It feels strange to know that people are starting to leave behind the biggest auto manufacturers in north america (Ford(F), GM(GM), Dodge(FCAU)) and moving to a more “carbon friendly” smaller company that manufactures electric vehicles. Aside from Tesla(TSLA) the other dedicated EV manufacturers are almost like a niche market right now. It makes sense though, EV are not practical in some parts of North America. The small EV manufacturers however are trying really hard to gain some ground in the southern US and I feel they are doing an extremely good job of it.
Now I know what you are thinking, “there is more than just Tesla that does only EV?”. There is actually quite a few in North America. There is even one that is from Canada who is based out of Vancouver. This is all very positive news from many different points of view, but is there a down side? Is it possible that EV right now are more of a bubble than anything else and that Tesla along with the other EV manufactures are moving up on rumor and no real base? I feel that could possibly be the case honestly. There is a strong argument about how the materials for EV are mined and what their batteries are made of. Are they really as ethical as we are lead to believe?
I think that this is an attempt to make a shift from fossil fuels and even though it might not be the end product that will fix the carbon footprint for vehicles, they need to start somewhere. This has also somewhat been surprising for the other major auto manufacturers since most of them have only really come out with 1 EV each which to me is somewhat surprising. They have the means to be the top and revolutionize the EV market because they have the infrastructure and the technology but just do not seem to be attempting to pursue the market. Maybe its a good thing and maybe it will leave room for someone else to step up and create new opportunity for investors.
There are some things to take into consideration right now though with the EV market. It is still fairly new and most of the companies aren’t really making any money. One of those reasons is because they do not have the facilities to keep up with demand. This is somewhat a good thing but they also need to spend any money they have into building new facilities and expanding which isn’t easy to do, or cheap, especially in North America. Since most of these companies are so new, they have not had time to generate much revenue therefore making it hard to expand. I hope that in the near future though there could be grounds for maybe some takeover or some seriously heavy investments into these companies. So, who are some of these EV companies that I speak of? Well, I’ll tell you about 3 of them starting with the first that needs no introduction.
Tesla(TSLA), they are actually even currently the biggest car manufacturer in the world right now per market cap finally knocking off Toyota(TM) from their high perch. Tesla currently manufactures and sells 4 different vehicles including the Model S, Model 3, Model X and Model Y. Thats a decent amount of vehicles and not to mention they are also the top selling manufacturer of EV. Even though that is all very impressive and to be honest I am quite impressed by Tesla (don’t ask Colby how he feels) but they have never had a profitable year. They have had profitable quarters but never a full year. They have truly been the front runner of this EV craze lately and I totally get it, good for them. I just feel how ever that they are VERY over priced right now and over valued, they are on my watch list but I watch them from a distance.
Tesla(tsla)- $1002.25/share, $185.9 Billion Market cap, NA P/E, -4.9 EPS, Dividend Yield NA.
This next company has really been making some waves lately and they are called Nikola Corporation(NKLA). They have been really diversifying their EV fleet including their latest which is a pickup truck. They currently have 6 different EV which are the Nikola NZT, Nikola One, Nikola Two, Nikola Tre, Nikola Reckless and the Nikola Badger which is their new pickup. They only just went public and started trading a few weeks ago but they already have gone up 7x what they opened at which is quite impressive. I feel that they are going to be expanding even more past their current lineup which is mostly focused on long haul transportation and recreational vehicles.
Nikola Corporation(NKLA)-$71.04/Share, $25.7 Billion Market Cap, NA P/E, 0.09 EPS, Dividend Yield NA.
The last company I would like to talk about is one that i have been following for about a year now and they are called Electrameccanica Vehicles Corp(SOLO). These guys are very unique in the sense that they are going after a different type of market than Nikola and Tesla. They are trying to cater to the daily drivers in congested areas of big cities which I think is a good idea. They currently only have 3 vehicles which are the Solo, Tofino and the eRoadster. The Solo which is the car for their main target audience is only 1 seater 3 wheel compact car. “Compact” even seems like too big of a word for it haha. They are a very small company but just last year they opened up another manufacturing facility and are working on expanding. I currently hold them in my portfolio because I feel they have LOTS of room to grow or the potential to be bought out by a bigger company. I mean, they have over $2 Billion in back orders right now that they cannot fill fast enough. I feel that they would greatly benefit from making a 4 door sedan in the future, or something a little bigger then a 1 seater. Being such a small company right now though they could possibly be attractive to another company to be bough out, but that is just my speculation.
Electrameccanica Vehicles Corp(SOLO)-$1.88/Share, $118.4 Million Market Cap, -8.2 P/E, -0.65 EPS, Dividend Yield NA.
I said that the EV market was a bubble and at this point in north america that’s what it feels like it is starting out as. The way that Tesla and Nikola has been skyrocketing this year shows just how much volatility there is in this market/sector right now and its something to keep an eye on for sure. Are these the only opportunity for investment in this sector? Of course not, there are still the other big manufacturers who are dipping their toes in and have EV of their own. I just feel like these few that I mentioned could be the next big thing, minus Tesla who is already there (again, don’t ask Colby if they are). The popularity in EV is growing and so are the companies, so why not get in sooner rather than later?
That is all for today and remember everyone, invest in yourself first.