Electric Car Stocks on the Rise: Rivian, Lucid, and QuantumScape Shine in July

Several electric vehicle (EV) stocks achieved remarkable returns in July. Rivian Automotive shares jumped by 22.3%, while those of the Lucid Group increased by an impressive 34.9%. QuantumScape, a manufacturer of EV batteries, also recorded a rise of 31.3%, according to data from S&P Global Market Intelligence. These price increases were based on company-specific positive news. Nevertheless, a significant portion of these gains evaporated in the first trading week of August, highlighting the volatility of these young EV stocks. Rivian Automotive experienced price growth at the end of June when the company announced a substantial new investment from Volkswagen. The automotive giant plans to initially invest one billion dollars in the form of a convertible bond with a yield of 4.75%. Overall, Volkswagen will invest up to five billion dollars in Rivian over the next two years. Two billion dollars of this will flow into Rivian's common stock, while a further two billion dollars will be used to establish a joint venture for the development of software platforms and architectures to be utilized in the EVs of both companies. Investors perceived this announcement as a strong vote of confidence in Rivian’s ability to grow and become profitable. The capital influx is expected to enable the company to begin production of its new R2 SUV without needing additional capital. This model, which is anticipated to be sold at lower prices than the existing vehicles, is expected to be delivered in early 2026. Another catalyst for Rivian's stock increase in July was the report on second-quarter production and delivery. The company delivered around 13,800 EVs. While the management reaffirmed its volume forecast for 2024 at 57,000 units, there is potential to increase this in the future. Volkswagen continued its EV investments in July by announcing a new partnership between its battery division PowerCo and EV battery manufacturer QuantumScape. This agreement grants PowerCo the right to license and mass-produce energy storage systems using QuantumScape's solid-state technology, providing QuantumScape with additional financial stability until 2028. Lucid stocks surged in July, mainly due to an update on vehicle deliveries that exceeded expectations. Overall, the company produced around 2,100 vehicles and delivered approximately 2,400. The decline in the share prices of all three companies at the beginning of August can be attributed to general economic uncertainty. New recession fears and disappointing labor market data have heavily pressured risky and unprofitable stocks. Investors in these volatile stocks should be aware that long-term success depends not only on the business model but also on the financial resilience of the companies in a slow economic environment.