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EV stocks $Tesla (TSLA.US)$, $Rivian Automotive (RIVN.US)$, $Lucid Group (LCID.US)$ are smoking hot now. The stock market $Nasdaq Composite Index (.IXIC.US)$, $S&P 500 Index (.SPX.US)$ appears to be giving incredibly high valuations to EV stocks, whether the companies have proven themselves effective manufacturers or not. As with the EV stocks, there will be winners and losers, and these investments seem to belong to the more speculative portion of a stock portfolio. Understanding individual risk tolerance level is an important step in determining which EV stock is suitable for investors. $Tesla (TSLA.US)$ is the most established and successful EV company in the market. Whether $Tesla (TSLA.US)$ is overvalued or not is up for debate, the company seems to be going stronger, with higher revenue, stronger margins, as well as better earnings. There is also a good chance of $Tesla (TSLA.US)$ driving higher profits in the future. While $Tesla (TSLA.US)$ would still appear overvalued according to traditional metrics such as P/E ratio, consistently generating positive net income is a step in the right direction. Relatively unproven but off to a fantastic start, $Rivian Automotive (RIVN.US)$ and $Lucid Group (LCID.US)$ appear to be high-risk, high-potential-reward growth stocks. No matter which EV stock investors choose, there is no denying that EV stocks have generally handily beaten the market, a trend that could very well continue in the future, as new product offerings, charging networks and aftermarket services continue to develop.
$Arrival (ARVL.US)$
$BYD Co. (BYDDF.US)$
$Canoo (GOEV.US)$
$Fisker (FSR.US)$
$Ford Motor (F.US)$
$General Motors (GM.US)$
$Li Auto (LI.US)$
$NIO Inc (NIO.US)$
$Sono Group (SEV.US)$
$Toyota Motor (TM.US)$
$VOLKSWAGEN A G (VWAGY.US)$
$XPeng (XPEV.US)$
$Arrival (ARVL.US)$
$BYD Co. (BYDDF.US)$
$Canoo (GOEV.US)$
$Fisker (FSR.US)$
$Ford Motor (F.US)$
$General Motors (GM.US)$
$Li Auto (LI.US)$
$NIO Inc (NIO.US)$
$Sono Group (SEV.US)$
$Toyota Motor (TM.US)$
$VOLKSWAGEN A G (VWAGY.US)$
$XPeng (XPEV.US)$
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Across the globe, the popularity of EV (electric vehicles) is overwhelming as the Eco Moment gains momentum. As car lovers, consumers will be having a field day attributed by the fierce competitions among several EV manufacturers such as $Tesla (TSLA.US)$, $NIO Inc (NIO.US)$, $Rivian Automotive (RIVN.US)$, $Ford Motor (F.US)$ $XPeng (XPEV.US)$
These EV companies have soared high in their valuations of shares' prices lately. Obviously, as investors our ultimate goals are to "have a good buy" and not to say a "goodbye".
In order to attain our goals we may have to compare the empirical history of automakers like giant $Tesla (TSLA.US)$ and $Lucid Group (LCID.US)$
There are two things that $Tesla (TSLA.US)$ and $Lucid Group (LCID.US)$ have in common. One is that they are both reigning Tittians and two, is that Peter Rawlinson, CEO of Lucid Motors was once an executive of Tesla and has helped to engineer the Tesla Model S. Therefore, by engineering Lucid Air sedan, Peter Rawlinson is directly posing a challenge to Tesla's superiority. Moreover, Lucid Motors has achieved its goal of "making the best car in the
world" when The Air was accorded the coveted award of "Motor Trends Car of the Year". Lucid has also plans of targeting its exports to China and The Middle East which sounds promising.
Lucid has a range of 520 miles which is more than Tesla's range of 405 miles.
Doubtless to say many people have considered Tesla as the leader in the EV evolution, as it is an iconic household name. However, of late there are factors that work against Tesla's image. They are:-
![]()
Recently CEO, Musk Elon has been
offloading big chunks of Tesla's shares.
