The electric vehicle (EV) industry is booming right now. New players are entering the space, existing titans are opening their portfolios and investing in electric vehicles, and a large number of supporting players such as charging companies, battery companies and autonomous driving companies are stepping up the pace. ‘innovation.
As the saying goes, a picture is worth 1,000 words, and sometimes you have to see something to believe it. Here are three EV charts that may blow your mind and prove the investment potential of electric vehicles.
1. The market has high expectations for electric vehicles
The combined value of the three most valuable stocks of electric vehicles, You’re here (NASDAQ: TSLA), Rivien Automobile (NASDAQ: RIVN), and Lucid group (NASDAQ: LCID), is three times higher than the combined value of the three largest traditional car manufacturers – Toyota engine (NYSE: TM), Daimler AG (ETR: DAI), and Volkswagen AG (FRA: Wish)
Another way to look at it is that the combined value of Rivian and Lucid is about the same as the combined value of Mercedes-Benz, Audi, Bentley, Bugatti, Lamborghini, Porsche and Volkswagen.
2. Tesla has become an incredibly profitable business
In just three years, Tesla has increased its quarterly shipments from less than 100,000 units to nearly 250,000 units. It has had positive Free Cash Flow (FCF) since the second quarter of 2020 and has recorded positive net income since the third quarter of 2019.
Tesla’s manufacturing capacity has grown thanks to Gigafactory’s expansions in California, Texas, Germany and China. Tesla’s scalability is impressive, but what really stands out is that it has maintained a high operating profit margin even though it sells low-priced models. by Tesla Stock remains a very controversial battleground, backed by supporters who think the price is worth it and people who say it will be impossible for him to meet his valuation. But no matter what you think of the stock, there’s no denying that the company is efficient, highly profitable and growing extremely fast.
3. Tesla sets the bar high for newcomers
Tesla’s current profitability is what up-and-coming EV companies like Lucid and Rivian eventually hope to achieve. For example, Lucid hopes to increase shipments from 20,000 units in 2022 to 251,000 units in 2026. By 2026, he forecasts sales of $ 22.8 billion, gross profit of $ 5.28 billion. and FCF of $ 1.52 billion.
Deliveries (in units)
$ 2.2 billion
$ 5.5 billion
$ 9.9 billion
$ 14.0 billion
$ 22.8 billion
$ 34 million
$ 1.2 billion
$ 2.1 billion
$ 3.1 billion
$ 5.3 billion
Free movement of capital
($ 2.8 billion)
($ 3.3 billion)
($ 1.5 billion)
$ 321 million
$ 1.5 billion
These figures should be taken with caution as they are all projections. However, they show Lucid’s potential to reach his current valuation of $ 85 billion. Lucid’s projections for 2026 would give it about a quarter of Tesla’s projected annual production for 2021, about half of its revenue, and roughly the same gross profit margin.
If Lucid really posted those numbers, is he worth maybe a quarter or a half of Tesla? It’s hard to say because Tesla’s manufacturing is so efficient. It has its own network of supercharger stations, its brand is powerful, and it has other sources of income from solar power and storage. Speculation aside, the point is that new car makers are bringing awesome technology to the table. They are teeming with cash, will likely have plenty of options to raise more cash if they need it, and have global ambitions. In short, they are serious and Wall Street takes them seriously by assigning high valuations.
Different Approaches to Investing in the Electric Vehicle Industry Now
For most people, investing in a basket of EV stocks that they believe in provides the best way to capture the upside while limiting downside risk. Risk averse investors may want to stick with seasoned veterans like Ford (NYSE: F), which uses the strength of its core business to invest in electric vehicles. A general way to invest in electric vehicles is to charge companies like Charging point (NYSE: CHPT) that is expected to grow with the industry, regardless of which automakers go up and down. Finally, there’s the high-risk, high-reward option, where Lucid seems best positioned to thrive over the next decade.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.