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Electric Vehicle Checkpoint: Rivals Miss a Knockout Punch at Tesla
In sport, the challengers know that they must solidify the rare opportunities that will present themselves to bring down the big favorites. They must be realistic and seize any opportunity to destabilize the champion.
The recent surge in oil prices, which translates into an explosion in the price of a gallon of gasoline at the pump, is one of those rare opportunities for Tesla's young rivals.
This situation was provoked by the economic and financial sanctions imposed by the West on Russia after its invasion of Ukraine. In view of the surge in the price of gasoline, we can logically speculate that consumers will show interest in electric vehicles.
Factors, such as the increasing cost of fuel and the government initiatives across different geographies to increase awareness about EVs, are expected to promote the usage of electric vehicles over the forecast period, a recent research report from Mordor Intelligence research said.
But contrary to what one might have expected, it is not the newcomers to electrification who will benefit from it. Indeed, Lucid (LCID) - Get Lucid Group, Inc. Report and Rivian (RIVN) - Get Rivian Automotive, Inc. Class A Report for example, are having difficulty increasing their production rates. Rivian is expected to provide an update on its production status when the automaker releases its quarterly results on March 10.
But the company, which counts Amazon (AMZN) - Get Amazon.com, Inc. Report (17.74%, according to FactSet) and Ford (F) - Get Ford Motor Company Report (11.42%) as shareholders, admitted during its quarterly earnings in December that it is experiencing difficulties in its supply chain and will ramp up production. It said that production would fall “a few hundred vehicles short” of its goal to make 1,200 EVs by the end of 2021.
Basically, a consumer who places an order with Rivian for one of its two models, the R1T electric pickup and the R1S SUV, will not have visibility on when they can take possession of their vehicle.
The same can be said of Lucid, which recently announced that it could start construction of a second production site based in Saudi Arabia. Lucid has tried to reassure consumers of its ability to increase production rates. In particular, the automaker said its plan to expand its one and only factory in Casa Grande, Ariz., was still on track.
As for Fisker, if the company has unveiled the PEAR, an all-electric sedan sold at less than $30,000 at the base price, we still have no details on the start date of production.
It, therefore, appears that the biggest beneficiary of soaring gasoline prices in the automobile world would be Tesla because General Motors (GM) - Get General Motors Company Report, and Ford are also overwhelmed with orders for their highly anticipated electric models.
Tesla, on the other hand, has just obtained the permit to start production in its gigafactory near Berlin. Production should start there by the end of the month.
Tesla May Be Worth $4 Trillion Very Soon
The electric vehicle manufacturer led by Elon Musk remains the world's leading electric vehicle manufacturer.
Black and his firm The Future Fund recently published their calculations. These are very optimistic and count on a massive adoption of electric vehicles around the world.
Black's estimate is based on the following assumptions: Electric vehicles will be more popular by 2030, with 60% penetration. Tesla, which is currently the leader of this booming market, will increase its leadership, with a market share that will reach 21%.
The production and deliveries of the firm led by Elon Musk will also explode, predicts Black. Sales of global light-electric vehicles should reach 85 million units per year, including 10 million sold by Tesla.
Tesla's operating margin, which was 14.1% in 2021, will jump to 26.1% in 2030 thanks to an improvement in technologies related to batteries in particular. The automaker's adjusted earnings per share (EPS) would go from $6.79 in 2021 to $100 in less than 10 years, Black calculates.
increase from 4.6 million in 2021 to 51 million in 2030.
It must be said that most vehicle manufacturers also have hyper-aggressive production targets. GM and Ford, for example, are talking about producing 2 million units per year from 2025 for the first and 2026 for the second. The two groups produced just 50,000 electric vehicles each in 2021.
Black isn't the first investor to see Tesla's market capitalization soar to $4 trillion. In March 2020, Cathie Woods' Ark Invest predicted that there was over a 25% chance that Tesla will be worth more than $4 trillion by 2025.