Musk Elon's decision has not caused a
major picnic in the reckless selling of Tesla's shares yet. Nevertheless, it still poses a volatile market.
![]()
On 18th November, Tesla has recalled
7,6000 vehicles in the US, because of certain risks to safety issues caused by the driver's airbags cushions. Will this
issue cause a negative impact to its EV sales? Only time can tell.
Regardless of which EV shares we have in mind, we can envision a trend of EV race in Wall Street in the near future.
Perhaps we may focus on one of the EV companies as a promising long term investment.
Moving forward, as investors we will have to monitor the trading market very closely, and hone on our trading skills in order to make timely, shrewd choices.
$Sono Group (SEV.US)$
$General Motors (GM.US)$
$TOYOTA MOTOR CORP (TOYOF.US)$
$VOLKSWAGEN AG (VLKAF.US)$
$Arrival (ARVL.US)$
$Li Auto (LI.US)$
$Apple (AAPL.US)$
$BYD COMPANY (01211.HK)$
$Volta (VLTA.US)$
$ChargePoint (CHPT.US)$
These EV companies have soared high in their valuations of shares' prices lately. Obviously, as investors our ultimate goals are to "have a good buy" and not to say a "goodbye".
In order to attain our goals we may have to compare the empirical history of automakers like giant $Tesla (TSLA.US)$ and $Lucid Group (LCID.US)$
There are two things that $Tesla (TSLA.US)$ and $Lucid Group (LCID.US)$ have in common. One is that they are both reigning Tittians and two, is that Peter Rawlinson, CEO of Lucid Motors was once an executive of Tesla and has helped to engineer the Tesla Model S. Therefore, by engineering Lucid Air sedan, Peter Rawlinson is directly posing a challenge to Tesla's superiority. Moreover, Lucid Motors has achieved its goal of "making the best car in the
world" when The Air was accorded the coveted award of "Motor Trends Car of the Year". Lucid has also plans of targeting its exports to China and The Middle East which sounds promising.
Lucid has a range of 520 miles which is more than Tesla's range of 405 miles.
Doubtless to say many people have considered Tesla as the leader in the EV evolution, as it is an iconic household name. However, of late there are factors that work against Tesla's image. They are:-
offloading big chunks of Tesla's shares.
Musk Elon's decision has not caused a
major picnic in the reckless selling of Tesla's shares yet. Nevertheless, it still poses a volatile market.
7,6000 vehicles in the US, because of certain risks to safety issues caused by the driver's airbags cushions. Will this
issue cause a negative impact to its EV sales? Only time can tell.
Regardless of which EV shares we have in mind, we can envision a trend of EV race in Wall Street in the near future.
Perhaps we may focus on one of the EV companies as a promising long term investment.
Moving forward, as investors we will have to monitor the trading market very closely, and hone on our trading skills in order to make timely, shrewd choices.
$Sono Group (SEV.US)$
$General Motors (GM.US)$
$TOYOTA MOTOR CORP (TOYOF.US)$
$VOLKSWAGEN AG (VLKAF.US)$
$Arrival (ARVL.US)$
$Li Auto (LI.US)$
$Apple (AAPL.US)$
$BYD COMPANY (01211.HK)$
$Volta (VLTA.US)$
$ChargePoint (CHPT.US)$
125
3
If I had said a few years ago that $Tesla (TSLA.US)$ would one day be worth $266 billion, there would have been many skeptics. I bring that number up because in just eight trading days, the electric vehicle maker lost that much in market cap from its recent all-time high to its low point on Monday. Shares have been struggling recently thanks to CEO Elon Musk's selling of Tesla shares, an overhang that's taking the narrative away from what the bulls would really like to be discussing currently.
