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Time to look at stocks with EV exposure – Tesla and others 

  • April 21, 2020 02:48 AM AEST
  • Team Kalkine
Time to look at stocks with EV exposure – Tesla and others 

There has been a market buzz surrounding the Electric Vehicles (EV) for some time now. The EV revolution, which started in 2010, is all set to accelerate in 2020. The stock values of companies dealing in electric vehicles have gone up recently, and the stocks hold potential for long term investors.

Gold MTF non-AMP

Tesla stocks have surged after the buy rating given by the Goldman Sachs. The investment firm is bullish on Tesla and other stocks with EV exposure. In 2019, the electric car penetration in the market was only 2 per cent. However, Goldman Sachs new global autos team predicts that it will go up to 15 per cent by 2030.

When the electric vehicles came into the market, it was surviving with great difficulty as there were no buyers interested. However, during the last decade, multiple happenings have evolved the EV market. The growth has been so spectacular that from complete non-existence in 2010, more than 2 million EVs were delivered globally in 2018. That’s 2 per cent of global auto-deliveries.

Tailwinds that contributed to EV’s market growth

  • Pollution is a significant problem with combustion engines. Hence, worldwide legislation welcomed EVs to combat carbon emissions. The government bodies around the world started promoting EVs.
  • More charging centres developed to support EVs growth to the mainstream market.
  • EVs are now more affordable due to the reduction in battery cost.
  • Technology advancement increased its power and range of EVs available today.
  • In today’s generation, everyone is aware of and concerned about the environment.

All these factors are to stay here forever and will continue to contribute to the EV revolution. The sector is coming to the mainstream, and right now, it has tremendous scope for growth. As per IEA (International Energy Agency), by 2030 global EV sales will be somewhere between 20 to 30 million cars.

Why invest in Tesla?

As per analyst Mark Delaney, Tesla is way ahead in the market when it comes to manufacturing electric cars. It is expected to be well-positioned in the market for a long time. The strong brand value, early-mover advantage, and vertical integration, all these attributes make it a promising future.

Delaney also updated that as the Tesla Model Y is less priced than the Model X, this model helps the brand to have more traction in crossover and SUV market.

Goldman’s statement came in a time where the company is already performing impressively in the market. During the past seven sessions ending on April 17, 2020, the company shares are up by ~31 per cent.

Tesla is the market leader in the EV industry, with increasing market share. New models like Model 3 contributed to the company’s success. Tesla is on a rising spree, starting from only 250,000 vehicles delivered last year to around 1.13 million sold globally in the first half of this year. The company has reached 60 per cent share in Q2 from the 25 per cent share back in 2017.

In the next decade, the EV industry will be completely revolutionised, and it is expected to grow by at least 10-fold. The EV pioneer is rolling out new models and products, and it is projected to remain in a leadership position for over the next ten years. All these factors will drive TSLA stock higher, and it gives an excellent opportunity to long term investors.

Delaney said that the company’s annual growth rate is expected to remain more than 20 per cent. Tesla shares have jumped to almost double in the recent weeks after hitting the low of around $360 in March. As per the report of auto consultancy LMC Automotive, the stock’s value increased more than 25 per cent in the last week.

Other best stocks with EV exposure

  • Aptiv Plc.: If you want to invest in other stocks related to EV, you can invest in auto supplier Aptiv Plc. The company designs and creates the electrical architecture of cars. It has a strong brand value in high-voltage harnesses, connectors, and autonomy. Delaney said that Aptiv is well-positioned to capitalise on key trends of autonomous and electric cars.

  • General Motors (GM): It has some impressive lineup in the EVs segment. The top name in the EV segment is GM’s Chevrolet Bolt and Chevrolet Volt. The first model is the fourth top-selling EV in the US this year, and the second one is eighth-best selling in the US in 2019, respectively. These models fall into affordable ranges, and the low prices make them a hit with the masses. That is the strategy of GM to design the solid and affordable EVs, which the masses can afford. That’s an intelligent strategy. Once the EV starts to become mainstream in 2020, General Motors will have a successful lineup of products.

  • Ford: The US-based auto company is recently entering aggressively in the EV market, and the stocks are most likely to perform better over the next decade. Their best model - Ford Fusion Energi, was the 9th best-selling in the US last year and they have better plans for the future. Ford is working on a Mustang-influenced electric crossover to compete with Tesla’s Model Y. Ford is working on multiple EV products such as a fully electric Lincoln crossover, F-150 pickup truck, SUV, and a handful of hybrid models. It is expected that by 2025, Ford will be better positioned in the EV market.

  • Panasonic: It is one of the largest lithium battery producers in the world. These batteries are a crucial part of Electric Vehicles. It recently partnered with Tesla for their Model 3 line. The stock of the Company is registered on US pink list.

  • Albelmarle: You can look for lithium miners as well. Though the $6 billion giant has recently come down from its peak in 2017, the shares are anticipated to be performing good based on next year’s forecast of a single-digit price-to-earnings ratio. The best part is, it gives 2.4 per cent dividend, which is equal to less than 25 per cent of earnings.

Going by the data and expectations, it is clear that the EV’s have finally arrived and it will enter the mainstream this year. Furthermore, there will be exponential growth in the sector in the next decade.


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