EVs Market Review, Investing Tips

By pjain      Published Jan. 8, 2021, 8:11 p.m. in blog Invest   

Investing in EVs

WHAT REALLY CHANGED in EVs

  • China heavy push into a strategic industry led by its Rare Earths advantage
  • IC Bans China, EU, California. China announced 9/17 to ban sales of ICs. Similarly Calif/EU would ban new IC sales 2030-2035.
  • Death of diesel - the Volkswagen diesel-emission cheating scandal has made battery-electric vehicles the preferred path for European manufacturers facing painfully tough reductions in tailpipe carbon-dioxide emissions.
  • Cheaper batteries
  • Explosion of Battery Capacity. 2020 dozens of cell-fabrication plants are under construction globally to supply batteries for those millions of EVs each year.

  • TOYOTA, VW, GM Struggling to catch up in EVs

    • https://www.spglobal.com/marketintelligence/en/news-insights/blog/amazon-ecommerce-sales-soar-amid-covid19
  • VW makes 10 m vehicles a year, aims 1 m/yr EVs 2025.
  • GM put all bets on 100% EVs and killed off its Volt plug-in hybrid.

Cos GOOG TSLA NVDA APTV - DLPH VC DAN PCAR NXPI

Transportation as a Service - EV/AV - Whitney Tilson - In 2019 gas cars cost 80c/mile total costs - Gas cars\ by 2025 sales FAR lower - EVs will be 50% of car sales in USA - EV+AVs will be FAR MORE DISRUPTIVE - TaaS will reduce costs 10x vs Owning your own car => Totally disruptive - Save average $6000/yr average car. - Number of cars needed drop by 80% - 1/3rd of the land some cities is occupied by parking lots! LA's parking lots = 3x SFO city total land! - Oil usage globally will plumett <$25/bbl as cars major usage

  • Oil cos, oil sands to go bankrupt
  • STAY Away from all traditional Gas car cos: GM,F,FCX,TM,... hybrid is not good enough
  • Avoid car lending reliant cos

    • banks: Santander and Consumer USA
    • insurance: Progressive or Allstate
    • Sell, repairing or servicing them: like AutoZone, Midas, or Precision Auto Care
  • EVs are here NOW!

  • AVs time are OVER-ESTIMATED eg cellphones,mainframes HIGHLY underrated

    • Highway trucks to come FASTEST!
    • Robotaxis, esp. medium haul replacements for Airplanes, local trains/commuter replacements
  • All EV/Regular car/part makers HURTING .. nobody’s making cars now and few are buying them

  • bottom-fishing opportunities - with long term EVs upside!

Own basket of GOOD EVs and avoid bad ones!

+ TSLA b@300+ : 500k'21,1m'22+ $25k chinese EV export to EU, New Co-free/cheaper batteries
? VWAGY BMWYY DDAIF - high end EVs
- NKLA ChineseEVs like NIO,XPEV,LI

Cars - Call in ownership=>Avoid Car,Dealers,Repair,lenders, Insurers,

- GM,F,FCAU,TTM - EVs will be too small
- Santander,ConsumerUSA
- Progressive, Allstate
- AZO,Midas,PrecisionAutoCare

Oil to hurt BAAD

Whitney Tilson on Gumshoe

EVs Market Trends 2021-2025 Who Will Get the Prize?

EV Automaker Majors entering EV Market

EVs Transportation as a Service TaaS trend - EVs, AVs

Europe is battleground - hyperbolic growth, EU renewables push, sharp anti-diesel

BATTERIES KEY but evolving rapidly - Chinese 30% global

but All six of the major battery manufacturers are Asian. - CATL tesla's CO-less mktShare exChina 2%'19 to 14%'25 - BYD

Reduced car ownership - Uber,etc ->

  • Covid spike in used car on avoiding public transport
  • Shift to EVs majority in US by 2025 isnt about going green
  • Cheaper, better SW - cheaper to operate esp. if generate own PV
  • AV, RoboTaxis - can reduce cost of ownership 4x but take 2025+
  • HurtAIRLINES Door2Door travel rather than regional air NY-WashDC<$25
  • Parking convert offices - LA parking = 3x SFO entire city

