May 7, 2021

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Which Of These Electric Vehicle Stocks Is A Better Buy?


7 min read


This story originally appeared on StockMarket

Investors Are Watching These 2 Electric Vehicle Stocks Right Now

Electric vehicle stocks are some of the most popular investments in the stock market right now. And, there are a few good reasons for this. For some, top EV stocks provide investors with some of the most exciting opportunities. But more importantly, what is really driving the top electric vehicle stocks higher this week is President Joe Biden’s statement on Tuesday. From the virtual tour of Proterra’s electric bus plant, he mentioned that the U.S. should be the single most significant supplier of electric buses and vehicles in the world. As a result, ArcLight Clean Transition Corp (NASDAQ: ACTC), the special purpose acquisition company (SPAC) which will be merging with Proterra, rose over 15% on Wednesday.

Considering this, it’s important to note how much of a catalyst the infrastructure plan could be to the electric vehicle space. Biden has proposed spending $174 billion to boost the production and sale of zero-emission buses and cars. The White House’s push for electrification comes as China has dominated the world’s electric vehicle and bus market. As a result, many are putting up a list of green investing stocks hoping to capitalize on this trend.

Now, after a couple of muted trading sessions in the EV space, the focus is back on EV start-ups. And these names are trending in the stock market today. Amongst them are Arrival Group (NASDAQ: ARVL) and Churchill Capital IV (NYSE: CCIV). These two names appear to be staging a comeback in the stock market. Whether they could pose a threat to Tesla (NASDAQ: TSLA) is another question to answer. But for now, let’s get into the details on how these two EV stocks stack up against each other.

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Arrival Group

Arrival is a UK-based electric vehicle company that focuses primarily on lightweight commercial vehicles. The company is now trading on the Nasdaq following the completion of its merger with CIIG Merger Corp, a SPAC.

Since its public debut on March 25, ARVL stock hasn’t performed to what many investors would have expected. And that may not be surprising considering that the company has yet to deliver any of its pre-orders. But the comments from the President regarding the state of the EV market in the U.S. is what has ARVL stock on investors’ watchlist.

Admittedly, the nation’s EV production and supply are way behind China at the moment. Therefore, many investors are speculating that Arrival could fill the gap after the company went public last month. The electric bus maker also said it has received plenty of interest in its vehicles. That includes a commitment to purchase up to 10,000 EVs from United Parcel Service (NYSE: UPS), plus an option to order up to an additional 10,000.

ARVL Stock Received A Boost After Delivering Its First Prototype Electric Delivery Van

The company’s stock price skyrocketed on Wednesday after it achieved what it called a “major milestone” for the company. ARVL stock jumped as much as 18% before closing 12% higher for the day. This came after the company announced that it has delivered its first prototype electric delivery van to UPS. It’s worth pointing out that UPS is also an investor in Arrival.

best electric vehicle stocks to buy (ARVL stock price)
Source: TD Ameritrade TOS

Also, the company announced that it will build its first two U.S. “micro-factories”. These facilities aim to build EVs without assembly lines. This will require the company to fork out lower upfront capital than traditional manufacturing facilities. Could that make ARVL stock more attractive than other EV stocks? Well, it is certainly risky to invest in EV companies that do not currently have any sales. But the fact that Arrival has delivered its first prototype van to UPS is a positive indication. And investors are rightfully cheering on it.

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Lucid Motors – Churchill Capital Corporation IV

Churchill Capital Corp. IV is a special purpose acquisition company that is merging with Lucid Motors. For those uninitiated, Lucid is a brainchild of former Tesla chief engineer, Peter Rawlinson. Since the confirmation of the merger news, the stock has garnered a lot of attention from investors. This week, CCIV stock investors are seeing some nice gains along with the broader EV space on what appear to be strengthening tailwinds.

SPAC stocks (CCIV stock)

Apart from having cars with some pretty sleek designs ready for sale sometime during the second half of the year, Lucid is also making a play into energy storage. This shows that the EV maker has a few tricks up its sleeve. The company is looking at innovative ways to create additional value in its product chain.

Perhaps, it wouldn’t end up being a very profitable endeavor. However, should Lucid execute successfully in this initiative, it could end up becoming a bigger player in the energy storage space than many would have thought.

CCIV Stock Is A Play On Biden’s Infrastructure Plan

As an American electric vehicle company, Lucid is in a good position to grow its business in the next few years. As you may not know, the Biden administration is reportedly looking at ending a legal battle with California over-regulation of motor-vehicle emissions. Should there be a waiver under the Clean Air Act, investors believe that stricter fuel emissions standards will directly benefit luxury EV makers like Lucid Motors. 

electric vehicle stocks (CCIV stock price)
Source: TD Ameritrade TOS

Lucid’s near-term prospects appear great even without the government stimulus. Let’s not forget that the company’s Lucid Air is fully reserved. Some would even say that CCIV stock’s valuation makes it a screaming buy right now. At the current level of around $20, the stock is nearly 70% off its all-time high. Besides, investors are able to invest alongside institutional investors like BlackRock. If you believe the company could execute its plan successfully and achieve a revenue of over $23 billion in the next few years, CCIV stock looks like a steal right now.

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Bottom Line: ARVL Stock Vs CCIV Stock

Now, both electric vehicle manufacturers have yet to actually sell any vehicles. But they certainly do have exciting developments on their own. With Lucid planning to deliver its first batch of Lucid Air in the 2nd half of 2021, we would be able to see some revenue this year. That may be sufficient to allay fears of valuation with CCIV stock. With an annual capacity of 30,000 units at its current Arizona facility, Lucid appears to be in a good position to meet the demand for its EVs. What’s more, the fact that Lucid is dabbling in energy storage could be a sign of bigger things to come.

On the flip side, the political support for the electrification of school buses and some transit vehicles in the U.S. could be a huge catalyst for Arrival. Being one of the earliest companies to focus on commercial vehicles could bode well for the company. As a result, many are betting on Arrival to be a major commercial EV supplier. Admittedly, commercial EVs may not receive as much attention as passenger EVs. And that may be precisely why ARVL stock could offer considerable upside.