3 Alternatives to Tesla Stock in the Electric Car Space

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General Motors Company (NYSE:GM), BYD Company Limited (OTCMKTS:BYDDF) and Bayerische Motoren Werke Aktiengesellschaft (OTCMKTS:BMWYY) are good options for longer term investors who want to profit from the electric car phenomenon but don’t want to deal with the uncertainties and volatility of Tesla Inc (NASDAQ:TSLA) stock.

Of course, in just the last several months, Tesla has had production issues, an episode of weirdness by its CEO, liquidity issues and bad accident issues. Moreover, Tesla stock has gyrated pretty wildly this year, falling starting the year close to $350, then falling to around $250 in April before recovering to around $350 again recently.

GM, BYD and BMW have avoided most of these issues, and all three appear to make high-quality electric cars (or be poised to make high-quality electric cars) that will resonate with consumers. Longer term, conservative investors should buy these three to exploit their leverage to the fast-growing electric car space.

Alternatives to Tesla: General Motors (GM)

Alternatives to Tesla: General Motors (GM)

Source: GM

GM plans to go “all-in” on electric vehicles, as the company said on June 12 that it would “launch more than 20 new zero-emissions vehicles in global markets by 2023,” The Detroit Free Press reported. The newspaper also quoted GM CEO Mary Barra as saying that GM is “committed to an all-EV future,” and noted that the company plans to increase production of its long-range electric Bolt vehicle in the fourth quarter of this year in order to meet higher demand.

In March, the last month that GM released sales figures for its electric cars, the automaker sold 1,774 Bolts in the U.S., up 81% year-over-year. Sales of GM’s lower-range Volt vehicles fell 16% year-over-year to 1,782, but obviously the company’s overall sales of electric cars rose significantly in March 2018 versus 2017.

Supply constraints, however, have contributed to the fact that Bolt sales have dropped significantly versus their levels at the end of last year, when GM was selling close to 3,000 of the vehicles per month. But the fact that 1,774 Bolts were sold in the U.S. in March, up from 1,424 in February, along with the report that the company plans to increase production of the vehicle in the fourth quarter, indicate that demand for the vehicle is still quite strong. Moreover, as electrek points out, GM should benefit from Tesla’s backlog and the fact that the Bolt, unlike the Model 3, can be leased.

Over the longer term, GM should be helped by the fact that it can spend much more money than Tesla on electric vehicle R&D and production. Additionally, GM is an extremely popular brand in China, where nearly four times as many electric vehicles were sold as in the U.S. last year and where the government is taking many steps to ensure that electric vehicle sales continue to grow rapidly.

Alternatives to Tesla: BYD (BYD)

Alternatives to Tesla: BYD (BYD)

Speaking of China, BYD is the leading electric car maker in the country, according to Cleantechnica. In March 2018, the company, which also makes batteries for electric cars, had the second, fourth and fifth best selling electric vehicles in the country and had its second best month ever, selling over 13,000 vehicles.

As Beijing takes more steps to promote electric cars, BYD stock should benefit tremendously. For example, Bloomberg noted that next year China, motivated by its desire to deal with the country’s massive pollution problem, will start requiring manufacturers to produce a certain number of zero and low emission cars. As consumers are forced to get used to buying more electric cars, EVs will become more accepted and popular, benefiting BYD in the process. Not only will more people be willing to buy BYD’s vehicles, but sales of its batteries should also surge.

BYD’s EPS sank to 2 cents in the first quarter, versus 20 cents in the same period a year earlier. But according to a Daiwa Securities analyst quoted by The South China Morning Post, the decline was due to adjustments of Chinese government subsiidies. However, the analyst says that new cars the company is launching in the second half of this year will qualify for higher subsidies, enabling its results to recover. Moreover, 18 of 27 analysts remain upbeat on BYD stock, Bloomberg data shows, according to the newspaper.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

It’s interesting to note that Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A, NYSE:BRK.B) invested $230 million in BYD in 2008 in exchange for a 10% stake in the company. As electric vehicles become much more popular in many different countries, Buffett’s connections around the world should enable the Chinese automaker to start selling cars and batteries in many foreign markets, further boosting its profits and revenue and causing BYD stock to rally further.

Alternatives to Tesla: BMW (BMW)

Alternatives to Tesla: BMW (BMW)

BMW does not plan to start mass producing electric vehicles until 2020 because it wont be able to do so profitably until then, Reuters recently quoted the company’s CEO as saying.

But of course, the company’s brand is tremendously well-respected, rivaling that of Tesla. Consequently, when the German automaker finally does mass produce vehicles, its strong brand alone should be able to attract many buyers.

Moreover, the company’s 2019 BMW i8 Roadster, a hybrid electric vehicle, got very strong reviews. The company’s ability to create a well-received hybrid vehicle bodes well for its ability to create popular all-electric vehicles.

Car and Driver said that the vehicle “looks great” and gives the driver “plenty of space,” adding that the vehicle provides plenty of storage

The magazine claims that the vehicle does not accelerate quickly compared to vehicles with similar prices, but BMW buyers aren’t looking to race; they’re paying for luxury, the brand name and the car’s green bona fides.

More enthusiastic is Motor Trend, which compared the vehicle to the Back To the Future movie’s DeLorean and wrote (in contrast to Car and Driver) that the BMW “flies down a country road better than ever … (and) the always-peaked torque is more than enough to zip you around in most situations”

Additionally, the vehicle is exceptionally quiet, and the gas engine rarely has to be utilized, Motor Trend reported.

BMW, which intends to launch 25 new electric models by 2025, plans to invest at least 100 million euros in battery cell research, Reuters reported. The large number of models, along with the huge R&D investment, should help to make BMW a leader in the sector.

As of this writing, Larry Ramer did not have shares of any of the companies mentioned. 


Article printed from InvestorPlace Media, https://investorplace.com/2018/06/3-alternatives-to-tesla-stock-in-the-electric-car-space/.

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