The electric vehicle boom is in full swing…
And though company valuations have already skyrocketed in the past couple of years…This new market trend has legs.
Think about this…Passenger electric vehicle sales are set to grow by more than 80% to 5.6 million units in 2021…And it’s clear to see why.
The world is racing towards a potentially catastrophic climate event. And only a reduction in emissions can prevent it.
That’s why BNEF, the strategic research arm of Bloomberg, predicts that there could be as many as 677 million zero-emission vehicles on the road by 2040.
The race for emissions-free transportation has seen companies grow by leaps and bounds over the past two years…
Take, Nio Limited (NYSE:NIO) for example. Since the beginning of 2020, it has surged by as much as 684%.
And, of course, Tesla (NASDAQ:TSLA) has grown even faster, skyrocketing by nearly 1000% in the same amount of time.
Though those gains are impressive…this revolution is just getting started.
That’s why we’ve put together a list of our favorite electric vehicle companies for 2022 and beyond.
#1 - Tesla Motors
After having peaked at almost $1250 per share on Nov. 4 of this year, EV-maker Tesla (NASDAQ:TSLA) has seen its share price fall back below $900, effectively wiping out all gains since the carmaker closed a huge deal with car rental company Hertz.
The $4.2 billion deal, which was revealed on October 25, was the start of yet another major rally in Tesla shares as markets read the deal as a signal that EVs are going mainstream.
The Hertz rally sent Tesla’s market capitalization soaring well above the astronomical $1 trillion figure. While some analysts were quick to predict some sort of a correction in share prices, others re-adjusted their bullish predictions for Tesla.
Wedbush Securities analyst Dan Ives has put a price target of $1,400 on Tesla's stock. According to Ives, the energy transition will create a massive $5 trillion market opportunity over the next decade, and Tesla is set to retain its market leadership.
On the other side of the spectrum is Tesla bear JPMorgan. The investment bank continues to say that Tesla is woefully overvalued, and before the Hertz rally, the bank expected Tesla to fall back to $250 per share in December 2022.
While the Omicron-selloff in equity markets has certainly weighed on Tesla, the real catalyst was the decision of its CEO Elon Musk to sell off a large number of shares. After polling the public on Twitter, Musk sold almost $13.6 billion in stock, with some of the bids already entered before the poll.
#2 - Li Auto
Li Auto (NASDAQ:LI) is an up-and-comer to watch in the Chinese electric vehicle space.
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 innovative 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.
While it just hit the NASDAQ in July of last year, the company has already seen its stock price nearly triple since its debut.
The company’s forward-thinking approach to the industry and promising financials have hit a nerve with analysts, with as many as 15 buy ratings out on the company and a potential price reaching $64 within the next 12 months, according to CNN forecasts.
#3 - Ford
Ford Motors (NYSE:F) is a Detroit veteran…and it certainly hasn’t ignored the dramatic rise in electric vehicles.
In addition to brand-new electric versions of its best-sellers, the F-150 and iconic Mustang, it’s also carving out its own position in the hydrogen race, as well.
In fact, it recently even unveiled the world’s first-ever fuel cell hybrid plugin electric vehicle, the Ford Edge HySeries.
“This vehicle offers Ford the ultimate in flexibility in researching advanced propulsion technology,” said Gerhard Schmidt, vice president of research and advanced engineering for Ford Motor Company. “We could take the fuel cell power system out and replace it with a down-sized diesel, gasoline engine or any other powertrain connected to a small electric generator to make electricity like the fuel cell does now.”
Thanks in large part to its green pivot, Ford’s stock price has soaredthis year. Since the beginning of 2021, the company’s share price has climbed from $8.52 to today’s price of $19, representing a more-than-100% increase in value.
#4 - Rivian
Last month, California-based electric vehicle maker Rivian Automotive Inc. (NASDAQ:RIVN) became the latest ultra-hyped EV manufacturer to hit the market.
Rivian's IPO was another hit after the company managed to raise about $13.5 billion by selling 175.95 million shares at $78 a pop. The company’s shares would go on to hit an intra-day high of $179.47 six days later before falling back to earth.
Though currently trading at just under $100 share due to renewed Omicron concerns which have dragged much of the market down, the company is starting to see some upward momentum once again.
Why has Rivian captured the imagination of Wall Street, exactly? Well, that’s largely thanks to its robust pre-orders and deal-making.
Ford, for example, paid a total of $820 million for Rivian's Series B and D offerings and also bought $415 million of the EV maker's convertible debt offering. Those early investments are now worth over $13 billion, meaning Ford owns a ~12% stake in Rivian and 10.5% of the voting power.
Amazon Inc. (NASDAQ:AMZN) also jumped on board, participating in no less than four rounds in Rivian’s fundraising, paying $1.35 billion, and also bought $490 million in convertible debt before buying 2.56 million shares worth $200M at the IPO. Overall, Amazon owns an 18.5% stake in Rivian after the IPO and holds 16.9% of the voting power.
