Is 2022 the year America finally goes all-in on electric vehicles?
Analysts at Bank of America certainly seem to think so, as they are predicting a “major year of commercialization" for the market, as reported by Axios.
Some 85 new electric vehicle models are set to launch within the next four years, including the Chevrolet Equinox SUV (GM), the Kia EVs (KIMTF) , and the Subaru Solterra (FUJHY). The last one is the first electric vehicle offered by Subaru.
Bentley, the U.K. luxury carmaker, announced Wednesday that it will spend £2.5 billion ($3.4 billion) over the next 10 years to update its Crewe facility as the company aims to roll out its first electric vehicle in 2025. The move is part of the 102-year old company's plan to shift to 100% EV production by 2030. Once Bentley, the 14th most-expensive luxury vehicle brand in the world, does enter the EV race, it will have to work to gain some traction.
Electric vehicles currently represent only 3% of the automobile market, while hybrid cars (meaning cars that run on a combination of fossil fuels and electricity) account for “about 5% of the overall U.S light vehicle sales.”
At the moment, it’s clear that consumer demand for electric vehicles is not as high as manufacturers’ commitment to electric vehicles. But the wave of upcoming electric vehicles shows that manufacturers are making a push to try to change consumer habits.
Tesla’s (TSLA) electric vehicles get most of the press coverage and cultural attention, to the extent that a casual observer might conclude they’re the only player in the game, even though that’s absolutely not true.
Although, Tesla is getting a lot of attention this week. The EV titan won't announce a new car model this year, CEO Elon Musk said on Wednesday.
"We will not be introducing new vehicle models this year," Musk said during the company's fourth-quarter earnings call, adding that it "would not make any sense because we will still be part-constrained." Instead, Tesla will focus on "scaling" and "output."
Musk says introducing new vehicles would affect the company's production rates and deliveries. "If we were to introduce new vehicles, our total vehicle output would decrease. This is a very important point that I think people do not understand. So last year, we spent a lot of engineering and management resources, solving supply chain issues, rewriting code, changing our chips, reducing the number of chips we need," Musk explained.
Musk also confirmed that production and first deliveries of the futuristic pickup are not expected until 2023. But, it depends on whether Tesla is able to produce "more cars or fewer cars," as maximum profits and deliveries are the company's goals.
The new delay confirms reports from earlier this month that said the Cybertruck would be delayed yet again. Musk tweeted on Tuesday that he was driving a Cybertruck, and leaked photos and videos reveal several important new features in the design of the Cybertruck, including a pair of exterior mirrors.
Musk also announced that it has started production of the Model Y at its new plant in Austin, Texas. Although, he said the company is not ready to announce any new locations just yet.
Tesla Warns Supply Chain Mess Could Last For Years
Tesla posted stronger-than-expected fourth-quarter earnings Wednesday but cautioned that supply-chain disruptions have held back production capacity and will impact that pace of near-term output at new plants in Germany and Texas.
Tesla posted record Q4 revenues of $17.7 billion but noted that supply chain disruptions will likely extend into 2022.
Tesla said adjusted earnings for the three months ending in December were pegged at $2.54 per share, up more than two-fold from the same period last year and well ahead of the Street consensus forecast of $2.34 per share.
Group revenues, Tesla said, rose 65% from last year to a record $17.72 billion, firmly ahead of analysts' forecasts of a $16.57 billion tally. Gross automotive margins were 29.2%, Tesla said, topping Street forecasts of 28.3% but down from 30.5% in the prior quarter.
"We believe competitiveness in the EV market will be determined by the ability to add capacity across the supply chain and ramp production," the company said in a statement.
The Chip Shortage is Worse Than Biden Thinks...
President Joe Biden has made a commitment to reducing greenhouse emissions, and has set an “ambitious target of 50% of electric vehicle EV sale shares in the U.S. by 2030.”
However, a global supply crunch sparked by the pandemic, extreme weather, and supply chain issues has led to shortages and, in some cases, higher prices of cars.
