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Electric vehicle stocks recover, but the road may not end well

Last time we checked in with the electric vehicle sector at Data Sheet—about two years, sorry, two months, no, checks web archive, two weeks ago— things were not good.

The crowd of revenue-free startups planning to produce EVs down the road, like Fisker, Hyliion, and Lordstown, were plunging amid a growing aversion to risky stocks and concern that consumers might not be ready to go electric. Even market leader Tesla, which produces more than 1,500 electric cars a day, lost one-eighth its value, or about $50 billion.

But a couple of things have changed in November. For one, former vice president Joe Biden won the election. A component of Biden’s economic plan is to boost the green energy sector by building a huge network of charging and refueling stations for renewable energy vehicles, converting half a million buses to emission-free technology, and subsidizing consumers who want to swap a gas-powered car for an EV. Also, the mysterious committee that oversees the S&P 500 stock index finally decided to add Tesla, meaning all of the mutual fund managers running S&P 500 index funds will have to buy billions of dollars worth of the stock.

The Biden win and S&P 500 decision fueled a turnaround not just for market leader Tesla, up 14% in November, but also smaller players like three-wheeled EV maker Arcimoto, with a 47% jump this month, electric van maker Workhorse Group, up 40%, and Chinese electric SUV maker Nio, up 52%. Star car designer Henrik Fisker got a boost too. His eponymously named second-try electric car startup doesn’t have a product on the market yet, but it rose 62% this month. Electric bus maker Arrival hit the market on Wednesday via a merger with a SPAC. Expect it to shoot up for a bit too.

While the president certainly has some influence over the future of electric vehicles, some related stocks got a boost from another guy who has some influence over the stock market. Former hedge fund manager and CNBC host Jim Cramer has long been touting companies that focus on the hydrogen fuel cell-powered vehicle segment. These vehicles replace a gasoline engine with one that runs on hydrogen, which can easily be created with wind power and produces no emissions beyond water. Cramer was hammering the theme again last week, even criticizing Tesla for ignoring hydrogen. FuelCell Energy saw its stock price double since the start of the month, Plug Power is up 64%, and Bloom Energy has gained 52%

All of these stocks may get another slight boost today, after U.K. Prime Minister Boris Johnson unveiled his green energy package that includes banning gas-powered vehicles in 2030.

But this sort of coordinated movement in the EV sector is one of the classic signs of an investment bubble. As is the flood of investor cash and high valuations given to companies that don’t have any sales yet. It’s gotten to the point where Elon Musk is worth more than Mark Zuckerberg, making him the third-richest person in the world.

For now, everyone’s a winner. But as with most bubbles, it’s unlikely to last for the majority of these speculative stocks caught in the updraft.

Aaron Pressman
@ampressman
aaron.pressman@fortune.com

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