Here are more of the top electric vehicle stocks to watch this week:
Ford
Ford (F) - Get Ford Motor Company Report currently finds itself in the war for vehicle electrification. Jim Farley is not satisfied with this position and wants to dethrone the big favorite and current champion, Tesla. Farley has just carried out a radical reorganization for the 118-year old company, by creating two distinct divisions: one specialized in electric vehicles, Ford e, and Ford Blue which is devoted to vehicles with internal combustion engines or gasoline cars. The objective is clear: To give wings to Ford e, whose mission could be summarized to catch up with Tesla.
Farley's efforts seem to be paying off. Ford is no longer taking orders for two versions of the Mach-E electric SUV, a spokesperson told TheStreet. The decision was prompted by strong demand. Ford is overwhelmed by great interest in this electric model that has breathed new life into the iconic Mustang. The company is therefore unable to meet all of this demand. In any case, its production capacities currently do not allow it.
TheStreet Quant Ratings rates Ford as a Buy with a rating score of B.
General Motors
In the automotive industry, the most important thing is timing. Let's consider the timetable given by car manufacturers when they announce and present a new model. Basically, when do they intend to start production, and on what date do they envisage the first deliveries. This calendar is important for potential customers because it tells them when they will receive the vehicles ordered, which can allow them to plan in the meantime.
General Motors (GM) - Get General Motors Company Report has understood this well. The company led by Mary Barra is on schedule to launch its first anti-Tesla weapon. Cadillac, the premium brand, will start production of the long-awaited Lyriq electric SUV around March 21, as initially planned, TheStreet just learned.
TheStreet Quant Ratings rates General Motors as a Buy with a rating score of B.
Rivian
It is a decision that risks leaving indelible traces. A decision that the young manufacturer of electric vehicles Rivian (RIVN) - Get Rivian Automotive, Inc. Class A Report would like not to have had to take as it risks having consequences on its ambitions in this very competitive industry where no missteps can be forgiven. Just days after raising prices, the manufacturer of electric vehicles has just canceled this decision in the face of a violent reaction from its customers. "Earlier this week, we announced pricing increases that broke the trust we have worked to build with you," said CEO RJ Scaringe, in a statement. He continued his mea culpa, going so far as to say that Rivian betrayed his clients' trust.
Rivian raised the price of its electric pickup truck R1T by 17% and its SUV R1S by 20% this week due to material costs and the ongoing chip shortage, the company said. The price increase applied to all customers, both new and those who had already placed their order. But the decision was very badly received by customers and led to order cancellations.
TheStreet Quant Ratings does not have a rating for Rivian.
Volkswagen
Volkswagen (VLKAF) will be squaring off in Germany as both companies recently unveiled plans to operate electric vehicle manufacturing plants 140 miles away from each other. Volkswagen just said it would spend some $2.2 billion to build a new manufacturing facility for its Trinity electric vehicle that will be built near its main plant in Wolfsburg.
Construction is to begin as early as spring of 2023, Volkswagen said, with the net carbon-neutral Trinity model rolling off the assembly line from 2026. The company said it is aiming for a production time of 10 hours per vehicle by employing such strategies as fewer components, more automation, and leaner production lines. The company's Accelerate strategy includes such features as a much shorter charging time and a range of over 700 kilometers (435 miles).
TheStreet Quant Ratings does not have a rating for Volkswagen.
Tesla
Every week a new twist. The legal saga between Musk and the SEC is not lacking in twists, hooks, or surprises. It sometimes feels like being in a courtroom wondering what is the next trick that one and the other side will play. Musk seems to enjoy this game. He has just asked federal judge Allison Nathan to end the settlement announced in 2018 with the regulator to end the investigation into the famous Tweetgate affair. "The SEC’s vendetta against Mr. Musk should be put to a stop," Alex Spiro, an attorney for Musk asked Nathan in a memorandum filed on Tuesday. "Mr. Musk respectfully requests that this court quash the challenged requests."
Tesla has just launched a recruitment campaign for its Gigafactory in Berlin, just two days after obtaining the permit. On its website, the car manufacturer has posted various job advertisements and above all displays a message that could not be clearer: "Giga Berlin is allowed to open," Tesla posted on Twitter in German. The company added: "Come join the team!" This frenzy suggests that Tesla will soon start manufacturing the Model Y electric SUV in Germany, aimed primarily at the European market.