Elon Musk has a set of stock options that must be exercised next summer or he will lose them, resulting in a potential tax bill that's estimated to be $15 billion. The outspoken company leader also started a poll on Twitter during the first weekend of this month asking if he should sell 10% of his position. As of Monday, Elon had sold about $8 billion worth of shares, with investors bracing for more sales in the coming days. Before his share sales, other directors and former directors sold hundreds of millions worth of Tesla shares, including Elon's brother Kimbal whose roughly $100 million sale was curiously not part of a pre-arranged sales program.
In the grand scheme of things, some will argue that Elon's Tesla sale this time around (he will have additional sales down the road as more options expire) shouldn't be that significant. Tesla was worth about $1.25 trillion at its peak, so one would normally assume that a sale of this size wouldn't do that much, as Tesla has been trading $25 billion or so worth of shares daily in recent days. Well, the stock's reaction has been rather sharp as I pointed out above, falling from a high over $1,243 to Monday's low below $979. As detailed in a series of tweets compiled below, some major supporters like Gary Black, who has personally owned Tesla shares over the years and has the stock as the largest holding in his $THE FUTURE FUND ACTIVE ETF (FFND.US)$, are a little upset at how Elon is handling his business.
Some will argue that Gary's secondary plan would have had a larger impact than 3-5%, but that's something we'll truly never know. What we do know is that Elon's selling in drips and drabs have helped to send the stock sharply lower, with some very crazy intra-day moves recently. Until Elon completes his selling, nobody is sure whether things will finish up in a day, week, month, etc., which is putting a dark cloud above Tesla right now. Unless Elon Musk was going to forfeit these options and give up several billion dollars, it was really only a matter of time until this process had to occur.
Tesla bulls would rather be talking about a variety of other items, however. Analyst estimates have been on the rise lately, especially on the bottom line, after the company smashed Q3 estimates as I predicted it would. We are now halfway through the final quarter of the year, a period where Tesla is expected to produce its first Model Y vehicles from two new factories, one in the Berlin, Germany area, and another in Austin, Texas. While these new facilities will add several hundred thousand units of new production in the coming quarters, deliveries won't be seen in the current quarter according to management.
Elon Musk has a set of stock options that must be exercised next summer or he will lose them, resulting in a potential tax bill that's estimated to be $15 billion. The outspoken company leader also started a poll on Twitter during the first weekend of this month asking if he should sell 10% of his position. As of Monday, Elon had sold about $8 billion worth of shares, with investors bracing for more sales in the coming days. Before his share sales, other directors and former directors sold hundreds of millions worth of Tesla shares, including Elon's brother Kimbal whose roughly $100 million sale was curiously not part of a pre-arranged sales program.
In the grand scheme of things, some will argue that Elon's Tesla sale this time around (he will have additional sales down the road as more options expire) shouldn't be that significant. Tesla was worth about $1.25 trillion at its peak, so one would normally assume that a sale of this size wouldn't do that much, as Tesla has been trading $25 billion or so worth of shares daily in recent days. Well, the stock's reaction has been rather sharp as I pointed out above, falling from a high over $1,243 to Monday's low below $979. As detailed in a series of tweets compiled below, some major supporters like Gary Black, who has personally owned Tesla shares over the years and has the stock as the largest holding in his $THE FUTURE FUND ACTIVE ETF (FFND.US)$, are a little upset at how Elon is handling his business.
Some will argue that Gary's secondary plan would have had a larger impact than 3-5%, but that's something we'll truly never know. What we do know is that Elon's selling in drips and drabs have helped to send the stock sharply lower, with some very crazy intra-day moves recently. Until Elon completes his selling, nobody is sure whether things will finish up in a day, week, month, etc., which is putting a dark cloud above Tesla right now. Unless Elon Musk was going to forfeit these options and give up several billion dollars, it was really only a matter of time until this process had to occur.
Tesla bulls would rather be talking about a variety of other items, however. Analyst estimates have been on the rise lately, especially on the bottom line, after the company smashed Q3 estimates as I predicted it would. We are now halfway through the final quarter of the year, a period where Tesla is expected to produce its first Model Y vehicles from two new factories, one in the Berlin, Germany area, and another in Austin, Texas. While these new facilities will add several hundred thousand units of new production in the coming quarters, deliveries won't be seen in the current quarter according to management.
