EV stocks pop after Congress passes infrastructure bill, Tesla falls on Musk tweet

Stocks related to electric vehicles jumped on Monday after Congress passed an infrastructure bill. Tesla fell after Elon Musk tweeted about selling 10% of his stake.

Video Transcript

JULIE HYMAN: And as we tend to see when these big pieces of legislation start to move and actually make some more progress through Congress, we are starting to see more of a reaction in the stocks. And, obviously, now this infrastructure bill is nearly a done deal here. So, we're seeing some of the traditional, sort of, infrastructure stocks on the move here, things like Caterpillar, things like US Steel, some of the other things that you traditionally think of as building infrastructure.

But then, of course, there is a new sort of class of different kinds of stocks that are also reacting, and that is within the EV charging space, specifically. And that's because, as we've been talking about, $7.5 billion going to zero and low emission buses and ferries in this plan. And, key here, $7.5 billion to the nationwide network of plug-in EV Chargers.

So Emily, we are really seeing some big moves in those stocks, which tend to be pretty volatile anyway, but they're definitely getting a lift today.

EMILY MCCORMICK: That's right, Julie. And just as you were laying out the details of the EV benefits that we're seeing in this infrastructure deal, $7.5 billion for EVs and EV charging. That also includes $2.5 billion in zero emission buses, and $2.5 billion in low emission buses, and then $2.5 billion for ferries.

But if we take a look at some of these EV stocks that are moving to the upside today, want to highlight a couple of those because we have Lucid Group up about 3% here. Workhorse, up 1.5%, that stock is also going to be reporting quarterly earnings results this week.

And then if we take a look at some of the EV infrastructure and charging and battering station-related stocks, we have Plug Power up more than 5% here. And taking a look at a broader ETF, the Global X Autonomous and Electric Vehicle ETF up 0.4%. And should also note that that ETF is actually up more than 30% for the year to date and outperforming the broader market.

And, guys, I think we've really seen over the course of the past year-to-date, and even since November, 2020 when the elections had taken place and, of course, Joe Biden coming into the presidency here, there had been a lot of optimism that this infrastructure type deal would include a number of provisions for EVs.

It's interesting to see these stocks continuing to get a pop here on this news since they had been priced in anticipation of this for the past several months now. But, again, really seeing quite a popular across a number of these EV names.

BRIAN SOZZI: Yeah. Julie, I love seeing action like this because the first inclination by traders is one of these companies is going to get $7.5 billion. I know that's not how it works, but that's how a lot of these traders in some of these speculative names think. There's going to be one or two winners here, at least the market is saying Volta might be one of those winners, for whatever reason that might be.

Overall this is, of course, good for the industry. Keep in mind, we only have a little more than 43,000 charging stations in this country. Most of these are level two. And as I learned, I think I charged up the Polestar I was reviewing a couple of weeks ago using level one. And I was sitting in a parking lot for about three hours and only charged it up half. I mean, the country needs level three, those are the fast charging stations where you could charge your car up in a little over an hour.

That's what the country needs and, hopefully, this bill will help get those chargers to a lot more stations out there. Because if you're going to sell thousands upon thousands of electric vehicles, you need public stations.

JULIE HYMAN: Well, the vehicles need to change, to some degree, themselves also, Brian. And I learned that this morning. I was reading a "Bloomberg" Hyperdrive column, which talked about that it's not just the infrastructure, it's the vehicles themselves and their charging capacity. Right now, something like a Porsche Taycan can charge up to, I think it's something like get a 200 mile charge in 20 minutes.

But that's also part of the capacity of the car. So we are going to start to see an increase in that race for charging capacity in the vehicle at the same time that we're going to see an increase of that speed on the part of the charging station. So all of that, really, there's a big push on, sort of, both ends of that to increase the capacity of the charging and the speed of the charging. So, it's pretty interesting and exciting stuff, Sozz.

BRIAN SOZZI: Yeah, no. You're right on the mark there, Julie. The battery technology has to continue to advance. I think the Polestar I reviewed only went about 250 miles on a full charge. So that has to improve greatly here. And you have to also be able to go, let's say, from the East Coast to the West Coast without running out of charge because you can't, obviously, fill these things up with gas.