TheStreet Quant Ratings rates Tesla as a Hold with a rating score of C+.
BMW
BMW (BMW) just got a bit of bad news, and it couldn't have happened at a worse time. The German luxury vehicle manufacturer is, like all players in the industry, racing to offer electric cars as soon as possible. Eyes are also on the industry as gasoline prices at the pump hit records in the wake of soaring crude-oil prices. EV experts say BMW is one of the brands that can compete with Tesla in electric vehicles. The premium vehicle maker has a portfolio of models that may indeed pull consumers away from buying Tesla.
For example, the BMW i4 electric model can go toe-to-toe with Tesla's Model 3. But while it attends to the positive EV fronts, BMW must now also take care of a problem with its gasoline cars. The automotive group must recall nearly 1 million vehicles in the U.S. to fix a problem related to the engine ventilation system. The system could overheat and increase the risk of fire. This is the second time the automaker has recalled some of the cars. Specifically, BMW will recall 917,106 cars, according to a notice from the National Highway Traffic Safety Administration.
TheStreet Quant Ratings rates General Motors as a Buy with a rating score of B.
Porsche
Porsche said Wednesday that it is suspending production of its electric Taycan model at the car maker's Stuttgart-Zuffenhausen plant due to a lack of components caused by Russia's invasion of Ukraine. The company said in an email statement to TheStreet that production will be halted until the end of next week. Roughly 200 Taycan cars cannot be built per day. European carmakers are struggling to obtain crucial wire harnesses as suppliers in western Ukraine have been shuttered by Russia's invasion, forcing them to curtail production, Reuters reported.
Production in the Porsche plant in Leipzig, which has been suspended until the end of this week, will start up again in reduced operation in the coming week due to an improved supply situation, the company said. The production of the 911 and 718 model series in the main plant is currently not affected, Porsche said and the production of the Cayenne in Bratislava is being maintained this week as well.
In sport, the challengers know that they must solidify the rare opportunities that will present themselves to bring down the big favorites. They must be realistic and seize any opportunity to destabilize the champion.
The recent surge in oil prices, which translates into an explosion in the price of a gallon of gasoline at the pump, is one of those rare opportunities for Tesla's young rivals.
This situation was provoked by the economic and financial sanctions imposed by the West on Russia after its invasion of Ukraine. In view of the surge in the price of gasoline, we can logically speculate that consumers will show interest in electric vehicles.
Factors, such as the increasing cost of fuel and the government initiatives across different geographies to increase awareness about EVs, are expected to promote the usage of electric vehicles over the forecast period, a recent research report from Mordor Intelligence research said.
But contrary to what one might have expected, it is not the newcomers to electrification who will benefit from it. Indeed, Lucid (LCID) - Get Lucid Group, Inc. Report and Rivian (RIVN) - Get Rivian Automotive, Inc. Class A Report for example, are having difficulty increasing their production rates. Rivian is expected to provide an update on its production status when the automaker releases its quarterly results on March 10.
But the company, which counts Amazon (AMZN) - Get Amazon.com, Inc. Report (17.74%, according to FactSet) and Ford (F) - Get Ford Motor Company Report (11.42%) as shareholders, admitted during its quarterly earnings in December that it is experiencing difficulties in its supply chain and will ramp up production. It said that production would fall “a few hundred vehicles short” of its goal to make 1,200 EVs by the end of 2021.
Basically, a consumer who places an order with Rivian for one of its two models, the R1T electric pickup and the R1S SUV, will not have visibility on when they can take possession of their vehicle.
The same can be said of Lucid, which recently announced that it could start construction of a second production site based in Saudi Arabia. Lucid has tried to reassure consumers of its ability to increase production rates. In particular, the automaker said its plan to expand its one and only factory in Casa Grande, Ariz., was still on track.
As for Fisker, if the company has unveiled the PEAR, an all-electric sedan sold at less than $30,000 at the base price, we still have no details on the start date of production.
