Tesla Suddenly Has Competition in the Electric Car Space

Tesla, Nio and Other Electric Vehicle Stocks for ESG Investors

Just like that, electric vehicles are emerging as a strong group in the stock market.

Most readers know about Tesla (TSLA), which has more than doubled from its mid-March low. Some people have seen Nio (NIO), its smaller Chinese rival that’s up 56 percent in the last week.

But there are more. Just today, Plug Power (PLUG), a relatively obscure maker of hydrogen cells, surged 20 percent. Other companies like Albemarle (ALB), Ballard Power Systems (BLDP) and Fuelcell Energy (FCEL) are also moving.

The rallies occur as analysts and money managers embrace the concept of Environmental, Social and Governance (ESG) investing. Morningstar data shows that ESG funds drew almost $46 billion of capital in the first quarter, while other portfolios had large outflows because of coronavirus.

Nio (NIO) chart with 50- and 200-day moving averages.
Nio (NIO), daily chart with 50- and 200-day moving averages.

Nio’s Wave of Upgrades

Shanghai-based NIO has had a wild ride since going public in September 2018. The maker of electric cars and crossovers shot as high as $13.80 before plunging under $1.50 last October. It started rallying in December on strong earnings, only to consolidate for the next five months.

It came back on the market’s radar in early May when Chinese auto sales rebounded. JPMorgan and Bank of America turned bullish before NIO’s quarterly results on May 28. Goldman Sachs jumped on the bandwagon yesterday, launching the stock to its highest level in over a year.

PLUG also got attention from Wall Street today after Barclays initiated the stock as “overweight.” The $7 target price was 68 percent above Wednesday’s closing price.

The company’s had a few other headlines in the last month. Quarterly revenue beat estimates on May 7. A week later it issued $200 million of convertible debt to make its supply chain less dependent on fossil fuels.

Plug Power (PLUG), daily chart with 50- and 200-day moving averages.

Amazon.com and Plug Power

PLUG’s fuel cells power vehicles like forklifts, using nothing by hydrogen. (The technology is based on the space program.) It already has a network of machines and hydrogen fueling-stations in warehouses for companies like Amazon.com (AMZN). Home Depot (HD), Wal-Mart Stores (WMT) and General Motors (GM) are also customers.

While PLUG doesn’t seem to have plans for passenger cars yet, it’s potentially related in the minds of investors. It also fits under the ESG investing theme.

Here are some other clean-energy companies associated with electric vehicles:

  • Albemarle (ALB): The provider of lithium for batteries is the only member of the group that’s currently in the S&P 500. TSLA, however, may be added in July. (It needs four straight quarters of profitability.)
  • Ballard Power (BLDP): A Canadian company focused on buses and watercraft. It’s active in Europe and China.
  • FuelCell Energy (BLDP): A smaller company providing fuel cells to utilities and industrial clients.

In conclusion, TSLA kicked off an electric-vehicle rally in late 2019. It paused during the coronavirus pandemic but buyers have returned in recent weeks. Given the interest in ESG investing and the recent move in solar, these sustainable vehicle stocks may be an important area to watch going forward.

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