Those of you following the EV industry closely would be excited to read some of the headlines President Biden has generated this week:

And while on the surface this is nothing new – the talks of a widespread push for EVs has been around for ages – this is the first time we’re hearing an actual policy suggestion from a US administration.

The “green” movement is surely here to stay and without a doubt the announcement will be followed by more specific policies implemented at both federal and state levels.

So what exactly does this mean for EV stocks and how can this help inform you?

What Exactly Did the Admin Say?

It is important to note right away – the announcement didn’t contain any actual policy, and no limitations on gas cars or new EV-incentives have been instituted just yet.

Rather, this was just a bill that incentivizes EV-promoting legislation across the country.

The administration also held a talk with the largest American automakers to get them to pledge that 40% of the cars sold in 2030 will be electric or hybrid – something, the manufacturers said they’d need a lot of government help in promoting.

Converting entire model lineups, adjusting the infrastructure and marketing electric vehicles for a broader uptake will understandably take up a lot of resources – a demand the government is seeking to address with grants and increased infrastructure investments.

The Administration has already pledged up to $7.5B in the latest infrastructure bill to fund a nationwide network of EV charging stations, but the plan itself calls for as much as $174B in spending and tax credits to boost sales of plug-in vehicles.

How Many EVs Are We Talking?

To get an idea of just how ambitious the plan is, let’s have a look at some numbers:

In 2020, sales of plug-in vehicles in the US totalled approximately 296,000 units. The figure is down slightly from ~331,000 units sold in the 2019, with the decrease blamed on a general demand slump caused by the COVID-19 pandemic.

For the reference, the total number of vehicles sold in the US in 2020 was about 14.5 million.

For 2019, the number sits even higher at nearly 17 million units.

Long story short, we’ve got a long way to go if the Biden Admin’s plan were to come to fruition.

In 2020, Tesla (TSLA) sold just shy of 500k cars worldwide. At current US sales rates, it would take anywhere between 15-20x of TSLA’s total production output to get to the 50% figure.

What Stock to Keep an Eye On?

I’ve been vocally bullish on EV names as of late, although my main premise was the technical setup and “not negative” earnings and delivery updates.

With this announcement, the macro environment becomes a part of the bullish thesis.

Here are some of the names I’ll watch over the next few days and week to see if any enthusiasm catches on. (Note, I’m only focusing on US companies here, as I doubt US federal money will be used to support NIO and LI).

Tesla – TSLA

Any such watchlist would be incomplete without the leader of them all – Tesla.

Earlier this week I wrote that I liked how Tesla held up higher post earnings. It’s moved higher since and is now trying to hold on above $700 – one of the key inflection points I mentioned.

I’d really love to see it consolidate here for a little longer and do a full retest of prior highs – potentially moving even higher, shall the momentum come back into the sector.

Ford Motor Company – F

I’ve been growing more and more enthusiastic about Ford ever since their EV announcement – the company actually outstripped the Biden Admin in committing to 50% plug-in sales by 2030.

This is also one of the bigger reasons I’m getting to like the stock – the price reaction has been… awesome!

I really like the post run-up consolidation above the $13.30 area – the market is clearly appreciating Ford’s ambitions.

So far it’s failed to hold $14 – the key level I’m watching, but I think it’s only a matter of time should the name continue hanging on in this area.

I’ll be watching out for any hold above $14 for the next leg higher into the $16-$17 area and possibly a lot higher than that.

Blink Charging – BLNK

This is not an EV name per se, but clearly a maker of charging stations is first in line to benefit from a potential infrastructure windfall.

The technicals here are not as great as the former two, but I’ll still have the name on my screen as I think any “refusal to go down” may cause a next sharp leg higher.

I don’t think i”ll get involved until $40 hold up well, but this is definitely a name to keep a close eye on should the sector catch on.

The stock is also hated by half the traders out there and sports a nearly 35% short interest – reminiscent of TSLA’s early days yet?

Jason Bond

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