#5 - Apple Inc.
We’ve all heard the rumors…In fact, it very well may be one of the worst kept secrets ever.
The Apple Car.
And the rumors are finally becoming a reality
Apple (NASDAQ:AAPL) has reportedly set a goal to produce a fully self-driving car by 2025 though it's yet to announce a production partner anytime soon for the self-driving car project.
Nothing has delivered us a more impressive wealth generation story in the past couple of years like Tesla. It's certainly with that in mind that Apple--which has gone back and forth over the Apple Car--appears to have turned things up a notch in the autonomous-driving arena.
Earlier this year, Tim Cook, CEO of Apple finally opened up about the project…and though a lot of details remain fuzzy, Cook did note that he has great admiration for Tesla.
The trillion-dollar question, however, is who will Apple be partnering with in its potentially-market-breaking pivot to electric transit?
The rumor mill has been flooded with guesses.
Hyundai was among the first to be mentioned…however, in early February it was revealed that the deal fell through.
Since then, other names have been dropped…including Taiwan Semiconductor and LG.
Even Magna, a Canadian mobility technology company, has been thrown into the pot.
And while nothing has been confirmed, one thing is clear - Apple could be on track to upend markets once again.
It’s already fast approaching a $3 trillion valuation…but this could send it even higher.
In fact, if Apple were a country, it would be the world’s sixth-richest…and this could very well push it into the top 5.
Canadian Companies Are Looking To Capitalize On The EV Boom, As Well
GreenPower Motor Company (TSX:GPV) is an exciting company that produces larger-scale electric transportation. Right now, it is primarily focused on the North American market, but the sky is the limit as the pressure to go green grows. GreenPower has been on the frontlines of the electric movement, manufacturing affordable battery-electric busses and trucks for over ten years. From school busses to long-distance public transit, GreenPower’s impact on the sector can’t be ignored.
Another way to get some indirect exposure to the booming tech, EV and mineral industries is through AutoCanada (TSX:ACQ), a company that operates auto-dealerships through Canada. The company carries a wide variety of new and used vehicles and has all types of financial options available to fit the needs of any consumer. While sales have slumped this year due to the COVID-19 pandemic, AutoCanada will likely see a rebound as both buying power and the demand for electric vehicles increases. As more new exciting EVs hit the market, AutoCanada will surely be able to ride the wave.
Magna International (TSX:MG) was already making major moves in the battery market over a decade ago, investing over half a billion dollars in battery production while the market was still in its infancy. At the time, electric vehicles as we know them had barely hit the scene, with Tesla launching its premiere car just two years prior.
Magna’s massive investment has paid off in a big way, however. Since its battery bet, the company has seen its valuation soar by tens of billions of dollars, and it has solidified itself as one of the leaders in the business.
Westport Fuel Systems (TSX:WRPT) is an important company to watch in the global energy transition. Especially as the world races to leave behind traditional gasoline and diesel-powered vehicles. Because it is a manufacturing play at heart, it is a unique way to get in on the boom in the alternative fuel auto industry.
Westport Fuel has been making major moves in the market over the past year, and its efforts are finally coming to fruition. Since February 2020, the company has seen its stock price rise by 348%, and with more potential deals like the one it has just sealed with Amazon to provide natural gas-powered trucks to its fleet, the stock has even more room to run in the coming years.
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By Michael Kern for Oilprice.com
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Forward-Looking Statements
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 electric vehicle market will continue to grow to an estimated $5 Trillion as anticipated; that electric vehicle manufacturers will challenge manufacturers of internal combustion engines for global market share of vehicle sales; that Tesla could obtain up to a 50% share of the $5-trillion EV market in the coming years; that the market will be bullish for electric vehicles generally and for Tesla in particular; that Tesla’s valuation will continue to increase and that its stock price will increase; that Tesla will continue to increase its revenue and profitability and that sales will continue to grow globally and in China; that other manufacturers of electric vehicles will have difficulty in catching up to Tesla’s global market share and dominance of electric vehicle sales; and that Tesla will be able to continue to increase profitability by reduction of costs and higher sales. 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 the electric vehicle market may not grow as anticipated; that electric vehicle manufacturers may be unable to gain market share over traditional combustion engine or alternative energy vehicles; that Tesla may fail to obtain up to a 50% share of the $5-trillion EV market; that the market may turn again electric vehicles generally in favour of alternative technologies; that Tesla’s valuation and stock price may not increase in value and may actually decrease for various reasons; that Tesla may fail to increase its revenue, sales and profitability globally and/or in China; and that other manufacturers of electric vehicles may produce more economical or better alternatives that obtain wider acceptance and market share. 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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