Led by Tesla (TSLA) and BYD Co. [HK:1211](OTCPK:BYDDY)(OTCPK:BYDDF) the electric vehicle [EV] and EV related stocks have been absolutely booming the past few months. Some examples of the recent bull run in EVs include:
- Tesla up over 7 fold the past 14 months and now the world’s most valuable car company.
- BYD Co doubled the past 4 months.
- NIO up over 3 fold the past 3 months.
- Nikola up 34% yesterday and up 5 fold the past 3 months.
- Electromeccanica [SOLO] up over 100% in 2 days this past week and up over 4 fold the past 2-3 months.
- Workhorse Group up 9 fold the past 4.5 months.
- Ideanomics up over 5 fold from recent lows.
- Exro Technologies up 3 fold the past 3 months.
- Blink Charging Co up over 4 fold the past 2-3 months.
Today I take a look at some of these smaller and lesser known EV related stocks. The purpose is more about learning as several have skyrocketed lately so the timing to buy may not be right until after a pull back.
Electric Vehicle Companies
NIO Inc. (NIO) – Price = USD 12.88
NIO price chart since listing
NIO Inc. is a relatively new Chinese automobile manufacturer headquartered in Shanghai; but with a global operation including offices in Beijing, San Jose California, Munich, and London. The Company’s focus is on smart, electric, and autonomous vehicles. Some people are calling NIO the Tesla of China.
NIO currently sells 3 luxury BEVs – es8, es6, and ec6. A typical NIO electric car comes with a 74-100kWh battery pack and up to 600kms of range.
NIO clearly sees a much bigger picture than just EVs, as indicated by their NIO Power, NIO House and NIO Life segments.
NIO Power provides an extensive battery charging and 3 minute battery swap facility network
NIO is currently ranked the number 18 globally for electric car sales with 1% global market share (based on 10,429 sales YTD (to end May 2020); and is ranked about number 6 in China. Given recent sales their ranking should soon improve.
In Q2 2020 NIO bounced back with higher delivery numbers probably due to China’s COVID-19 recovery. NIO delivered 3,155 vehicles in April 2020, representing a strong consecutive growth of 105.8% month over month and a 180.7% growth year over year, from a small base. The best selling model NIO es6 sold 2,685 vehicles in May 2020, and has sold 9,235 vehicles YTD (to end May 2020), achieving 3% market share in China. Then last week NIO announced “record high monthly and quarterly deliveries” including 3,740 vehicles in June 2020, 179.1% growth YoY, and 10,331 vehicles in the three months ended June 2020, exceeding quarterly guidance.
NIO has recently received significant cash injections to help fund the Company’s growth plans.
NIO currently has a market cap of US$15.4b after a spectacular rise the past 2-3 months. Analyst’s consensus estimate is a hold with a price target of CNY 38.50 (~US$5.50).
NIO looks to me to be a likely future winner; however the current stock price looks to have run well ahead of itself. I would consider buying if it gets back below the US$5.50 analyst’s target price.
NIO’s high end luxury EVs are gaining in popularity especially in China
Nikola Corporation (NKLA) – Price = USD 54.03
Nikola price chart since listing
Nikola Corporation is an American hybrid truck (including semis) design and manufacturing company based in Phoenix, Arizona, USA. Nikola offers both battery electric vehicles [BEVs] and fuel cell electric vehicles [FCEV]. The Company is named after inventor Nikola Tesla and has 3 main divisions – Nikola Motor Company, Nikola Energy, and Nikola Powersports.
JP Morgan gave Nikola a large PT upgrade (to US$45) yesterday resulting in a 34% stock price surge and were quoted by Yahoo Finance:
A “number of potential positive catalysts in coming weeks and months” including the announcement of a partner to produce its Badger pick-up truck, deployment plans for hydrogen charging stations in the UK, and “potentially accelerated implementation plans for the FCEL truck in the U.S.”