Much like the Covid-19 pandemic that caused it, the phrase “supply chain issues” is one we’re all sick of hearing and dealing with… even as it continues to impact our daily lives, whether we like it or not.
The automobile industry has been hit by a shortage of the semiconductor chips needed to make most modern cars run smoothly (chips can control everything from brakes to advanced driver assistance software).
Last year, General Motors was forced to temporarily shutter production at most of its North American plants because of the chip shortage, and many other automakers slashed their production plans.
The Detroit giant is presented by Biden as leading the world in electric vehicles. But it hasn't really produced a fully electric car in the United States for several months.
And above all, GM could very soon pull the plug on the Chevrolet Bolt, its mass-market electric car aimed to kill and compete with Tesla's Model 3.
The Biden administration has been working to prop up the US chip-making industry, both to ease current supply chain woes and reduce America's dependence on foreign production of the crucial components going forward.
The biggest bottleneck in the chip supply chain is capacity at semiconductor fabrication plants, called "fabs.” Still, some chipmakers are already looking to turn the tide.
"We aren’t even close to being out of the woods as it relates to the supply problems with semiconductors," Commerce Department Secretary Gina Raimondo said. "The semiconductor supply chain is very fragile, and it is going to remain that way until we can increase chip production."
The industry lost “1.3 million units of production in 2021 because of the chip shortage… and the impact could be another 7 million units in 2022 and 1.6 million in 2023,” as reported by Motor Trend.
This chip shortage is expected to continue until next year, which will tighten production along with the entire industry.
EV Makers Cater to the Consumer
There’s an ongoing attempt by EV manufacturers to give people what they want. Luxury vehicles are nice and all, but nationwide the top-selling makes of cars are crossover SUVs and pickup trucks, according to Statista. It's clear these are the cars and trucks that the majority of Americans want, so if manufacturers want people to drive electric vehicles, then they need to make the electric vehicles that America wants to buy.
This is why we can expect to see a wave of larger-scale EVs, including the upcoming GMC Hummer EV and the Rivian R1T (RIVN) pickup truck.
The long-delayed release of Tesla Cybertruck, which as many have noted looks like the Batmobile, keeps getting pushed back, but maybe one day it will also be available to meet the consumer need.
And, Ford (F) is hoping to double the pace of its F-150 Lightning output to 150,000 units this year. It has said it's booked 200,000 reservations for the iconic electric pickup, as the carmaker ramps up its electric vehicle push. Ford also announced this week that it had to stop taking retail orders for the Maverick amid a production backlog for the newly-unveiled hybrid pickup.
It’s clear that EV is a growing sector that just hasn’t gone mainstream… yet, but it seems safe for investors to assume that the industry is going to do what it needs to do to get an EV in every garage.
Here are the top electric vehicle stocks to watch this week:
More Tesla News...
Elon Musk has put pressure on McDonald's (MCD) after a campaign was launched last week by the co-founder of Dogecoin asking the fast-food chain to accept the meme coin as a means of payment. The fans of the so-called "people's way to pay" have received the support of the richest man in the world.
The tweet had already been shared and liked by over 178,000 people at the time of writing. Most comments were positive. McDonald's didn't respond immediately to a request for comment.
TheStreet Quant Ratings rates Tesla as a Hold with a rating score of C+.
Lucid's 2030 EV Production Goals
Lucid (LCID), a would-be Tesla competitor, has a market cap of nearly $70 billion and essentially no sales. Electric vehicles bring a valuation premium that's substantial and Lucid gets an awful lot of benefit of the doubt from investors. It may not need to reach the millions of vehicles sold by traditional automakers to justify its current valuation, but it's currently trading at a much higher premium per car it has actually sold than Tesla.
Lucid has achieved its valuation without recognizing any revenue from selling vehicles. It did begin delivering vehicles in October, but the numbers were in the dozens, or maybe even the hundreds.
Lucid does have plans to ramp up its production, and CEO Peter Rawlinson seemed excited about the interest in the company's first vehicle, Lucid Air. It's worth noting that Lucid requires a $3,000 deposit to reserve a Lucid Air. That's a much bigger commitment than the $100 Tesla asks for when people reserve a Cybertruck.