It, therefore, appears that the biggest beneficiary of soaring gasoline prices in the automobile world would be Tesla because General Motors (GM) - Get General Motors Company Report, and Ford are also overwhelmed with orders for their highly anticipated electric models.
Tesla, on the other hand, has just obtained the permit to start production in its gigafactory near Berlin. Production should start there by the end of the month.
Tesla May Be Worth $4 Trillion Very Soon
The electric vehicle manufacturer led by Elon Musk remains the world's leading electric vehicle manufacturer.
Black and his firm The Future Fund recently published their calculations. These are very optimistic and count on a massive adoption of electric vehicles around the world.
Black's estimate is based on the following assumptions: Electric vehicles will be more popular by 2030, with 60% penetration. Tesla, which is currently the leader of this booming market, will increase its leadership, with a market share that will reach 21%.
The production and deliveries of the firm led by Elon Musk will also explode, predicts Black. Sales of global light-electric vehicles should reach 85 million units per year, including 10 million sold by Tesla.
Tesla's operating margin, which was 14.1% in 2021, will jump to 26.1% in 2030 thanks to an improvement in technologies related to batteries in particular. The automaker's adjusted earnings per share (EPS) would go from $6.79 in 2021 to $100 in less than 10 years, Black calculates.
increase from 4.6 million in 2021 to 51 million in 2030.
It must be said that most vehicle manufacturers also have hyper-aggressive production targets. GM and Ford, for example, are talking about producing 2 million units per year from 2025 for the first and 2026 for the second. The two groups produced just 50,000 electric vehicles each in 2021.
Black isn't the first investor to see Tesla's market capitalization soar to $4 trillion. In March 2020, Cathie Woods' Ark Invest predicted that there was over a 25% chance that Tesla will be worth more than $4 trillion by 2025.
Here are more of the top electric vehicle stocks to watch this week:
Ford
Ford (F) - Get Ford Motor Company Report currently finds itself in the war for vehicle electrification. Jim Farley is not satisfied with this position and wants to dethrone the big favorite and current champion, Tesla. Farley has just carried out a radical reorganization for the 118-year old company, by creating two distinct divisions: one specialized in electric vehicles, Ford e, and Ford Blue which is devoted to vehicles with internal combustion engines or gasoline cars. The objective is clear: To give wings to Ford e, whose mission could be summarized to catch up with Tesla.
Farley's efforts seem to be paying off. Ford is no longer taking orders for two versions of the Mach-E electric SUV, a spokesperson told TheStreet. The decision was prompted by strong demand. Ford is overwhelmed by great interest in this electric model that has breathed new life into the iconic Mustang. The company is therefore unable to meet all of this demand. In any case, its production capacities currently do not allow it.
TheStreet Quant Ratings rates Ford as a Buy with a rating score of B.
General Motors
In the automotive industry, the most important thing is timing. Let's consider the timetable given by car manufacturers when they announce and present a new model. Basically, when do they intend to start production, and on what date do they envisage the first deliveries. This calendar is important for potential customers because it tells them when they will receive the vehicles ordered, which can allow them to plan in the meantime.
General Motors (GM) - Get General Motors Company Report has understood this well. The company led by Mary Barra is on schedule to launch its first anti-Tesla weapon. Cadillac, the premium brand, will start production of the long-awaited Lyriq electric SUV around March 21, as initially planned, TheStreet just learned.
TheStreet Quant Ratings rates General Motors as a Buy with a rating score of B.
Rivian
It is a decision that risks leaving indelible traces. A decision that the young manufacturer of electric vehicles Rivian (RIVN) - Get Rivian Automotive, Inc. Class A Report would like not to have had to take as it risks having consequences on its ambitions in this very competitive industry where no missteps can be forgiven. Just days after raising prices, the manufacturer of electric vehicles has just canceled this decision in the face of a violent reaction from its customers. "Earlier this week, we announced pricing increases that broke the trust we have worked to build with you," said CEO RJ Scaringe, in a statement. He continued his mea culpa, going so far as to say that Rivian betrayed his clients' trust.