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$Tesla (TSLA.US)$ As Tesla continues to expand its production capabilities, every quarter now is expected to set a new delivery record. Avid Tesla follower Troy Teslike recently called for 270,000 deliveries in Q4 2021, which would be 9,000 more than street estimates. His number could be revised even higher in the coming weeks if we continue to see strong production numbers coming out of China. We don't currently know the true potential of that factory as management has been very tight-lipped about its capacity numbers, only saying that it is "greater than 450,000 vehicles annually" at its two most recent earnings reports. October's delivery and export numbers extrapolate to a more than 652,000 vehicle per year rate, which could push Tesla over 900,000 deliveries for this year if recent trends hold in the final two months of the year.
Tesla shares recently took off after rental car company $Hertz Global (HTZ.US)$ announced it was buying at least 100,000 Tesla Model 3 vehicles. However, Elon Musk later said that no deal was in place, despite reports of Hertz having already accepted some initial deliveries of Model 3's. The sharp rally put the stock more than $400 above its average street price target at one point, a gap that has narrowed by more than half since. At one point on Monday, Tesla shares were less than $100 from their 50-day moving average seen in the chart below, with the 200-day being a bit further below its shorter term counterpart. By most technical metrics, Tesla shares were extremely overheated as they raced past $1,200, so the recent pullback has improved that picture quite a bit.
There's a dark cloud hanging over Tesla shares currently, and investors are hoping that its end comes rather soon. Elon Musk is in the midst of selling shares to pay an upcoming large tax bill, which caused the stock's losses to total more than $265 billion at times on Monday. Tesla bulls would really like this process to end quickly, so they can change the current narrative back to the company's production growth story. If we continue to see the CEO's stock sales come in small portions over a series of trading days, recent price action suggests shares could continue to head towards the 50-day moving average, at which point a major technical test would come.
Tesla shares recently took off after rental car company $Hertz Global (HTZ.US)$ announced it was buying at least 100,000 Tesla Model 3 vehicles. However, Elon Musk later said that no deal was in place, despite reports of Hertz having already accepted some initial deliveries of Model 3's. The sharp rally put the stock more than $400 above its average street price target at one point, a gap that has narrowed by more than half since. At one point on Monday, Tesla shares were less than $100 from their 50-day moving average seen in the chart below, with the 200-day being a bit further below its shorter term counterpart. By most technical metrics, Tesla shares were extremely overheated as they raced past $1,200, so the recent pullback has improved that picture quite a bit.
There's a dark cloud hanging over Tesla shares currently, and investors are hoping that its end comes rather soon. Elon Musk is in the midst of selling shares to pay an upcoming large tax bill, which caused the stock's losses to total more than $265 billion at times on Monday. Tesla bulls would really like this process to end quickly, so they can change the current narrative back to the company's production growth story. If we continue to see the CEO's stock sales come in small portions over a series of trading days, recent price action suggests shares could continue to head towards the 50-day moving average, at which point a major technical test would come.
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$Rivian Automotive (RIVN.US)$ is up 9.88% to $164.12 and has traded as high as $169.70 earlier in the session. Volume on RIVN is over 53M shares with several hours of trading still left.
Valuation today on Rivian moved to as high as $143B, which leaves the question of where analysts will go when the quiet period expires on December 20. The lead underwriters on the Rivian IPO were Goldman Sachs, JPMorgan and Morgan Stanley. BofA, Barclays, Deutsche Bank, Wells Fargo and a host of others participated in the underwriting. While Sell-equivalent ratings from analysts are pretty much unheard of on the first day of a quiet period expiration, other EV stocks have seen a flurry of Neutral-equivalent ratings arrive due to frothy valuations. In some cases, shares of EV high-fliers cooled off when the ratings poured in.