TheStreet Quant Ratings does not have a rating for Lucid.
Ford Halts New Maverick Pickup Orders
If you were thinking about picking up Ford’s new pickup truck, the Maverick, then we have some unfortunate news. Ford shares slumped lower Monday after the carmaker said it would stop taking retail orders for the Maverick amid a production backlog for the newly unveiled hybrid pickup. The company currently can’t build enough to keep up with demand, as reported by The Wall Street Journal. Ford said customers can still buy the $20,000 Maverick on dealer lots, but it won't take new retail orders for the truck until later in the summer as it focuses on fulfilling existing demand.
Jefferies analyst Philippe Houchois cut his rating on Ford to 'hold", from 'buy' last week -- while bumping his price target $5 higher to $20 per share -- but noted that premature to re-rate legacy OEMs for their EV progress since earnings remain mostly driven by cyclical shortages, returns remain within historical norms and the EV transition is largely a zero-sum-game initially."
TheStreet Quant Ratings rates Ford as a Buy with a rating score of B.
General Motors Is Chasing Tesla, Ford
General Motors (GM) has a plan to catch Tesla and sell 1 million electric vehicles by 2025, but based on its current pace, the company has a lot of ground to make up. GM recently announced that it is investing $7 billion in four Michigan manufacturing plants as part of the car maker's plan to transform its output into an electric vehicle fleet as the company looks to keep up with rival Tesla. But after the company delivered just 26 electric vehicles in the fourth quarter, GM has a long way to go to convince investors that it can catch up to its rivals.
The Detroit-based company says its investment will create 4,000 new jobs and retain 1,000 others while "significantly increasing" battery cell and electric truck manufacturing capacity. GM will invest $4 billion to convert its assembly plant in Orion Township, Mich. to produce electric trucks. In December, the company said it intends to spend over $3 billion to manufacture EVs as it looks to become the EV market leader in North America by 2025. Time will tell whether GM will be able to "absolutely" catch Tesla in EV sales by 2025 as has been promised by Barra.
TheStreet Quant Ratings rates General Motors as a Buy with a rating score of B.
Rivian COO Departs
Electric vehicle maker Rivian said its chief operating officer, Rod Copes, has left the company. Separately, it reported production figures in line with lowered guidance it offered last month. The Amazon-backed (AMZN) company said in emailed comments that “Rod began a phased retirement from Rivian several months ago, affording the team continuity as we moved toward production ramp.” Copes’ “duties have been absorbed by our leadership team,” the company added.
In a recent statement, Rivian said it had produced 1,015 vehicles by the end of 2021. It said it had delivered 920. And, the company's shares briefly dipped below their November initial public offering price. That came after Amazon announced that it will buy electric delivery vans from Stellantis (STLA), bypassing Rivian, its original electric-vehicle purchase partner. Amazon has ordered 100,000 Rivian vans to be delivered by 2030, and it owns a 20% stake in the company. The agreement with Stellantis doesn't represent a slight toward Rivian, Amazon said.
TheStreet Quant Ratings does not have a rating for Rivian.
Nio Made Some Moves
Nio (NIO) has made some moves recently, including listing a number of jobs that suggest it plans to enter the U.S. market in 2022. The company also said that it will enter Germany, Netherlands, Denmark, and Sweden in 2022, and reach 25 countries by 2025, at its annual Nio Day event.
Nio delivered 25,034 vehicles in the fourth quarter and 91,429 in 2021, and the electric carmaker expects to begin delivering the ET7, a premium electric sedan, in March. And two weeks ago, Nio unveiled the ET5, a midsize electric sedan, and said it would begin delivering it to customers in September. The company's deliveries rose 50% in December and 44% in the fourth quarter and they doubled for the full year. In December, Nio reported, 10,489 electric vehicles were delivered, up 50% from a year earlier.
TheStreet Quant Ratings rates Nio as a Sell with a rating score of D.
