Shares of electric vehicle companies tumbled Monday following the apparent failure of President Joe Biden’s “Build Back Better” plan that includes significant incentives for the growing sector.
The stocks of EV start-ups such as Lordstown Motors, Faraday Future and Nikola all shed more than 7% Monday. Rivian Automotive, which went public through a blockbuster IPO last month, hit a new low Monday of $88.40 a share.
Shares of other automakers such as Tesla and General Motors – both of which no longer qualify for federal EV tax credits but would have under Build Back Better – also lost ground during the trading session.
The EV incentives under the Build Back Better plan include up to $12,500 per vehicle and are viewed as critical to spur consumer demand in EVs, which are priced far higher then their traditional internal combustion engine counterparts.
Transportation officials have touted the Build Back Better bill as a key part of Biden’s plan, along with the new infrastructure package, to help achieve the president’s EV sales goal. Biden has said he wants half of all new vehicles sold by 2030 to be EVs, including plug-in hybrid electric vehicles that include EV batteries and traditional internal combustion engines.
Biden’s bipartisan infrastructure package allocated $7.5 billion for EV chargers, but Wall Street had assigned greater significance to the Build Back Better incentives which are now unlikely to pass. Democratic West Virginia Sen. Joe Manchin effectively doomed the bill Sunday, saying he wouldn’t vote in favor in the 50-50 Senate.
The proposed EV incentive under Build Back Better included a current $7,500 tax credit to purchase a plug-in electric vehicle as well as $500 if the vehicle’s battery is made in the U.S. It also includes a controversial $4,500 tax credit if the vehicle is assembled domestically with union labor, which has drawn heavy criticism from non-Detroit automakers whose American workers aren’t organized.
Here’s a look at several EV start-ups as well as Tesla and legacy automakers GM and Ford Motor, both of which have announced significant investments in electric vehicles.
– CNBC’s Jessica Bursztynsky contributed to this report.