Electric Car Wars: Who Will Come Out on Top
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FN Media Group Presents Oilprice.com Market Commentary
London - January 29, 2021 – Electric vehicle stocks have been on fire this past year, outperforming every other sector in the market. The sector's favorite benchmark–Global X Autonomous & Electric Vehicles ETF (DRIV)–has climbed 75.3% over the past 12 months and is already up 13.6% YTD, managing to even outperform the red-hot biotech sector as the Covid-19 vaccine rollout gets underway. Mentioned in today's commentary includes: Li Auto Inc. (NASDAQ: LI), Workhorse Group Inc. (NASDAQ: WKHS), Xpeng Motors (NYSE: XPEV), Apple (NASDAQ: AAPL), Electra Meccanica Vehicles Corp (NASDAQ: SOLO).
Incredibly, EV and clean energy have continued to post impressive growth numbers amid the ongoing pandemic. Indeed, the latest report by clean energy watchdog Bloomberg New Energy Finance (BNEF) has revealed that investments in renewable energy capacity came to $303.5 billion, up 2% on the year, thanks mainly to the biggest-ever build-out of solar projects as well as a $50 billion surge for offshore wind.
The EV sector has emerged on top, with investments in the burgeoning industry including charging infrastructure buildout clocking in at $139 billion, good for a 28% Y/Y increase, while the passenger EV market reached an estimated $118 billion representing a four-fold growth compared to 2016 levels.
EV-focused ride-sharing could also be poised for stardom, with Uber and Lyft both pledging 100% EVs by 2030, and Canadian "Silicon Valley" darling Facedrive (FD,FDVRF), pioneering carbon-offset ride-sharing back in 2019 and moving quickly to expand its North American footprint with a stunning acquisition of Washington D.C.-based Steer, the EV subscription company that plans to change the way we view both EVs and car ownership.
Millennials, a generation that holds massive consumer power, is now beginning to dictate what happens next with the auto industry. And while the global pandemic and a major shift to remote work has brought them back into the car "ownership" market--they don't want to own the same way their predecessors did. Numerous studies have shown they value "access" to a private car over ownership, and they want it on-demand in a process that is as easy as the click of a button. And they overwhelmingly value EVs over conventional cars.
That's Steer: It's the digitally seamless way to have your own virtual gallery of the best EVs on the market, with no insurance costs, no hassle, whenever you want, wherever you. It's like one new way to "own" a car (or cars, in this case).
That could be one of the reasons why Facedrive stock is up over 110% in less than a month:
This company knows Millennials inside and out, and it's capturing them in advance. We think demand for this innovative and transformative EV subscription service stands to increase substantially in the coming months and years as our world undergoes one of the biggest lifestyle transformations in centuries.
With president Joe Biden now in the driving seat and the Democrats in control of both branches of Congress and the White House for the first time since the first two years of Barack Obama’s first term, EV companies could be some of the biggest beneficiaries of Biden's $2 trillion climate plan.
After all, Biden has pledged to install 500,000 charging stations, a number that analysts believe could spur sales of 25 million EVs, or 25x what Tesla Inc. expects to sell in 2021.
That's not just a huge boost for EV manufacturers ... it extends to the charging innovators, and particularly to the ride-sharing platforms, not to mention EV subscriptions that fully intend to gain significant 'conventional' converts.
Legacy automakers understand this is an unstoppable trend and many such as General Motors, BMW, Volkswagen and Nissan Group have launched their EV brands, while smartphone titan Apple Inc. is seriously considering making a comeback to the EV space after shelving the Apple Car project several years ago.
They say that a rising tide lifts all boats, and buying a fund like DRIV can give you broad exposure to the EV space. Still, some EV names are likely to remain ahead of the pack.
In the meantime, amid all the traction in this section, the EV wars are intensifying exponentially, and while Tesla is the obvious front-runner, there are a number of ways to ride the tailwinds of our transportation transformation that have a lot more upside.
Of course, up until now, no electric vehicle company has captured the imagination of Wall Street and investors quite like Tesla Inc. has.
In fact, Tesla's $870B market cap means it accounts for two-thirds of the ~$1.3 trillion valuation of the global EV industry. In contrast, traditional ICE manufacturers are currently valued at just over $1.2 trillion.
After years of doubting by naysayers and short-sellers with expectations that Tesla would go bankrupt or sell out to a company like Apple Inc.
But those speculations were short-lived: Tesla and Musk quickly proved to the world that there's robust demand for EVs and the future truly is electric.
Tesla has been able to inject its large-scale manufacturing capabilities into Musk's inspired improvisation, looking to deliver an astounding 500,000 vehicles in the current year and 1 million in 2021, with a number of gigafactories in the pipeline, which could significantly increase its production capacity as the quarters roll on.
But now, it's time to look for the next Tesla–or the next Tesla-like EV tie-in.
Workhorse Group Inc. (WKHS) is taking EVs further with medium-duty trucks, HorseFly delivery drone systems, and even electric aircraft. It also develops cloud-based and real-time telematics performance monitoring systems that enable fleet operators to optimize energy and route efficiency.
Now, it's emerged as one of the most popular EV stocks thanks to being a leader in the manufacture of electric vans. And the addressable market in the US alone is huge, with more than 350,000 last-mile delivery vans sold every year. At an average selling price of $50,000, that's good for a market size of $18 billion.
