Incredible Expansion in the Electric Vehicle Industry
Who Will Win the EV game?
The electric vehicle (EV) industry has seen an incredible expansion in recent years, with long-term growth becoming more prominent in the late 2010s. Total annual revenue has increased in the industry by around 152%, from $ 106.5Bn in 2016 to $162.34Bn in 2019, with projections to have the market reach a value of $802.81Bn in 2027 due to the quick-growing popularity of EV’s. This post will analyze five EV stocks to determine which stock is most likely to come out on top in the EV game.
Tesla, Inc. (TSLA)
Tesla, Inc. is an American electric vehicle and clean energy company that is dedicated to the production of their self-driving electric vehicles as well as clean energy products for the home setting. The company currently released its newest EV, the Tesla Model Y into the market with plans to release the Tesla Semi and Tesla Cybertruck into the market in 2021 and 2022 respectively. The current market cap of TSLA is $606.9 billion with each share hovering around $640. As of Q3 2020, there has been a 114.6% increase in growth over the last semester with a current year growth of 5,625% and a $640.34 share price compared to the analyst price target average of $401.47. I estimate a long-term price target of $750 based on the analyst review and that the share price has historically been higher than originally estimated.
NIO Limited (NIO)
NIO Limited is a Chinese automotive company specializing in high-performance electric vehicles. The company is focusing on the production of their premium high-performance line of electric SUV’s which are to be revealed on Jan 9. The company has also launched a battery leasing service that will allow customers to purchase an EV without owning the battery pack to reduce the starting price of the cars. NIO Limited came out with a quarterly gain of $0.04 in Q3 this year compared to the loss of $2.38 per share a year ago.
Nikola Corporation (NKLA)
Nikola Corporation is an integrated zero-emissions transportation system provider focused on developing battery-electric and hydrogen-electric vehicles, as well as EV components. The current market capitalization for NKLA is $6.46 billion, one of the smaller EV manufacturing companies. Back in September of 2020 GM revised its plan with Nikola, no longer providing a hydrogen-electric battery pack and purchasing a percent of the company. Since July, Nikola’s share prices dropped 387% from $65.90 to $16.83. The company also saw a decrease in volume of 137 million. Analysts from Yahoo! are predicting a 21.30% decrease in growth for 2021 as compared to the previous fiscal year.
Apple Inc. (APPL)
Apple Inc. designs manufacture and markets smartphones, other personal devices, and accessories worldwide. The company is one of the largest smartphone companies in the world with a market cap of $2.24 trillion with each share valued at around $132 YTD. On Tuesday Apple announced its plans for its first-ever EV which is now set for production in 2024, with a large portion of the reveal focusing on the new battery technology Apple is developing for this EV. Apple announced its involvement in the EV market caused its share price to increase $3.65, 2.85% of the shares total price and is expected to add more than $62 billion to its market valuation.
Rivian is an American automaker and automotive technology company specializing in the manufacturing of off-road, utilitarian electric vehicles. This is a private company; however, it has drawn some attention that I think is worth noting. Since February 2019, the company has received about $6 billion in funding from a multitude of investors: Amazon, Ford, BlackRock, and Cox Automotive to name a few. The company is also set to release its R1T pickup and R1S SUV by the summer of 2021 and has been contracted to manufacture and deliver 100,000 new electric delivery vans to Amazon, with 10,000 being on the road by 2022 and all of the vehicles on the road by 2030. Rivian is set to have a pre-money evaluation of $8 billion.
It seems that TSLA is set to win the EV game. Besides being in the market for almost seventeen years, Tesla, Inc. has the highest growth of the EV companies, even performing better quarters than anticipated. Yahoo! reports that for each semester in 2020, TSLA reported higher EPS than anticipated, showing that this trend is likely to continue into the next year creating even more value for the company. Although company NIO has had a great yearly EPS turnaround, having a gain than a loss, I do not feel it has the financial strength to compete with TSLA head-to-head. Nikola will lose to TSLA because of the poor performance it had this year and Apple will lose to TSLA since it will not have the reputation of an automotive to directly challenge TSLA. Rivian is unknown to me, with such large funding and a plan to have commercial and privately used EV’s in the market by summer 2021, I feel that Rivian could be a prominent member of the EV market in the future.