Other potential catalysts arrive in the early part of 2022 when Rivian starts to make some public appearances at conferences and issues the company's first earnings/production reports. There have been many share price stumbles in the EV sector when production timelines were altered due to supply chain issues, chip shortages or other hiccups.
In regard to social media interest, Google searches on Rivian, RIVN and Rivian stock are in a downtrend after the peak during the IPO.
RIVN is still a top ticker on Reddit's WallStreetBets and Stocktwits in terms of mentions. On moomoo, more people follow one-week old Rivian than 47-year old $Foot Locker (FL.US)$.
Valuation today on Rivian moved to as high as $143B, which leaves the question of where analysts will go when the quiet period expires on December 20. The lead underwriters on the Rivian IPO were Goldman Sachs, JPMorgan and Morgan Stanley. BofA, Barclays, Deutsche Bank, Wells Fargo and a host of others participated in the underwriting. While Sell-equivalent ratings from analysts are pretty much unheard of on the first day of a quiet period expiration, other EV stocks have seen a flurry of Neutral-equivalent ratings arrive due to frothy valuations. In some cases, shares of EV high-fliers cooled off when the ratings poured in.
Other potential catalysts arrive in the early part of 2022 when Rivian starts to make some public appearances at conferences and issues the company's first earnings/production reports. There have been many share price stumbles in the EV sector when production timelines were altered due to supply chain issues, chip shortages or other hiccups.
In regard to social media interest, Google searches on Rivian, RIVN and Rivian stock are in a downtrend after the peak during the IPO.
RIVN is still a top ticker on Reddit's WallStreetBets and Stocktwits in terms of mentions. On moomoo, more people follow one-week old Rivian than 47-year old $Foot Locker (FL.US)$.
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Selling pressure is piling up on some favorite electric vehicle stocks of investors with $Rivian Automotive (RIVN.US)$ on a path to see its first down day, while $Lucid Group (LCID.US)$, $Fisker (FSR.US)$, $Arrival (ARVL.US)$, $Lordstown Motors (RIDE.US)$ and $Faraday Future Intelligent Electric Inc. (FFIE.US)$ are all notably in reverse.
IPO newbie $Sono Group (SEV.US)$ is holding to its big early gain and is about 93% higher than the IPO pricing level of $15. The high point for shares of the solar-powered car maker so far is $32.34.
The company raised $150M today after selling 150M shares in the IPO. Sono is a European-focused electric vehicle player so far with pre-orders coming in from Germany, Austria, Switzerland, France, the Netherlands, Italy, Spain and Portugal. Sono has a partnership with MAN Truck & Bus., which is under the $VOLKSWAGEN AG (VLKAF.US)$ corporate umbrella.
Sono was on catalyst watch this week with some fireworks anticipated due to its going public right when EV interest is sky high.
Elsewhere in the auto sector, $Hyzon Motors (HYZN.US)$ is recovering from yesterday's drop and $Ferrari (RACE.US)$ is riding higher after Morgan Stanley called it its favorite EV stock.
Meanwhile, $Tesla (TSLA.US)$ is having a solid day considering Elon Musk has now unloaded about $8.8B worth of shares after his latest batch of sales.
IPO newbie $Sono Group (SEV.US)$ is holding to its big early gain and is about 93% higher than the IPO pricing level of $15. The high point for shares of the solar-powered car maker so far is $32.34.
The company raised $150M today after selling 150M shares in the IPO. Sono is a European-focused electric vehicle player so far with pre-orders coming in from Germany, Austria, Switzerland, France, the Netherlands, Italy, Spain and Portugal. Sono has a partnership with MAN Truck & Bus., which is under the $VOLKSWAGEN AG (VLKAF.US)$ corporate umbrella.
Sono was on catalyst watch this week with some fireworks anticipated due to its going public right when EV interest is sky high.
Elsewhere in the auto sector, $Hyzon Motors (HYZN.US)$ is recovering from yesterday's drop and $Ferrari (RACE.US)$ is riding higher after Morgan Stanley called it its favorite EV stock.
