News of a fresh directive from the federal government sapped a lot of energy from electric vehicle (EV) charging stock EVgo (NASDAQ: EVGO) as the trading week came to a close. The company's shares tumbled by more than 7% on this development, a far steeper fall than the sub-1% decline of the S&P 500 (SNPINDEX: ^GSPC).
Sudden stop
Earlier on Friday, the Trump administration slammed the brakes on the government's $5 billion initiative to build out EV charging infrastructure near U.S. highways. The agency tasked with implementing the move, the Federal Highway Administration (FHA), ordered the states to cease their participation in the National Electric Vehicle Infrastructure (NEVI) Formula Program.
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It added that any plans approved by ex-President Joe Biden are suspended until the FHA's parent agency, the Transportation Department, issues new guidelines in the coming months.
For obvious reasons, the program was quite a boon to specialist EV charging companies; it also affects some carmakers, particularly Tesla, that are involved in charging networks.
A lack of appeal
It remains to be seen how much of a backlash this rather abrupt policy move will engender. Already, some states (such as Pennsylvania) aren't rushing to comply, in fact, they are continuing to run the projects they've already awarded. Future development even in these states, however, looks doubtful at the moment.
If there is sufficient protest in both the charging segment and the wider auto industry, it's likely the administration will put its decision in reverse to some degree. Regardless, EV charging stocks haven't been great winners in the market even when the government's program was active, so I don't think there's a great buy-on-weakness opportunity with them now.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
