Look Out, Tesla, The EV Industry is Poised to Take Off

By Duncan Ferris

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Our 'Key Themes For 2022' is designed to help you identify and capitalise on the areas to watch out for. Here we have electric vehicles.

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Electric vehicles (EVs) are taking off and 2022 looks like being the biggest year yet for the industry. With their rise fuelled by the need to go green and ditch fossil fuels, investors need to pay attention to the rise of the EV.

Statistics from 2021 clearly show how much the industry has grown. The electric vehicle (EV) market now represents 26% of new global vehicle sales. H1 sales had more than doubled compared to the year before, rising by 160% worldwide. 

In short, EVs are becoming harder and harder to ignore for drivers and investors alike.

But what is in store for the future and what are some of the most exciting companies within the EV sphere?

What is coming in 2022?

The world of EVs moves pretty fast. As such, there are quite a few changes on the way.

One major change, which we will go into more detail on a little later, is that the likes of Tesla can expect more competition in the EV market as more traditional manufacturers are releasing their own ambitious plans to transition to electric vehicle production. 

Supply chain issues

This could also be problematic for manufacturing. There is already a shortage of semiconductors, which are used more in EV manufacturing than in the production of combustion engine vehicles.

This has already caused production to cease at some factories. This is not a problem that is going away any time soon, with analysts predicting that the issue will continue into 2022. Further strain from increased EV production could make a solution more difficult or even worsen the issue.

Innovation

There are a few inventive products set to come to the market in 2022. For example, Aptera plans to release the world’s first solar electric vehicle, which it says will require no charging for most daily use.

The three-wheeled vehicle is relatively cheap with prices starting at $25,900, with Aptera claiming drivers can expect around 40 miles per day of charge-free driving.

Falling prices

While many people want to do their bit to limit emissions, some have felt priced out of getting on board with EVs.

The cheapest Tesla (NASDAQ: TSLA) has to offer will set you back just under $40,000 and Nissan’s Leaf, the cheapest EV available in North America, costs more than $27,000. Additionally, as EVs are a fairly new phenomenon, there are limited options for buying a pre-owned car.

However, this could all be about to change. Companies such as Kia have unveiled plans to produce cheaper vehicles to try and secure their slice of the EV pie. This will in turn push other carmakers to keep their pricing competitive.

Indeed, EVs are on course to be cheaper than traditional vehicles by 2027, according to forecasts from Bloomberg NEF.

Are traditional manufacturers making EVs?

As well as manufacturers which exclusively deal in EVs, some traditional carmakers are shifting their focus towards greener vehicles.

Indeed, November saw many manufacturers sure up their commitments to EV’s. At COP26, nations and companies agreed to transition to 100% zero-emission sales of new cars and vans by 2040 globally and by 2035 in leading markets.

Ford (NYSE: F), GM (NYSE: GM), Volkswagen (ETR: VOW3) and Mercedes-Benz (ETR: DAI) were among those to sign the commitment.

Along with this, some major manufacturers are investing heavily in their ability to make the transition to electric vehicle production.

For example, September saw Ford reveal a $11.4bn plan to build its largest ever factory. The Tennessee site will be home to production lines for next-generation electric pickup trucks and battery packs. Additionally, Ford’s plan includes the construction of two vehicle battery plants in Kentucky.

This scale of investment in EVs would have been unimaginable just a few years ago, but now it seems carmakers will have to invest in a greener future or get left behind.

But it’s not just Tesla and traditional automakers that you should be keeping your eye on. There are also some newer kids on the block…

Exciting EV companies to invest in 

Rivian Automotive (NASDAQ: RIVN)

This company has been touted as a possible major competitor to Tesla. Rivian raised around $13.5bn in its IPO in mid-November, selling its shares at $78 each. This valued the company at over $100bn.

Currently, the company is focused on producing rugged off-road electric vehicles, such as its launch products, the R1T and R1S trucks.

Rivian has been investing heavily in increasing its production capabilities and plans to introduce a delivery van model. However, the company is still young. It only started delivering its vehicles to employees in September, with public customers having to wait until March 2022 at the earliest.

A lot of hype surrounds Rivian, but it is well-placed to elbow in on the North American EV market.

Canoo Inc (NASDAQ: GOEV)

Canoo is another up and comer which is yet to deliver a vehicle to the general public. Under its current plans, Canoo will have an electric minivan on sale before the end of 2022. Other planned vehicles include a multi-purpose delivery van and a pickup truck, with the latter expected to be released in 2023.

Canoo’s most recent earnings showed that it has ramped up its production schedule and drawn up plans for new manufacturing facilities.

It is yet to register revenue, but CEO Tony Aquila said the company was targeting “approximately $100m in vehicle orders with the states and universities where we are locating these facilities”.

The company’s share price has declined across the year to date, dropping by over 4%. However, it has recovered from a low point of $5.83 in August to sit at $11.97 at the end of November, with the renewed interest of investors coinciding with good news for EV manufacturers from COP26.

Lucid Motors (NASDAQ: LCID)

Lucid is an interesting case. The company was originally founded in 2007 to build EV batteries, but has since turned its focus on producing the vehicles themselves.

The company’s niche within the EV market is luxury vehicles. The vehicles have a sleek design, looking like something halfway between a sports car and a spacecraft. They’re not just pretty to look at either. The company says it has produced the world’s first ever EV with a single-charge range of more than 500 miles.

Lucid said its new $700m plant, which was completed in 2020 will have the initial capacity to produce 10,000 cars a year. The company also claims this can improve to over 300,000 annually with planned expansion.

Its first completed vehicles rolled off the production line in September, with the first customer deliveries coming right at the end of the following month.

In its most recent earnings, Lucid said it had netted 17,000 reservations for its Air sedan, up from 13,000 through the prior quarter. Production is set to climb as well, with the company targeting the 20,000-vehicle mark for the next calendar year.

Lucid’s share price has jumped by over 400% in the year to date and if its luxury vehicles hit the spot with customers then we could see this new player climb even higher in 2022.

Nio Inc (NYSE: NIO)

Turning away from North America to China, we have to look at Nio. Though BYD Company (HK: 1211) is the largest EV manufacturer in China, some of Nio’s innovations make it a key company to watch.

For example, the company has taken an interesting tact to the issue of charging. Instead of plugging your vehicle in and waiting, drivers can simply swap out their depleted battery for a fully charged one at one of the company’s 504 swap stations. It’s a smart and exciting solution to charging issues.

However, the company does have its issues. The share price has fallen by over 25% across the year to date as vehicle deliveries fell following production issues. Upgrading facilities and supply chain issues have been blamed. 

Additionally, China’s EV market has really been taking off but presents its own challenges. Sales of electric vehicles in China more than tripled to 1.48 million units over the first eight months of 2021, compared to just 17% growth for the rest of the car market. 

However, competition is strong, with state-owned media outlet Xinhua totting up around 300 EV companies in the East-Asian nation.

Even so, with a new luxury sedan being released in early 2022 and talk of European expansion further on down the road, it’s worth keeping an eye on Nio.

Want to know more about our other key themes for 2022? Download our exclusive free report.

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In this article:

Topics:
Electric Vehicles
Industries:
Consumer Discretionary
Companies:
Tesla
Ford Motor Company
General Motors Company

Author: Duncan Ferris

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Duncan Ferris does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Duncan Ferris has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.