Meanwhile, $Tesla (TSLA.US)$ is having a solid day considering Elon Musk has now unloaded about $8.8B worth of shares after his latest batch of sales.
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$Ford Motor (F.US)$ is selling it's stake in Rivian to fund it's own EV production. They own 12% of $Rivian Automotive (RIVN.US)$, worth about $10 billion. Seems like the legacy manufacturers could make a buttload of money for shareholders by simply floating new EV IPO's that are nothing but a plan to eventually have an electric car company. Silly that Rivian, with no actual cars to sell, has a bigger market cap than Ford or $General Motors (GM.US)$. If it's that easy to start an electric car company, then it begs the question, what's preventing anyone else from entering and taking Rivian's market share? Here come's $Apple (AAPL.US)$, $Alphabet-C (GOOG.US)$, $Meta Platforms (FB.US)$, along with every other vehicle manufacturer.... Heck, I could see Deere and CAT having their own EV companies. Basically any company that's remotely attached to making things with wheels could start up an EV company and get a $100 billion valuation. Personally, I'm waiting for Mattel to come out with the new Big Wheel brand EV. It will be made of plastic and have a cool hand brake that can make you spin 180 degrees...you can even put a playing card in the wheels to make a clickity sound, since EV's are boringly silent. There's a whole market of ancillary products they can add that should make it a $trillion company, like those little streamers that hang off of handlebars...you could hang them off the sideview mirrors. Or maybe even a full size EV Tonka Truck? There's a trillion dollar market cap right there...
The reality is that any idea that keeps us sitting by ourselves in traffic is not a solution to global climate change. Europe and Asia are busy making efficient trains and bike highways that get people out of their cars. I spent some time in the Netherlands and never even got in a car....just a 5 minute bike ride to the train and I can get anywhere in Europe with my bike included. You know all those obese people waddling around the Walmart in the US? They don't have them in Europe. People are generally thin and fit. Think of how much better Tinder & Bumble will be if we all start riding bikes! No more gambling on someone who only posts photos from the chest up!
The reality is that any idea that keeps us sitting by ourselves in traffic is not a solution to global climate change. Europe and Asia are busy making efficient trains and bike highways that get people out of their cars. I spent some time in the Netherlands and never even got in a car....just a 5 minute bike ride to the train and I can get anywhere in Europe with my bike included. You know all those obese people waddling around the Walmart in the US? They don't have them in Europe. People are generally thin and fit. Think of how much better Tinder & Bumble will be if we all start riding bikes! No more gambling on someone who only posts photos from the chest up!
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$Tesla (TSLA.US)$ It is futile to preach to a crowd that thinks traditional metrics used to evaluate stocks are fuddy duddy rubbish, examples of long-ago industrial age technology. Today it is all about projections, all about sure-fire disruptive technologies like EV's and FSD.
Some old timers smile when we see startling valuations for $Rivian Automotive (RIVN.US)$ , $Lucid Group (LCID.US)$ , $Tesla (TSLA.US)$ and other EV companies. Does anyone recall Digital Equipment or Data General? They were "disruptive" companies, stock market darlings, growing hyper-fast. Until the market segment became saturated, and it all fell apart. Does anyone recall the beginning of the PC market? I bought a top-of-the-line Xerox PC for I think $3,000 or so, about $8,000 in today's money. Xerox was hot. Then after Xerox disappeared -- the disruptive PC market continued to soar and one of the huge market faves was Gateway computers. You could see their distinctive cartons everywhere, they were on the way to market domination. Uh, anyone buying Gateway computers these days? Wang Labs, the forerunner of the PC was another market darling, a sure-fire new technology called word processors. Then the company went pffft.
What most of the hot-stock crowd piling into Rivian and Lucid don't realize is how quickly a hyper-growth market can slow down. The overall vehicle market l is mature, slow-growth, saturated, cyclical and highly competitive. Not a market that sports generous valuations -- in fact for decades most vehicle manufacturers have traded at less than 1X revenues.