Workhorse happens to be at the epicenter of a major disruption, which could mean huge long-term upside potential.
But keep an eye on the newcomers, too, like Xpeng Motors (XPEV), which has been making impressive gains thanks mainly to a growing demand for its stylish vehicles and promising financials.
In addition to retail interest, Xpeng has also received a ton of interest from Big Money. Earlier this year the company raised over $500 million from the likes of Aspex, Coatue, Hillhouse Capital and Sequoia Capital China, and even more recently, secured another $400 million from heavy hitters such as Alibaba, Qatar Investment Authority and Abu Dhabi's sovereign wealth fund Mubadala.
As the demand for electric vehicles continues to grow, newcomers like Xpeng provide an excellent opportunity for investors to jump on this undeniable trend even if the missed out on Tesla's meteoric rise to glory.
Newcomers like Xpeng provide an excellent opportunity for investors who missed out on Tesla's meteoric rise or Chinese Tencent-backed Nio's storming of the market in 2020–even if its shares did rise too far, too fast.
But EV related tech companies may be where the real upside is: Facedrive (FD,FDVRF), the crown jewel of Canada's 'Silicon Valley', was the first to foresee ride-hailing's biggest mistake: Ride-sharing was a brilliant idea when it exploded across the world, but it created more pollution than it displaced, and that is off-trend when it comes to today's investing atmosphere.
Facedrive figured this out before anyone else and launched their carbon-offset ride-hailing platform in 2019 in Canada, and is now paving the way for its debut in the U.S. It not only offers customers a choice of EV, hybrid or conventional, but it works in cooperation with city authorities to plant trees to offset ride-hailing carbon.
Facedrive's rapid expansion and string of acquisitions give us a clue as to where this is going. It's targeted everything from carbon-offset ride-sharing and food delivery to pharma deliveries, COVID contact tracing tech, and even e-sports predictive technology.
More than anything, this startup from Canada's soaring Waterloo "Tech Triangle" is the proof that technology is the backbone of our energy transition and our transportation transformation, and the next thing to come out on top in the EV sector will very likely be a totally tech-driven company, like this one.
That's why no one should be surprised at news leaking out about Apple's interest in jumping in on the EV game.
Apple (AAPL) is a leader in Big Tech's sustainability push...but it's more than just that. From the products themselves, to the packages they came in, and even the data centers powering them, Apple has gone above and beyond to cut the environmental impact.
But now, it's even getting into the transportation business. “We’re focusing on autonomous systems. It’s a core technology that we view as very important. We sort of see it as the mother of all AI projects. It’s probably one of the most difficult AI projects actually to work on.” Apple CEO Tim Cook on Apple’s plans in the car space. Electric vehicles aren't likely to be left out, either...
Apple’s rumored car design means that more active material can be packed inside the battery, giving the car a potentially longer range. Apple is also examining a chemistry for the battery called LFP, or lithium iron phosphate which is inherently less likely to overheat and is thus safer than other types of lithium-ion batteries.
If you want to get to the top of the EV related bull run, look to the tech players that are right now blazing a new path.
Electra Meccanica Vehicles Corp (SOLO) is another electric vehicle stock that has turned heads this year. The Canadian company's single-seat electric car carries a lower, and more appealing price point for consumers that do not need all the bells and whistles that come with luxury brands like Tesla. It's also on the cusp of an emerging market.
In fact, demand for single-seat electric vehicles is projected to grow significantly in the coming years, and SOLO is one of the few companies in this market, representing a great opportunity for investors looking for an easy-entry EV stock with a lot of potential upside.
Electric Meccanica isn't only interested in the company niche, however. It's also planning to roll out an electric sports car for two, the Tofino, and another electric two-seater boasting an old-school design that will appeal to a wide range of consumers. Given that the stock is only trading at $7.31 at the moment, there is a lot of room to grow, though not without potential risks.
Li Auto (LI) was founded in 2015 by its namesake, Chairman and CEO Li Xiang. And while it may not be a veteran in the market like Tesla or even NIO, it's quickly making waves on Wall Street.
Backed by Chinese giants Meituan and Bytedance, Li has taken a different approach to the electric vehicle market. Instead of opting for pure-electric cars, it is giving consumers a choice with its stylish crossover hybrid SUV. This popular vehicle can be powered with gasoline or electricity, taking the edge off drivers who may not have a charging station or a gas station nearby.
By. Joshua Matthias
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that the demand for ride sharing services will grow; that Steer can help change car ownership in favor of subscription services; that new tech deals will be signed by Facedrive and deals signed already will increase company revenues; that Facedrive will be able to expand to the US and globally; that Facedrive will be able to fund its capital requirements in the near term and long term; and that Facedrive will be able to carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that riders are not as attracted to EV rides as expected; that competitors may offer better or cheaper alternatives to the Facedrive businesses; changing governmental laws and policies; the company's ability to obtain and retain necessary licensing in each geographical area in which it operates; the success of the company's expansion activities and whether markets justify additional expansion; the ability of the company to attract drivers who have electric vehicles and hybrid cars; and that the products co-branded by Facedrive may not be as merchantable as expected. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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