Biden’s ‘Clean’ Sweep Favours Renewables and EV Industry

Democrat Joe Biden’s victory in the U.S. presidential election has provided a huge boost to the shares of electric-vehicle makers and renewable energy firms, as the U.S. President-elect has promised the ‘Build Back Better’ policy goals for clean energy and manufacturing.

While stocks of these companies have been on a tear in 2020 so far, with frenzied buying visible in the sought-after Tesla and Nikola stocks, Biden’s victory cemented investors’ positive bet on the sector and boosted these names.

For this week, we have divided the charts of the two sectors in segments of year-to-date returns and returns as of August 19, 2020, when Biden was officially nominated as the Democrats’ presidential nominee. This assumes significance given Biden’s known stance on clean energy and automotive space, which formed a part of his bigger economic plan that he had released in July this year.

Electric Vehicles

Tesla has witnessed a dream run for any investor, including a 5:1 stock split that the company announced this year, helping it soar a whopping 389.55% so far this year. Let’s take a look at shares of other such stocks and associated sectors such as battery makers.

Electric Vehicle Stocks

The chart above shows enormous gains for electric delivery and utility vehicles maker Workhorse Group at more than 500 percent, followed by Tesla and Nikola. Interestingly, soon after Biden’s announcement as the nominee, and the resultant, the closely contested polls between him and the incumbent President Donald Trump ensured the gains had steadied against the frenzied buying seen throughout the year.

What’s driving these stocks?

While a future with e-vehicles as the source of transport across sectors boosted stocks in this space, a huge jump in the adoption of electric vehicles by people has also aided the stocks’ rally. Data estimates that a yearly growth in buying e-vehicles by people has risen from 46 percent to 69 percent between 2010 and now.

Consumers have become more concerned about the environment and are boosting charging infrastructure and vehicle driving ranges, as per this report.

Moreover, Democrat Biden’s victory has ensured a renewed push with the help of his plan for electric vehicles and related industries. Here’s a look at some of the initiatives he plans to take over:

• Building at least 50,000 charging stations in the country
   
• Having electric vehicles for all government vehicle fleet, cars for postal services, and other federal businesses
   
• Overtaking China in making electric vehicles
   
• Giving rebates to customers who opt for green vehicles
   
• Creating a million new jobs in the U.S. auto industry
   
• Increasing battery-related research and development
• 
   

Clean Energy

Companies in the renewable energy space have also seen stunning returns, notably among names such as Sunrun Inc, First Solar Inc, NextEra Energy, and Canadian Solar, to name a few.

Renewable Energy Stocks

On a year-to-date basis, firms such as First Solar — the largest U.S.-based solar panel maker, along with Brookfield Renewable Partners, and JinkoSolar Holding have recorded gains in the range of 50 percent to 162 percent, with Ormat Technologies picking up pace soon after Biden’s announcement in August.

A clean sweep?

Some of the reasons behind the rally in renewable energy space has been abetter-than-expected earnings scenario amid the pandemic and their growth projections, going forward. Additionally, China’s vow to be carbon neutral by 2060 and expectations that the U.S. election was set to reshape America’s energy sector fuelled the rally, as per this Financial Times report from late-October.

And Biden, indeed, does have major plans for a clean energy-driven economy, amid this $2 trillion plan to revive the country from the coronavirus crisis. The Democrat is expected to reinstate the legal basis for California’s zero-emission vehicle rules and turn around Trump’s decision to ease fuel efficiency and carbon emission requirements through 2025, as per a Reuters report.

He has also outlined an agenda that includes a $700 billion investment in procurement and research and development of technologies such as clean energy, along with committing to re-join the Paris agreement.

Among the several clean energy initiatives by Biden is the goal to achieve net-zero emissions no later than 2050 and achieving 100 percent clean electricity standard by 2035.

In a nutshell

Clean energy and electric-vehicle companies have found favour among investors in the year so far. They will keep an eye on Biden’s policy announcements in the sector and the earnings growth by these companies under his administration.