Who says you can’t teach an old dog new tricks?
After years of getting their butts kicked by Tesla (NASDAQ:TSLA), these “old dogs” of the auto world are learning the “new tricks” of electric vehicles, and each are going all-in with EVs.
This is a broad market shift that could fundamentally reshape the $3 TRILLION transportation industry.
First, it was Volkswagen in March.
The world’s largest auto maker by volume basically said, at a widely watched investor event, that it plans to take over Tesla in electric vehicles. To wit, the German auto maker is calling for 450,000 EV deliveries this year alone, led by the ID.4.
Looking further out, Volkswagen calls for more than half of its cars sold by 2030 to be fully electric and believes its investment and partnership with QuantumScape (NYSE:QS) will yield game-changing benefits in battery development.
Investors cheered the all-out assault into the EV space, and sent Volkswagen stock soaring.
Then, it was Ford’s turn. Ford had its big EV event in late May, where it staged a similar all-out assault into the EV space. The “old hat” automobile company talked up new electric models, such as the Mustang Mach-E crossover, E-Transit, Bronco, and F-150 Lightning. Where, according to Ford, pre-orders for its F-150 Lightning stand at over 70,000 units.
The Detroit automaker also announced that 40% of its cars sold will be fully electric by 2030 – versus 50% for Volkswagen – and upped its electrification spending forecast to over $30 billion by 2025.
As was the case with Volkswagen stock, investors celebrated the Ford EV event, and in the wake of the event, have pushed Ford stock to its highest levels since 2015.
And, most recently, it was GM’s turn. This month, GM boosted its EV spending plans by 30% to $35 billion by 2025, announced two new battery plants, and said that it wants to lead in electric vehicles.
Guess what GM stock did in response? Yep. Like Volkswagen stock and Ford stock, it rallied.
Do you see what’s going on here?
The old guard of the auto industry has finally come to the understanding that EVs are the future, and they are now going all-in with all-electric cars.
How successful they’ll be remains to be seen. But considering Volkswagen, GM, and Ford all have more cash on their balance sheet than Tesla, you can certainly bet that the old guard will – at the very least – put up a good fight.
What’s the investment implication of all this?
It’s probably time to start diversifying your EV investments, because the EV world itself is going to start getting diversified.
Throughout the 2010s, there was really only one company making EVs at scale and one stock to buy to capitalize on the EV market – Tesla.
In the 2020s, every auto maker in the planet is going to be making EVs at scale, and every auto stock will double as an EV stock. The upside thesis for these “new EV stocks”, of course, is that none of them command the near $600 billion valuation of Tesla – meaning Tesla is already priced for runaway success in EVs, while other auto makers are not.
That’s why buying Ford stock… buying GM stock… and buying Volkswagen stock makes sense today. And it’s why a lot of folks are doing just that.
But, to be frank, those stocks will give you simply good returns in the EV Revolution of the 2020s… not great returns.
That’s because companies like Ford, GM, and Volkswagen have legacy auto businesses that will lose ground as their EV businesses gain ground. This will have a dilutive effect on their growth rates in coming years, and dilutive effect on their stock price returns.
Whose growth rates won’t be diluted?
Brand-new entrants into the auto market, that are designing new and exciting EVs and which don’t have any legacy cars with declining sales.
I’m talking companies like Fisker (NYSE:FSR), the new EV company that is employing a “platform-sharing” business model which essentially allows Fisker to focus on what its best at – designing awesome luxury cars – and outsource everything else. In outsourcing everything else, Fisker reduces its cost basis and can sell very high-quality cars, at very reasonable prices. I think this company will be a power player in the EV industry at scale.
I’m also talking companies like ChargePoint (NYSE:CHPT) – the world’s largest EV charging company, which will see enormous growth as gas stations globally are replaced by EV charging stations – and NIO (NYSE:NIO) – China’s leading EV maker.
Then there’s Lucid Motors (NYSE:CCIV), the company that I think has what it takes from a talent, technology, branding, and resources perspective to be the next Tesla.
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Each of these Next-Gen Mobility stocks could post early-Tesla-like returns, including a secret startup that’s spearheading the self-driving revolution and a company I consider my EV “sleeper” stock of the decade.
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That’s the good news. Here’s the better news: The party is just getting started.
Over the next decade, the number of EVs sold in the world is going to grow by many multiples, and as it does, the stock prices of the best EV makers are going to soar.
Ready to find your next 10X winner in the EV space? Click here to find out more.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s the theme of his premiere technology-focused service, Innovation Investor. To see Luke’s entire lineup of innovative cutting-edge stocks, become a subscriber of Innovation Investor today.