Bubble in EV Stocks

  • Tesla Bull in is real, 400 to 1600 - HFs too scared to short it.
    • But reality is Q2'2020 -100m loss on EV cars, $450m rebates
  • Nikola - SPAC-ipo jun'20> $25b M fell to $14b - both cannot be justified
    • seen as H2 Truck competitor to Tesla (no battery needed)
    • NO SALES, low production
  • NIO - long way from profitability
    • consolidating after overbought July - 2yrs IPO'18 $2 +350% to $15 july
  • Li Auto
  • Tortoise Acq
  • Spartan Energy Acq
  • DiamondPeak - spiked 30% on acqure Lordstown Motors reverse takeover

EV Stocks are HOT on Robinhood, Tesla more than Big 6 combined

  • Tesla's current $1478 price, and market cap is now more than Big 6 combined - GM, F, FCAU, BMW, Daimler, VW

  • EVs are 4 of top 25 Robinhood stocks

    • TSLA
    • NIO - raising $1b from state and another 0.43b in share sales, Never been profitable, China has 400+ EV manufacters
    • NKLA - Zero Products. Up 423% ytd to $20b valuation.
    • WKHS - Makes EV vans for logistics. No real sales but has $1.5b cap. Up 340% in last 1 mo, +440% YTD

Public Policies Pushing EVs - One Way!

The rise of EV fleets to 125m by 2030 will be spurred by median policies that encourage drivers, fleets and municipalities to purchase clean-running cars, IEA the policy advisor to energy-consuming nations forecast in May 2018. Country-wise policies differ behind the Median 2030 projection - 25% China credits and subsidies will help EVs grow to account for 25% of sales of cars by 2030. - 23% Europe tightening emissions standards and high fuel taxes will boost the vehicles to 23 percent of the market. - USA - CA and similar states EV higher on zero emissions, red states CAFE mpg capping by Trump to slow down penetration

However IEA sees a possible 220m EVs if the world takes a more aggressive approach to fighting climate change and cutting emissions than currently planned.

  • 2017 was a critical year for EV sales acceleration
    • The world saw a 54% jump in fleet in 2017 over prior year.
    • Germany and Japan boosted production in 2017 by 100%
    • Norway was largest penetration at 40% of new car sales in 2017

Growth Rates

C19 Fears - Less Car Buys, Commute in Used Cars BOOM

If people are not confident about their jobs or economy, they will think twice before buying a new car

If buy then next one cheap EV TO WIN

MARKET Sales by Country, Region

Important 2021-2025 To Fight for Market Shares as Gas Cars decay fast!

Predicts a surge in electric vehicle sales in 2021 as countries around the world push new programs to encourage consumers to buy battery powered vehicles.

EVs in 2021 global could jump 36% and top 3 million vehicles for the first time ever.

  1. China is already the world’s largest market for electric vehicles, with one million battery powered models built in that country last year
  2. Post Covid incentives to continue with regulations to
  3. Force EVs to use Chinese batteries including Tesla,
  4. Subsidies to Continue,
  5. Focus on Larger range
  6. Prices pushing down to $25,000 level in order to compete will explode Chinese Market
  7. China to lead manufacture and exports to Europe and maybe even India
  8. EV demand in China is starting to accelerate with Tesla competing with a number of domestic and international competitors for this market shar

  9. Europe Markets HOT - don't want to lose Luxury Car Sales - rapid greening

  10. 2020 Demand rose 185% as EV registrations of 108k
  11. DEMAND PHEVs stopgap hit 67k up 91% over 2019 at Covid peak
  12. DEMAND combined xEVs hit 10% of all registrations vs 3% in 2019, Norway it hit 54% of all new car sales
  13. 2021 Biggest growth in EV sales next year will happen in Europe
  14. Governments in the EU are committed to lowering CO2
    • 3b fleet Mpg penalties to force makers to move faster
    • 2030 EU Strategy (a) 30m ZEV, (b) STOP Selling gas/diesel cars
  15. Lead or lose jobs: France new EV incentives & become the top producer in Europe of clean vehicles.
  16. PRODUCTION RAMP - European automakers are all adding capacity and that will really have an impact starting
  17. Tesla Berlin plant model Y Q2'2021
  18. MBZ sold over 160,000 plug-in hybrids and all-electric vehicles in 2020, a tripling compared to the previous year.
  19. MBZ NewModels xEVs 13%exp'21, 7.4% '20, 2%'19
  20. VW investing 35bEuro in EVs - slowly roll out 30 xEV models by 2030