How long will it take for the "disruptive" EV segment to run into this brick wall? How soon will even EV segment become crowded and saturated? According to sky-high market caps for Tesla, Rivian and Lucid, the EV vehicle segment will grow at 50% or better, undisturbed for another decade. Their 20X and 30X revenue valuations will not compress toward the industry 1X average for the foreseeable future, despite a flood of new EV's entering the market over the next several years.
Good luck with that. I foresee ugly saturation reality colliding with the hyper-growth EV story circa 2025, at the latest 2027. And when that happens. lots of EV stocks -- vehicle makers and support companies -- will go south.
I know, I'm too old fashioned to understand the new reality. But I've seen a whole lot of disruptive technologies -- fax machines, cellular phones, PC's, mini-computers, smart phones, cable TV and many others -- become saturated and slow growth much sooner than Wall St. predicted.
Some old timers smile when we see startling valuations for $Rivian Automotive (RIVN.US)$ , $Lucid Group (LCID.US)$ , $Tesla (TSLA.US)$ and other EV companies. Does anyone recall Digital Equipment or Data General? They were "disruptive" companies, stock market darlings, growing hyper-fast. Until the market segment became saturated, and it all fell apart. Does anyone recall the beginning of the PC market? I bought a top-of-the-line Xerox PC for I think $3,000 or so, about $8,000 in today's money. Xerox was hot. Then after Xerox disappeared -- the disruptive PC market continued to soar and one of the huge market faves was Gateway computers. You could see their distinctive cartons everywhere, they were on the way to market domination. Uh, anyone buying Gateway computers these days? Wang Labs, the forerunner of the PC was another market darling, a sure-fire new technology called word processors. Then the company went pffft.
What most of the hot-stock crowd piling into Rivian and Lucid don't realize is how quickly a hyper-growth market can slow down. The overall vehicle market l is mature, slow-growth, saturated, cyclical and highly competitive. Not a market that sports generous valuations -- in fact for decades most vehicle manufacturers have traded at less than 1X revenues.
How long will it take for the "disruptive" EV segment to run into this brick wall? How soon will even EV segment become crowded and saturated? According to sky-high market caps for Tesla, Rivian and Lucid, the EV vehicle segment will grow at 50% or better, undisturbed for another decade. Their 20X and 30X revenue valuations will not compress toward the industry 1X average for the foreseeable future, despite a flood of new EV's entering the market over the next several years.
Good luck with that. I foresee ugly saturation reality colliding with the hyper-growth EV story circa 2025, at the latest 2027. And when that happens. lots of EV stocks -- vehicle makers and support companies -- will go south.
I know, I'm too old fashioned to understand the new reality. But I've seen a whole lot of disruptive technologies -- fax machines, cellular phones, PC's, mini-computers, smart phones, cable TV and many others -- become saturated and slow growth much sooner than Wall St. predicted.
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$BYD Co. (BYDDF.US)$ In 2020, on the back of strong market growth and political and regulatory tailwinds, the electric vehicle industry started to garner massive attention, which has resulted in exploding share prices for many of the most-watched players, $Tesla (TSLA.US)$ being a prime example. The company is valued at more than $1 trillion today, despite selling just around 1% of all automobiles in the world. Other EV pureplays have also benefited from massive hype, such as $Rivian Automotive (RIVN.US)$ and $Lucid Group (LCID.US)$ , which are valued at around $100 billion and $80 billion, respectively, despite having produced just a couple dozen of cars in their entire company history -- this is, for reference, a market capitalization in the ballpark of $Ford Motor (F.US)$ or $DAIMLER AG ADR (DMLRY.US)$ , which sell millions of cars a year.
Due to their better growth outlook, EV pureplays naturally deserve a premium relative to how legacy automobile manufacturers are valued today. But at current prices, this seems overdone, and it seems doubtful whether a company like Rivian does deserve to trade at a similar market cap as established peers that have proven they are able to scale operations and that generate billions in net profits.
