After an almost surreal 15-month stretch that saw its market value balloon 17-fold, Tesla Inc. (NASDAQ:TSLA) has come back to earth this year and appears in desperate need of some inspiration to get going again. TSLA, along with the majority of its green energy peers, has been seriously lackluster in 2021, managing a mere 0.6% gain in the year-to-date as the stock continues to consolidate after crazy gains in 2020.
Even the company’s latest earnings report has only managed to elicit a small post-earnings afterglow despite Tesla enjoying yet another strong quarter in the pivotal Chinese market.
Tesla is no longer hot, but that does not mean it has completely lost its Midas touch.
Chinese electric vehicle battery maker, Contemporary Amperex Technology (CATL) has turned on the afterburners and is minting billionaires faster than Silicon Valley stalwarts Google or Facebook ever did.
According to the Wall Street Journal, CATL share price has soared 167% over the past 12 months, bringing the company to a market value of over $200 billion and making it the third-largest business listed in mainland China.
CATL, a leading supplier of the EV batteries that go into Tesla cars, is one of the world’s largest EV battery manufacturers with an annual capacity pegged at 490 GWh. CATL also supplies EV batteries to Toyota, BMW, and Volvo.
Betting on a trend, not brand
CATL’s rapid rise has helped it catapult more people into Forbes List of Billionaires faster than Google, Facebook or even Tesla itself. Zeng Yuqun, Huang Shilin, Pei Zhenhua and Li Ping, majority owners of CATL, boast a combined net worth of $61.6 billion with a green net worth clocking in at $60.7 billion.
CATL has, of course, the iconic Palo Alto, California-based EV maker to mostly thank for its rise from a relatively obscure EV player to one of the most recognizable names in the space.
Last year, the two companies inked a two-year supply deal making the Chinese company Tesla’s third battery supplier after South Korea’s LG Chem and Japan’s Panasonic. In June, the two companies extended the supply deal until 2025.
Interestingly, these other two EV battery giants have also been enjoying impressive share gains in the current year. What sets CATL apart, though—and the reason why its shares have performed better than its rivals—is because it took Tesla’s rallying call to its battery suppliers to ramp up their capacity seriously with CATL setting off a “a blistering pace of expansion.”
Generally, stocks of battery manufacturers have been enjoying solid gains while those of EV manufactures have languished because investors recognize that it’s still early innings in the EV transition and it’s, therefore, safer to bet on a wider electrification trend rather than betting more narrowly on EV brands.
As the world continues to navigate the fast-changing tech landscape, megatrend investing has emerged as the hottest investing theme in 2021. Megatrends are powerful, transformative secular trends that frequently bring about permanent changes in the world around us. For instance, the Global X Autonomous & Electric Vehicles ETF (DRIV) invests in stocks of companies operating across the development of electric vehicles and/or autonomous vehicles, including companies that produce electric/hybrid vehicles, electric/hybrid vehicle components and materials, autonomous driving technology, and network-connected services for transportation, collectively, autonomous and electric vehicle companies sectors. DRIV has outperformed most EV names with a 19.4% YTD gain. Related: Shale Giants Hit Hard By Poor Hedging Decisions
That said, CATL is by no means the only EV battery manufacturer that’s minting billionaires.
Liu Jincheng, chairman at Eve Energy, another Chinese li-ion battery manufacturer, boasts a net worth of $10.9 billion and a similar green net worth. EVE supplies the likes of Daimler, BMW, and Xpeng Inc. (NYSE:XPEV).
Owners and founders of EV companies such as Tesla’s Elon Musk still holds major sway in the EV space, though.
Wang Chuanfu, Lv Xiangyang, Xia Zuoquan-- have a combined net worth of $ 33.5 billion with a green net worth of$13.4 billion. These three Chinese investors are majority owners at BYD, an electric vehicle company that’s currently converting Shenzhen’s fleet of buses, taxis, and trucks into electric vehicles. Berkshire Hathaway (NYSE:BRK.B) has owned BYD since 2008.
Meanwhile, Li Bin, founder of Tencent-backed NIO Ltd (NYSE:NIO), by far the largest Chinese EV maker, boasts a net and green net worth of $9.1B.
You can find other billionaires who owe their massive wealth to the EV and green revolution on Bloomberg Green.
By Alex Kimani for Oilprice.com
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