help automakers retool their factories, invigorate domestic supply chains for raw materials and parts, and “support American workers to make batteries and EVs,” according to a White House fact sheet on the proposal distributed today.

The infrastructure plan would also give rebates and tax incentives to US consumers that buy American-made EVs, and establish grant-and-incentive programs for local governments and the private sector to build a network of half-a-million EV chargers by 2030.

Electrifying the federal fleet of vehicles, US Postal Service vehicles, and at least 20% of school buses are also priorities of the infrastructure plan.

Investors cheered the news, with EV stocks halting their recent multi-month decline and moving higher. EV stocks have been under pressure in recent weeks as a rise in interest rates made these high-growth stocks less appealing relative to more value-oriented cyclical stocks.

Shares of Tesla, Fisker, and Lordstown Motors each traded up as much as 4% in Wednesday trades. Shares of Chinese EV companies also moved higher, with shares of Nio, XPeng, and Li Auto up 1%, 5%, and 7%, respectively.

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Ex-Russian minister stands to gain 3,000% from electric vehicle maker Arrival SPAC, report says

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Denis Sverdlov (center) pictured with Russian President Vladimir Putin (left)

  • Ex-Russian minister Denis Sverdlov is set to profit massively from his firm Arrival’s merger with a SPAC.
  • The electric-vehicle maker is worth about $15.3 billion, in a sign of lofty valuations in green tech.
  • Shareholders in the CIIG Merger SPAC will vote on the Arrival deal on Friday.
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A former Russian minister is set to win big from the craze for both electric vehicles and blank-check companies, notching up a reported 3,000% gain by taking his company Arrival public via a SPAC.

Shareholders in the special-purpose acquisition company CIIG Merger Corp will vote on Friday on its merger with British-American electric-vehicle firm Arrival, which was announced in November.

The combined company will list on the Nasdaq with the ticker ARVL. Arrival is now valued at around $15.3 billion, based on the price of the CIIG SPAC with which it’s merging. That makes it worth more than half of the UK’s blue-chip FTSE 100 stock index.

Bloomberg reported Sverdlov will soon have a net worth of $11.7 billion. That is thanks to his hefty 76% stake in the new combined company.

That would be a roughly 3,000% return on Sverdlov’s investments in his company, which specializes in making electric vans and buses and has recently signed a deal with UPS, Bloomberg said.

It is the latest instance of the craze for special-purpose acquisition companies making people extremely rich.

SPACs launched in 2021 have now raised more money than those listed in the whole of 2020, at more than $83 billion.

A SPAC is an entity that exists solely to list on the stock exchange to raise money, in the hope of finding and merging with a target company to take it public.

The model can be extremely lucrative for the owners of the companies that go public as well as the initial sponsors of the SPAC, who take a big stake for a small sum – often 20% for a nominal price of $25,000.

For example, billionaire Alec Gores reportedly turned one $25,000 stake into an $80 million payout after a SPAC deal with United Wholesale Mortgage.

The deal for Arrival, which is yet to fully scale up production, is also a sign of the huge increase in the value of electric vehicle companies. Pack-leader Tesla has soared more than 600% over the past year as investors rush to get a piece of new green technologies.

A spokesperson for Arrival was contacted for comment.

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Churchill Capital Corp. IV retail investors stung by the steep drop following the Lucid Motors deal are banding together on Reddit to ‘defend’ the stock

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Reddit logo.

A group of Churchill Capital Corp. IV retail investors hurt by the stock’s rapid fall are attempting to band together on Reddit to “defend” it from short sellers. 

The stock fell sharply in the days following Monday’s announcement that the SPAC would merge with luxury electric-vehicle maker Lucid Motors. 

A user going by u/MadMax212121, took to Reddit’s r/CCIV forum on Thursday to discuss what the trader described as “market manipulators” entering the stock.

In a post entitled, “LWSB: Lucid Wall Street Bets, all longs – CCIV heavily shorted by coordinated groups and manipulators. Why can’t we have a LWSB and defend. Are you in?” that garnered nearly 9,000 upvotes, the Redditor said retail traders should “keep buying” CCIV stock until it hits $300 per share.

The post echoed popular “David vs. Goliath” sentiments from past Wall Street Bets discussions arguing traders should join forces to “defend” CCIV from institutional short-sellers and bearish options traders. The post called CCIV a “heavily-shorted” stock.

However, according to data from The Wall Street Journal, short interest in CCIV was just 2.19% in February. Although the figure has risen over the past week. By comparison, Reddit darling GameStop has short interest of around 30%. 

With a lower short interest, it’s unlikely a short squeeze could occur, meaning that a GameStop-style rally in the share price is a long shot. Not only that, but hedge funds also own a considerable portion of CCIV shares.

In fact, the three top hedge fund owners of CCIV – Millennium Management, Karpus Management, and Alberta Investment Management – own over $400 million worth of shares in the SPAC, and institutional ownership in the company is over 55%, according to data from Nasdaq.

That didn’t stop Redditors from making their case.

“It takes time to build momentum. GME did not happen in one day. Be Patience. Shorts/puts will try to spoil momentum, but we together hold strong and move step by step. we will start first day war tomorrow. Sleep well Warriors,” u/MadMax212121 said.

Additionally, the traders have started their own forum dedicated specifically to Lucid Motors. It’s called Lucid Wall Street Bets or r/LWSB and currently has around 5,000 members.

While that’s a far cry from the nearly 10 million users on the main Wall Street Bets forum, the Lucid traders are gaining momentum.

Attempts to crowdsource funding to “defend” certain stocks from falling share prices has become a common occurrence on Reddit. It’s a phenomenon that has come despite the Securities and Exchange Commission saying they are looking into possible misinformation on social media sites like Reddit.

Shares of CCIV recovered as much as 17% on Friday before paring gains. 

CCIV chart 2

 

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