Rivian raised the price of its electric pickup truck R1T by 17% and its SUV R1S by 20% this week due to material costs and the ongoing chip shortage, the company said. The price increase applied to all customers, both new and those who had already placed their order. But the decision was very badly received by customers and led to order cancellations.
TheStreet Quant Ratings does not have a rating for Rivian.
Volkswagen
Volkswagen (VLKAF) will be squaring off in Germany as both companies recently unveiled plans to operate electric vehicle manufacturing plants 140 miles away from each other. Volkswagen just said it would spend some $2.2 billion to build a new manufacturing facility for its Trinity electric vehicle that will be built near its main plant in Wolfsburg.
Construction is to begin as early as spring of 2023, Volkswagen said, with the net carbon-neutral Trinity model rolling off the assembly line from 2026. The company said it is aiming for a production time of 10 hours per vehicle by employing such strategies as fewer components, more automation, and leaner production lines. The company's Accelerate strategy includes such features as a much shorter charging time and a range of over 700 kilometers (435 miles).
TheStreet Quant Ratings does not have a rating for Volkswagen.
Tesla
Every week a new twist. The legal saga between Musk and the SEC is not lacking in twists, hooks, or surprises. It sometimes feels like being in a courtroom wondering what is the next trick that one and the other side will play. Musk seems to enjoy this game. He has just asked federal judge Allison Nathan to end the settlement announced in 2018 with the regulator to end the investigation into the famous Tweetgate affair. "The SEC’s vendetta against Mr. Musk should be put to a stop," Alex Spiro, an attorney for Musk asked Nathan in a memorandum filed on Tuesday. "Mr. Musk respectfully requests that this court quash the challenged requests."
Tesla has just launched a recruitment campaign for its Gigafactory in Berlin, just two days after obtaining the permit. On its website, the car manufacturer has posted various job advertisements and above all displays a message that could not be clearer: "Giga Berlin is allowed to open," Tesla posted on Twitter in German. The company added: "Come join the team!" This frenzy suggests that Tesla will soon start manufacturing the Model Y electric SUV in Germany, aimed primarily at the European market.
TheStreet Quant Ratings rates Tesla as a Hold with a rating score of C+.
BMW
BMW (BMW) just got a bit of bad news, and it couldn't have happened at a worse time. The German luxury vehicle manufacturer is, like all players in the industry, racing to offer electric cars as soon as possible. Eyes are also on the industry as gasoline prices at the pump hit records in the wake of soaring crude-oil prices. EV experts say BMW is one of the brands that can compete with Tesla in electric vehicles. The premium vehicle maker has a portfolio of models that may indeed pull consumers away from buying Tesla.
For example, the BMW i4 electric model can go toe-to-toe with Tesla's Model 3. But while it attends to the positive EV fronts, BMW must now also take care of a problem with its gasoline cars. The automotive group must recall nearly 1 million vehicles in the U.S. to fix a problem related to the engine ventilation system. The system could overheat and increase the risk of fire. This is the second time the automaker has recalled some of the cars. Specifically, BMW will recall 917,106 cars, according to a notice from the National Highway Traffic Safety Administration.
TheStreet Quant Ratings rates General Motors as a Buy with a rating score of B.
Porsche
Porsche said Wednesday that it is suspending production of its electric Taycan model at the car maker's Stuttgart-Zuffenhausen plant due to a lack of components caused by Russia's invasion of Ukraine. The company said in an email statement to TheStreet that production will be halted until the end of next week. Roughly 200 Taycan cars cannot be built per day. European carmakers are struggling to obtain crucial wire harnesses as suppliers in western Ukraine have been shuttered by Russia's invasion, forcing them to curtail production, Reuters reported.
Production in the Porsche plant in Leipzig, which has been suspended until the end of this week, will start up again in reduced operation in the coming week due to an improved supply situation, the company said. The production of the 911 and 718 model series in the main plant is currently not affected, Porsche said and the production of the Cayenne in Bratislava is being maintained this week as well.
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