What’s going on with EV stocks?
A few EV stocks have been grabbing headlines for different reasons this week. From Rivian to Xpeng, here’s what you might have missed.
Rivian only made its stock market debut two days ago but it’s quickly becoming the darling of electric vehicle investors.
Not content with being 2021’s biggest IPO, opening 30% higher than its projected debut share price, Rivian continues to hit the accelerator. Pre-US market open, the stock is up a further 23%.
Why Rivian? The company isn’t expected to hit profitability any time soon. It’s yet to deliver any meaningful volume of vehicles. It’s not really generating any revenue either.
Rivian’s a good case study of the market betting on a sector. It’s already made big wins with Tesla, so now it’s looking for the next big thing. That could be Rivian. The carmaker offers two models at present, the R1T pickup and R1S SUV, and will soon be entering the commercial vehicle game following an Amazon order for 100,000 delivery vehicles.
Amazon owns a 20% stake in the start-up. Funnily enough, potential rivals Ford owns a 12% stake in Rivian. With the new launch boost Rivian is enjoying, Ford has made about $10bn so far. That’s more than the Detroit old guard carmaker made selling vehicles last year.
The challenge for Rivian now is turning this momentum into revenue generation and vehicle deliveries. The R1T has started to roll off forecourts across the US. Rivian’s R1S will begin deliveries in 2022. After investing $1bn in a factory in Normal, Idaho, the Californian mark says it has the capacity to deliver 150,000 vehicles a year.
With roughly $11bn in capital to play with thanks to the largest US float since Facebook, Rivian is expected to pour that cash into building new factories and delivering trucks and SUVs. It’s one to watch.
Elon Musk has been up to his old tricks again.
He has sold $5bn worth of his Tesla shares after polling his legion of Musk Rat Twitter followers. An unusual move from an unusual CEO but fair play to Musk. He did actually follow through. Since then, however, the Tesla share price as been on a bit of a wild ride.
Upon making his Tweet, the stock hit the skids. It is now down about 10% across the week, wiping off around $157bn of Tesla’s market cap. Until we see another uptick, which is likely given the world is in the grips of electric vehicle fever, Tesla has lost its $1 trillion valuation.
A $1 trillion valuation for a car company seems excessive on the face of it, but investors just seem to love Tesla. Some brokers, such as Fidelity, have reported that Tesla remains one of the most traded and bought stocks, with buy orders completely outstripping sells.
Even with this week’s blip, there’s no way Tesla is anywhere close to skidding off the road. As it stands, the stock is still up 51% in 2021 as a whole. Compared with 2020’s lows, Tesla is 1,300% higher.
Tesla reported another exceptionally strong quarter in its latest earnings report. A record-breaking 241,300 vehicles were delivered in Q3 2021, helping the EV pioneers reach Wall Street-beating revenues and earnings per share.
It is interesting to see that, despite these incredible stats, that the Tesla share price is so susceptible to the actions of its CEO. It goes without saying that executive-level actions can move shares up or down, but very few companies have a head honcho so woven into the world of social media like Tesla.
What’s next? Expansion is the name of the game. More factories are under construction. More cars are rolling off production lines. There’s still more to come from Tesla – probably more Elon Musk shenanigans too.
China has its own number of electric automobile makers, such as NIO and Li Auto, but we’d like to turn our attention to their rival Xpeng.
Xpeng made a strong start in Asian trading today, jumping 10% after the marque teased a new SUV model. It’s likely to replace Xpeng’s G3 and G3i models when fully revealed at the Shanghai Motor Show event on November 19th.
Xpeng deliveries are behind those of Tesla, but it really only operates in one market. Certainly, it’s delivered more vehicles than the $100bn Rivian – but bizarrely you don’t see valuations anywhere near that high for Chinese electric carmakers.
In October, Xpeng delivered 10,138 cars, of which 3,657 units were its G3 and G3i SUV, reaching a monthly record since the vehicle’s launch in December 2018.
The company said its cumulative deliveries have exceeded 100,000 as of the end of October.
China is the largest auto market in the world and is quickly emerging as THE go-to place for electric motors. Bearing in mind the industry is still in its infancy, but over two million electric passenger vehicles have been sold in China in 2021 so far.
While the marketplace is fairly crowded, there is still substantial room for growth – especially with the Chinese government pledging to up its eco-game in the wake of the COP26 summit.
Keep an eye on Xpeng, as well as other Chinese EV stocks like Li and NIO. There could be something big building in the Far East.