Nikola Badger pickup truck planned for a 2022 or earlier production startup
Nikola’s planned EV and FCEV models
Nikola currently has a market cap of US$19.5b after a spectacular rise the past 2-3 months. Analyst’s consensus estimate is a hold with a price target of $US56.67. You can view the latest company news and presentations here.
ElectraMeccanica Vehicles Corp. (SOLO) – Price = USD 4.71
ElectraMeccanica Vehicles Corp. is a Canadian manufacturer of electrically-powered ‘microcars’ headquartered in Vancouver, British Columbia. The Company has developed an affordable three wheeler EV designed for a single driver, as most of our car travel is done alone.
ElectraMeccanica sells a trendy 3 wheel one person electric car called the Solo
ElectraMeccanica currently has a market cap of US$296m after a spectacular rise the past 2 months. Analyst’s consensus estimate is a buy with a price target of $US5.00. You can view the latest company news and presentation here.
Workhorse Group Inc. (WKHS) – Price = USD 16.66
Workhorse Group price chart since inception
Workhorse Group is an American manufacturing company focused on manufacturing electrically powered ‘delivery and utility’ vehicles. Workhorse states on their website: “We have more electric ‘delivery’ vehicles on the road than any other company.”
Workhorse business summary
Workhorse Group currently has a market cap of US$1.52b after a 9 fold gain the past 4.5 months. Earnings are currently negative and expected to turn positive in 2022, with a forecast 2022 PE of 67.4. Analyst’s consensus estimate is a buy with a price target of $US15.13. We may see the ‘buy’ rating soon downgraded given the dramatic recent rise above the target price. You can view the latest company news and presentation here.
Rivian (private)/Amazon (AMZN)/Ford (F)
As Rivian is still private so I won’t spend much time covering them. Amazon is a cornerstone investor in Rivian and is already showing several signs they are very interested in electric vehicles/delivery, drones, ride hailing, and autonomous vehicles. Ford is also an early cornerstone investor in Rivian and may combine with them for future electric vehicles or at least EV platforms.
In 2019 CNBC reported:
Amazon is purchasing 100,000 Rivian electric vans, the largest order of EV delivery vehicles ever……in a push to make the company’s fleet run entirely on renewable energy.
Then just last week Amazon announced:
We’re acquiring Zoox to help bring their vision of autonomous ride-hailing to reality….Amazon has signed an agreement to acquire Zoox, a California-based company working to design autonomous ride-hailing vehicles from the ground up…… Zoox started in 2014 with the vision of purpose-built, zero-emissions vehicles designed for autonomous ride-hailing, along with an end-to-end autonomy software stack. Zoox’s ground-up vehicle focuses on the ride-hailing customer, with tightly integrated features designed to provide a revolutionary passenger experience.
Rivian currently has two EVs planned – The R1T pickup truck and the R1S SUV. It looks like prices will be from US$69,000 for the RIT.
The Rivian R1T pure electric pickup truck due to start production in 2021
Rivian may IPO in the next few years, so for now they are off limits for most investors. Still private, Rivian has raised $2.85 billion from Amazon, Ford, and T. Rowe.
EV related companies (financing, technology, charging etc)
Ideanomics Inc. (IDEX) (fleet EV purchasing & financing) – Price = USD 1.56
Ideanomics 5 year price chart
Ideanomics is a US headquartered global company interested in transformative industries (“empowering a new economy”). Ideanomics is currently focused on facilitating the adoption of commercial electric vehicles and developing next generation financial services and fintech products.
Ideanomics divisions
- Mobile Energy Global [MEG] provides group purchasing discounts on commercial electric vehicles, EV batteries and electricity as well as financing and charging solutions. A main focus is currently fleet operators of EVs in China.
- Ideanomics Capital includes DBOT ATS and Intelligenta which provide innovative financial services solutions powered by AI and blockchain.
Note: Both of the above provide global customers and partners better efficiencies and technologies with greater access to global markets.
Ideanomics has identified a niche market to help EV fleet purchases by financing and brokering deals, especially in China. Many fleet operators are restricted in what they can borrow on EVs as opposed to on ICE vehicles – hence the opportunity for Ideanomics.