Not all companies in this space are trading at the extremely high valuations seen in RIVN, LCID, TSLA, however, as the market is somehow not hyped about all EV companies to the same degree. One company that does barely get any hype and that could be one of the best picks in this space is BYD Company.
Due to their better growth outlook, EV pureplays naturally deserve a premium relative to how legacy automobile manufacturers are valued today. But at current prices, this seems overdone, and it seems doubtful whether a company like Rivian does deserve to trade at a similar market cap as established peers that have proven they are able to scale operations and that generate billions in net profits.
Not all companies in this space are trading at the extremely high valuations seen in RIVN, LCID, TSLA, however, as the market is somehow not hyped about all EV companies to the same degree. One company that does barely get any hype and that could be one of the best picks in this space is BYD Company.
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$Lucid Group (LCID.US)$ The total MC of the auto sector is exploding while the TAM of the sector will remain roughly the same over the coming years. Either the sector participants will be blessed with permanently much higher valuations, or the number of sector participants will need to be culled. Some investors must believe that these new EV players will supplant the legacy guys.
These naive investors see EVs as a new type of automobile. It’s not, it’s a new type of drivetrain. What’s unchanged is everything else, I.e. wheels, tires, body panels, bumpers, brakes, windows, interiors, etc.. Who has 100 years of manufacturing experience in making cars? Who already has the capacity to make millions of cars? Who has the parts manufacturing subcontractor contracts in place, at favorable costs due to large quantities ordered? Legacy car makers that’s who. Tesla has had growing pains in scaling up their operations, that according to Elon almost caused a bankruptcy. They were fortunate to be at that time the only EV manufacturer and was able to stay solvent without any competition by selling green credits. Anyone who thinks that these EV manufacturers are going to supplant the legacy guys is kidding themselves. What’s more likely to happen, that Legacy guys learn to make EV drivetrains, or that these new EV players flawlessly, economically and quickly are able to manufacture millions of their cars?
Other than $Tesla (TSLA.US)$, who because of it’s huge lead and who can be a leader in EV compact sedans, the remainder of EV newbies will at best be niche players selling at most low six-figures of units/year. In a few years they will trade at a fraction of their current ridiculous share prices.
Finally, EV adoption will be slower than the optimists believe and Legacy selling both ICE and EV will turn out to be an advantage.
These naive investors see EVs as a new type of automobile. It’s not, it’s a new type of drivetrain. What’s unchanged is everything else, I.e. wheels, tires, body panels, bumpers, brakes, windows, interiors, etc.. Who has 100 years of manufacturing experience in making cars? Who already has the capacity to make millions of cars? Who has the parts manufacturing subcontractor contracts in place, at favorable costs due to large quantities ordered? Legacy car makers that’s who. Tesla has had growing pains in scaling up their operations, that according to Elon almost caused a bankruptcy. They were fortunate to be at that time the only EV manufacturer and was able to stay solvent without any competition by selling green credits. Anyone who thinks that these EV manufacturers are going to supplant the legacy guys is kidding themselves. What’s more likely to happen, that Legacy guys learn to make EV drivetrains, or that these new EV players flawlessly, economically and quickly are able to manufacture millions of their cars?
Other than $Tesla (TSLA.US)$, who because of it’s huge lead and who can be a leader in EV compact sedans, the remainder of EV newbies will at best be niche players selling at most low six-figures of units/year. In a few years they will trade at a fraction of their current ridiculous share prices.
Finally, EV adoption will be slower than the optimists believe and Legacy selling both ICE and EV will turn out to be an advantage.
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YL tan : My favourite is still Tesla. It is the best EV stock any investor could own
garay : Tesla is already an established stock and has proven to have strong returns. However it is sometimes very volatile whenever Musk tweets something funny
不理不理左不理 : Tesla is the future. I think it’s a sound and best investment for EV, even though there’s a nominal risk involved.
Spearhead : Good
101767718 : I think EV stocks will be doing very well in the years ahead witb stronger demand
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