JULIE HYMAN: Well, maybe the next time that you get one of those electric vehicles and you want to figure out where to charge, maybe you should just do a Twitter poll. Figure out what your map through the United States should be.

BRIAN SOZZI: I don't want you to think about it. It's too much, it's too much. That's why I'm a gas car guy, I don't want to think about that stuff. I just want to go and not have to worry about charging up my car.

JULIE HYMAN: But Twitter polls are apparently the way that you should map out what you're going to do next. That's what Elon Musk has now done.

BRIAN SOZZI: Worked for him.

JULIE HYMAN: He asked on Twitter whether he should sell 10% of his Tesla stock. And he sort of makes a little bit of a political thing about it that, OK, he's not trying to avoid taxes, or he's going to take the tax on those then unrealized gains once he sells. And 58% of the three and a half million people who voted in that poll said that, yes, he should, indeed, sell. He said he would abide by the results of that poll.

There is so much to sort of talk about when it comes to this. First of all, there's the fact that the stock is down 5%. Second of all, there's the fact that he put this to a Twitter poll when he's been smacked before by regulators for putting material things on Twitter. We don't know if this was lawyered by Tesla's lawyers or not.

But, you know, whatever the case is, if he's going to sell 10% of the shares, that is going to, and already is, putting some pressure here on the shares, Sozz.

BRIAN SOZZI: Yeah. The expectation, at least from those I've chatted with briefly this morning on this that cover Tesla, there has always been this speculation, or this expectation I should say, that Musk would unload a large chunk of his stock, about 6% to 8% according to those I have talked to, within the next two years. So this is may just be him accelerating that timeline.

And it's a welcome development according to those who I have talked to. They just want to see this overhang removed from Tesla, that overhang from the stock. Have that removed, go back to the fundamentals of the company, which have been very strong this year. Cash flow, margins, you name it, Tesla has had a very strong year. Get this distraction out of the way and keep it moving.

And then, lastly, how can we sit here and cry for Elon Musk? He's going to sell 10% of his stock, potentially. He's going to walk away with billions of dollars. I mean, that's a good trade for him.

EMILY MCCORMICK: Right, Brian. I think, to your point here, I think Dan Ives at Wedbush was one of those analysts who was highlighting the fact that unloading this stock now could actually remove that overhang here. But if we take a look here at the details of Elon Musk's compensation plan, this had been in place since about 2012, I believe, Elon does actually have options expiring in August 2022.

But in order to actually exercise these, he does have to pay an income tax on this gain. And because of this, there had been this expectation that he was going to unload some of these shares before that due date came to be. And even if we take a look back at what he'd said at a code conference back in September, he said at the time that he does have a bunch of options that are expiring early next year.

And, again, he does have to sell a number of those, pay those income taxes on those gains. So getting ahead of this, Twitter poll or not did look like it would be in his playbook here. So it is interesting to see the stock, of course, moving sharply to the downside on the heels of this news, but potentially something that had already been baked in and planned to begin with. JULIE HYMAN: Well, and the stock is up 75%, what, through Friday's close? Like, nobody's crying for Elon, nobody's crying for Tesla's shareholders for a 5% pullback.

BRIAN SOZZI: No boo-hoo for me. No boo-hoo for me.

JULIE HYMAN: Which is negligible, given what we have seen the stock. I mean, look at that year-to-date chart. I don't think it's problematic in anyone's eyes that the stock would pull back by 5%. Would you question his judgment tweeting something like this and saying he's going to-- I mean, what if they had said, no, don't sell 10%?

BRIAN SOZZI: He's going to do it, anyway. He's going to do whatever he wants.

JULIE HYMAN: He said he would abide. I mean, well, then would he run into regulatory trouble? If he had already said he would abide by the results of the poll. I don't know. Does it matter?

BRIAN SOZZI: I think the point is that he has us talking about Tesla again, that's what it is.

JULIE HYMAN: Well, there you go. And if we're talking about this, we won't be talking about the fact that they saw their China shipments fall a little bit, I guess, is part of it as well. That we saw total China shipments were just over 54,000 versus 56,000 in September. I don't know. Although, I don't know that that's even that negative news for them, but it is a little bit of a deceleration.

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