The Ideanomics MEG EV Center in China
Ideanomics stock price has been on a wild ride. A frenzy of news releases announcing new contracts has seen the price surge, then a short selling attack in recent weeks has caused a significant pullback. Below is a sample of the frenzy of good news.
The above is just a fraction of the news flow or this very busy company.
Ideanomics MEG division revenue model
Insider ownership is high mostly due to billionaire Chairman Bruno Wu (Wu Zheng) (0.22% ownership) and his Sun Seven Stars Investment Group Ltd (14.6% ownership).
The current market cap is US$211m. An April 2020 analyst’s report quotes: “We model CY22 EPS of $0.12 and apply a conservative 15x PE multiple to arrive at an intrinsic value of $1.82/share.” Market Watch quotes a single analyst’s price target of 5.00, which may not be up to date and is not clear if that is in USD or CNY.
Exro Technologies Inc. (CSE: XRO) (OTCQB:EXROF) – Price = CAD 1.10, USD 0.80
Exro Technologies 5 year price chart
Exro sells an AI technology that effectively creates ‘gears for electric motors’ to optimize the performance of an electric motor’s output, similar to how gears work in a conventional vehicle.
Exro currently has a market cap of C$92m after large recent gains. Earnings are currently negative as the Company is just beginning to win contracts and commercialize their impressive technology. I was unable to find any analyst’s price targets at this stage. I think there is huge potential with Exro and their niche technology.
You can read more in my articles linked below, where I wrote for InvestorIntel on Exro Technologies.
EV charging companies
Apart from Tesla and BYD Co, some key listed companies in the EV charging business include: Qingdao TGOOD Electric Co. Ltd [CH:300001], Blink Charging Co. (BLNK), and ABB Ltd [SWX: ABBN] (ABB). There are also numerous other private companies. My article linked below looks at the sector and the companies in more detail. My article concluded stating:
Unfortunately many of the charging companies are either not listed, a car manufacturer, or not a pure play on EV charging. Nonetheless a few interesting opportunities exist such as Blink in the USA.
Note: Blink Charging was then trading at US$2.11, and now trades at US$7.55, for a nice over 3 fold increase in the past 6 months. The current target price is US$5.00. I still like the stock but will wait for a better entry price if possible.
Summary charts
EV sales forecast to really take off from 2022 as affordability kicks in
BloombergNEF 2020 forecast for annual electric vehicle sales released during May 2020. They are:
- 10% share by 2025 (~9m pa)
- 28% share by 2030 (~24m pa)
- 58% share by 2040 (~54m pa)
The EV Cost curve of Tony Seba – USD 20,000 EV by 2022
Risks
- Many of the EV related stocks discussed in this article have had an incredible price rise recently. Investors need to be very cautious buying stocks after an exponential stock price rise. My view it is usually safer to wait for a pullback and then re-assess.
- EV adoption rates may stall, EV subsidies may decrease, other legislative changes may impact the EV sector, technology change.
- Business risks – Management, debt, and currency risks.
- The usual stock market risks (liquidity, sentiment etc).
Conclusion
The purpose of this article is to gain a better knowledge and familiarity with some of the smaller and lesser known EV and EV related listed companies. With Tesla’s stock price surging many of these stocks appear to have followed with their own price surges. This means buyers need to be cautious to buy at this time.
Of course the EV boom is only just getting started with electric car market share so far at 2.7% YTD in 2020, rising slightly from 2.5% in 2019 despite the COVID-19 global pandemic. Once COVID-19 issues fade away we should start to see some very rapid gains in EV sales as we are already seeing signs of this in Norway (69% EV market share YTD in 2020), Europe (7.8% YTD), UK (7.7%) and China (4.3% YTD).
Risk is higher with the smaller and lesser known EV companies (especially those with no earnings and/or after exponential stock price rises); but with the EV boom set to be one of the greatest disruptions this decade it is worthwhile to take a deeper look at the field.
As usual all comments are welcome.
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