- The EV sector is exploding, dominating the market in 2020 and continuing into 2021.
- Regulations at the federal and state level is pointing toward an electric revolution. Climate change has everyone looking toward renewable energy as the future.
- P/E Valuation seems frothy but how do we price in the future?
- NIO and Tesla are the Alibaba and Amazon of the Market.
- Competition is heating up.
If 2020 was the year for the EV sector, I wonder what 2021 holds? Was 2020 just the beginning? As 2021 kicks off, the valuations for the EV sector as a whole specifically toward Tesla and NIO seems expensive. Value investors shudder at the thought of pouring funds into these stocks but what choice do they have? It has come to a point where companies are being left behind if they do not adapt, somehow, to the electric vehicle boom.
As Elon Musk pointed out once:
Tesla stock price is too high imo— Elon Musk (@elonmusk) May 1, 2020
Cathie Wood called out on Tim @Apple for not only missing out on the Electric Vehicle boom but being behind! More than that, Cathy praises Tesla for adapting and even following strategic business plays that Apple deployed.
#Tesla took a leaf from #Apple’s business plan when it designed its own #AI chip. Apple designed its own smartphone chip when #QCOM was catering to Motorola, Nokia, and Ericsson, none of which understood that phones could and would become smart.
— Cathie Wood (@CathieDWood) December 23, 2020
Throughout 2020, many analysts threw shade at Cathie and Tesla bulls, ridiculing the and the foolishness that is the price of Tesla stock. But we all know how that unfolded.
Evercore ISI upgraded their rating on the stock to the equivalent of hold, from sell, saying that they have been “on the considerably wrong side of (Tesla) for over a year now,”Bloomberg
RBC Capital Markets analyst Joseph Spak upgraded Tesla to the equivalent of a hold rating from a previous sell recommendation, saying he got the stock “completely wrong.”Bloomberg
The State of Electric Vehicles in 2021 Remains at Hand.
There are many competitors in the electric vehicle market. But the leaders of the EV world right now remains TSLA and NIO. Tesla is currently contending NIO directly as they battle for the hearts of China in mainland China. With Tesla opening shop in Shanghai and lowering its prices, how will it affect Nio Inc.? Will patriotism remain when the Chinese consumers have to pay for it?
- Tesla (NASDAQ:TSLA)
- Nio (NYSE:NIO)
- Xpeng (NYSE:XPEV)
- Toyota (NYSE:TM)
- Ford (NYSE:F)
- GM (NYSE:GM)
- Workhorse (NASDAQ:WKHS)
Variables such as government regulations (state and local) as well as incentives have stimulated the EV market. It’s becoming a trend to own a Tesla and with the declining price to own an EV, sales have naturally gone up. This is evident not just in the U.S. but also globally in countries such as China.
With the blue wave on its way to cleanse the soul of Washington D.C., we’ll know soon how much of an impact the democrats want to make against climate change. Their regulations and laws against big oil but also its desire for renewable energy across the board will impact the electric vehicle market.
Current standing of the electric titans. How will 2021 fare for them?