Comparison of EV Stocks
With electric cars looking like the future of the automobile, there have been multiple new startups aimed at competing in the now-crowded market of electric vehicles. We will be comparing multiple American companies that produce EVs. Apart from Tesla, all of these automakers have one goal in common: to stop Tesla’s dominance and eat into their market share. Amidst the current economic downturn and fears of a recession, having cash available to invest when EV stock prices are low is the best way to earn great returns in the future.
Tesla - TSLA
Tesla went public on June 29, 2010. The stock has undergone multiple stock splits, with Tesla filing for a 3-1 split in June 2022 with the SEC. Since 2010, Tesla stock has grown by over 3000%. However, many see its stock price as overvalued due to the massive amount of hype behind the stock. This can be seen in its extremely high PE ratio of 94.5. That being said, even though it's a volatile stock, Tesla has held the number 1 spot for EVs sold in America. However, due to COVID lockdowns and supply shortages, Tesla has been selling fewer vehicles with 310,048 vehicles in Q1 and 254,695 vehicles in Q2. Production delays associated with COVID-19 are taking a toll on the production of vehicles, with customer delivery times creeping into the 11-12 month period. However, Tesla does seem to be the least affected by these shortages out of all of the EV companies due to it producing most of its own parts.
Rivian - RIVN
With the most recent IPO out of all of these companies, Rivian went public on November 10, 2021. The stock IPO-ed at $78 and has fallen to more than half of that as of June 2022. The company currently produces two electric vehicles; the R1T and R1S. Demand for these products has been extremely high, with the company announcing 90,000 pre-orders during Q1 2022 earnings. However, the company is currently struggling with production due to shortages of key raw materials. Also, inflation has taken a serious toll on the company with Rivian raising the price of its vehicles by either $12,000 (R1T) or $14,500 (R1S) only to backtrack due to massive backlash. However, as Rivian is a startup company, it’s expected that the company will not be profitable for the next year or so. Rivian had a net loss of $1.59 billion in Q1 2022 but has $17 billion remaining in cash to cover expenses and the launch of a lower-cost vehicle, the R2. With all of that said, Rivian currently occupies a unique area in the market by offering higher-end EV SUVs and trucks, with the only indirect competition being the F150 Lightning and Tesla Model X.
Lucid - LCID
Lucid went public on July 26, 2021. With its high-end Air sedan, Lucid primarily competes with Tesla and Porsche, two very established automakers at this point. The market for high-end vehicles above $100k is very small, which is a major concern for the automaker as demand is likely to fall off after saturating the market. As of Q1 2022, Lucid has around 30,000 reservations for its Air. However, the Saudi Arabian government has announced it would be purchasing 100,000 vehicles. Lucid has also expanded overseas, with plans to build a factory in Saudi in 2025, with a capacity of up to 155,000 vehicles. Similar to Rivian, Lucid has committed to raising the prices of its vehicles by around 11% as it struggles with production. That being said, the company feels confident with $5.4 billion in cash that it can last through a period of economic downturn and supply shortages.
General Motors - GM
General Motors is one of the big three car companies in the United States. GM recently launched the new Bolt EV with a starting price of $27,400, making it the more affordable EV on the market. Because of rising inflation, concerns over its slow transition to EV vehicles, and further supply constraints, the stock has been slowly falling since last year. This reflects the fact that GM had 20% less US sales than last year Q1. This may lead to the delay of future electric vehicles. However, General Motors remains positive that it will be able to sell the over 100,000 vehicles that are awaiting parts by the end of the year due to extreme demand for vehicles. It sold 582,401 vehicles, surpassing Toyota in Q2 sales.
Ford
Out of all of these car manufacturers, Ford is the oldest at 119 years old. Ford currently has two electric vehicle offerings: Mustang Mach E and F150 Lightning. These vehicles have been selling very well, but make up a small number of Ford’s sales compared to ICE (internal combustion engine) vehicles. Ford is investing $22 billion through 2025 into EVs and seems to be ahead of General Motors in the electrification race, having an EV truck whereas GM only has the expensive and niche Hummer EV. Inflation and supply shortages have also affected production like all of the automakers here, but this is the only stock that also pays dividends, with the most recent being $0.10 per share. Ford’s PE (stock price to earnings) ratio is currently 3.98 which makes the stock a value compared to the competition. For example, Tesla’s PE ratio is 94.5 to put perspective on how low Ford’s PE ratio is.
Conclusion
All of these automakers are currently facing big headwinds regarding inflation, supply shortages, and a potential economic downturn. Lucid and Rivian, the two startups of the group, are facing the most uncertainty as their bad timing into the markets will make it harder to weather the potential storm. The legacy brands GM and Ford are playing a big catchup game to transition from ICE to electric vehicles. With governments likely to ban ICEs in the future, these companies have a massive market to cover and will experience big growth if they get it right. That’s why investing during an economic downturn is a great idea, but you’ll need to decide which of these companies has the greatest growth potential.