The Latest News in the EV Sector

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The Latest News in the EV Sector

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Anyone who knows me or has read my stuff throughout the years knows that I’m a car guy.

I’ve always liked cars… especially cars that are really nice and really fast. I have owned dozens throughout the years – including electric vehicles (EVs). And over the past year one of my main focuses, much like the rest of the analyst community, has been the EV sector.

Just last year, the International Energy Agency (IEA) stated that electric vehicles sales hit 6.6 million worldwide. And that growth continued into this year with 4.3 million EVs sold in the first half of the year.

But even with sales growth, the EV sector has not had an easy ride.

So, in today’s Market360, let’s take a look at what’s been going on in the EV space and where you should go from here.

EV Sector Breakdown

2022 has been a big year for EVs in the U.S. But as with any transformative trend, getting here has been a little bumpy at times. And the biggest bump this year was the battery shortage.

As you may recall this past summer, the lithium-ion battery shortage was a struggle as lithium, nickel and cobalt prices took off. One of the biggest barriers for EV adaptation is cost – as it stands, most EVs cost more than what the average consumer can afford. And the rise in battery metals caused already expensive EV cars to become even more expensive.

I should also add that the war in Ukraine also impacted EV manufacturers throughout the year as import bans on Russian products took a toll on the nickel supply. And that the higher demand for EVs also contributed to the battery manufacturing struggles.

To help balance the impact of these shortages, companies like Tesla, Inc. (TSLA) raised the prices of their electric vehicles.

To help balance the impact of these shortages, companies like Tesla, Inc. (TSLA) raised the prices of their electric vehicles.

But the fact is, while the shortage of raw materials certainly poses a challenge to the EV revolution, the revolution is still alive and well.

BloombergNEF states:

The rising costs of batteries does not derail near-term EV adoption. Some of the factors that are driving high battery raw material costs are also pushing the price of gasoline and diesel to record highs, which is driving more consumer interest in EVs.

Bottom line: Consumers like the idea of EVs – and manufacturers are trying to meet demand. In fact, there are several new and highly anticipated models from companies such as Chevrolet, Ford Motor Company (F), and Volkswagen AG (VWAGY) set to be released by the end of 2024.

However, with more companies stepping into the EV space, the market is becoming more saturated. And some of the EV darlings are being left behind.

Competition is Heating Up

The biggest EV darling is Tesla, which has been the number-one selling electric vehicle brand in the U.S. since 2015. However, with competition heating up, Tesla’s dominance is starting to slip away.

For the third quarter, the company reported that deliveries were around 343,000. Production was over 365,000 vehicles. This is up from deliveries of about 241,000 and production around 230,000 in the previous year.

But the stock itself is down more than 56% year-to-date – falling to a new 52-week low on Friday. And even with the growing production and deliveries, the company has become becoming a sore spot for investors.

And that sore spot is causing Tesla to lose some of its footing in the U.S. EV market.

The S&P Global Mobility stated:

Tesla’s position is changing as new, more affordable options arrive, offering equal or better technology and production build. Given that consumer choice and consumer interest in EVs are growing, Tesla’s ability to retain a dominant market share will be challenged going forward.”

There are two other popular EV companies that have also started to feel the heat: Rivian Automotive, Inc. (RIVN) and Lucid Group, Inc. (LCID).

Last November, Rivian made its debut on the U.S. stock market and took the number-one spot as the biggest IPO in 2021, as well as the 12th-biggest in history. It also had the financial support of Ford Motor Company (F) and Amazon.com (AMZN). However, the company burned through cash, and Ford eventually sold about eight million of its RIVN shares.

I should also add that just this week the company announced its plans to hit the brakes on its partnership with Mercedes-Benz to manufacture electric commercial vehicles in Europe. The company’s CEO RJ Scaringe said that Rivian is moving to focus on the “best risk-adjusted returns on capital investments.”

Rivian, like most other EV companies, is also feeling the sting of the rising raw material prices. The company is also experiencing increased difficulties with production and now, without the help of Mercedes-Benz, will have a harder time taking the lion’s share of the EV market.

Lucid is no stranger to the raw materials issue either. A year ago the company was gearing up to take a large portion of the EV market.  But now quarterly results are falling short of expectations. Back in September Lucid reported a backlog of 34,000 orders as production problems continued to impact the company. And now Lucid is appears to be struggling to get by.

In fact, the company has begun to offer workers a discount to buy its luxury vehicles before yearend to help boost its delivery numbers. I should also add that Lucid has emailed customers offering about a 10% discount on any expired orders.

Wrapping Up

Clearly momentum in the EV sector is slowing, and right now, the losers are shaping up to be Tesla, Rivian and Lucid.

Personally, I think the winner will be Ford, which may come as a surprise given its D-rating in Portfolio Grader (Rivian also sports a D-rating, while Lucid has an F-rating and Tesla stands pat with a C-rating.)

The reality is Ford has superior fundamentals. For the fourth quarter, earnings are forecast to surge 138.5% year-over-year to $0.62 per share, up from $0.26 per share in the same quarter of last year. Revenue is anticipated to rise 15.4% year-over-year to $40.69 billion – almost 50% more than the $26.11 billion Tesla is projected to bring in in the fourth quarter. Meanwhile, Rivian and Lucid are estimated to lose money.

Ford is also expected to be the leading EV brand in the U.S.  You may recall that Ford recently reiterated that it expects to produce a total of 600,000 EVs annually by the end of 2023 – and plans to produce two million EVs annually by 2026. The company’s popular Mustang Mach-E will likely account for the majority of these EVs, as Ford expects global production of 270,000 per year. The Mustang Mach-E has also made Ford the number-two EV brand in the U.S.

I should also add that Ford is expected to grow its sales and earnings in the fourth quarter. Currently,

And not to mention the stock is currently outperforming Tesla, Rivian and Lucid, as it is only down 40% year-to-date. As I mentioned, Tesla is down about 56% year-to-date. Rivian and Lucid are down about 78% and 80%, respectively.

The bottom line: Ford has aligned its business to profit in this EV revolution and it has the fundamentals to back it up.

Sincerely,

Source: InvestorPlace unless otherwise noted

 

 

Louis Navellier

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What’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.

It’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Amazon.com (AMZN), Ford Motor Company (F), Volkswagen AG (VWAGY)


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