  21. USA - Auto Rates to remain low 4.2% vs 4.9%'18 - need for OWNED CAR

  22. EVs stalled under Trump/EPA CAFE - No federal mandates !
  23. LACK OF MODELS as Makers dragged feet
  24. Estimate EVs yoy jump in 585k'21 70%, 345k'20, 319'19 -3%, 328k'18 75%, 188k'17 29%, 145k'16 28%, 111k'15 -5%
  25. EVs still to be <4% of all car sales in 2021 - LOTS of rampup - makers just DON'T WANT TO SELL MONEY LOSING EVs!
  26. Incentives expiry limit per automaker - GM,Tesla
  27. Biden to enfroce CAFE rules
  28. Lot of climate EPA rules change is hard due to Fossil energy lobbying
  29. giving more money to EVs is easy for subsidies,etc.
  30. Tesla dominated with 226k 65% of all evs, all others only 120k 35% - Tesla had a MUCH HIGHER sahre 85% of pure EVs (prius/hybrids for others)

  31. 20+ New Low end Models forced rapidly declining Model3 share

  32. Tesla Model 3 Got the lions share of mass market sales - with 45%'19, 35%'20, 21%'21 - as makers catch up in VIABLE PRICE RANGES
  33. Toyota RAV4 Prime pushed to 2021 - SUVs+EVs limited by supply
  34. Ford Escape PHEV - delayed due to battery fire issues with the Kuga PHEV in EU
  35. Kia CV
  36. Hyundai IONIQ 5
  37. GM Chevrolet Bolt EUV $40k - Not really competitive anymore
  38. GM Ultium tech - better batteries, motors, pure EVs
  39. Nissan Ariya
  40. Ford Escape PHEV pushed to 2021

  41. Model Y 2021 Makers strategize High End to AFFORD PROFITABLE SALES

  42. Tesla Model Y (replacing X/S hiend)
  43. Volkswagen ID.4
  44. Polestar 2
  45. Audi Sportback
  46. Lucid Air Dream
  47. Volvo XC40 Recharge - high sales in UK
  48. GM Hummer EV SUV - shows bean counter - too narrow slice approach - Luxury strategy NOT to work
  49. Cadillac luxury crossover called the Lyriq.
  50. Ford Mustang Mach-E,

  51. Trucks key battle ground - knife at throat of GM/F

  52. Cybertruck 200k+ 2021, 500k+ in 2022 - slap in face to GM/F - forced to respond FASTER!

Global Segmentation and Key Factors, Lessons for Investors - TODO

Year Global China USA
grew 54 percent to about 3.1 million in 2017.
* Fleet = Global passenger car fleet - commercial busses and trucks are smaller 10=20%?
* Ev#=size of Fleet
* EVs= sales per year, Note that recent peak year in 2019 was 2.1m, with expected drop in 2020
* %ev/yr = % of total vehicle sales

Global Production Tracking

Year Fleet %ev/yr Ev# new# CAGR% Global China USA EU
2015 .45m 540k 331k 116k
2016 773k 507k 160k
2017 3.1m 1224k 777k 200k
2018 1800k 1000k 400k
2019 2.1m
2020 1.2B 2.7% 8.5m 1.3m
2021 ?B 3-4% 8.5m 2.2m
2025 10% 8.5m 54%world
2030 1.4B 28% 116m 25m 49%world
2040 2 B 58% 54m 33%world
  • 2020 slowed production of EVs - originally 1.7m were to be produced
  • though Tesla pulled ahead by bullying lockdowns
  • 2021 initial Q1-Q2 lockdowns would slow down - Tesla going forward to Trucks

Major EV Models

Toyota - Failed in EVs and Batteries

  1. Launched Prius 2-motor hybrid - reaching 15m sales by 202o or 50% of all hybrids on the road
  2. Plugin Hybrid had a lame 4.4 kwh battery only 11 miles vs Volt which had 35 miles.
  3. canceled its plans for a tiny, two-seat electric car
  4. Urban mobility concept car - tiny one-seater car (maybe electric) toyed with - this is the problem - disconnected with real world plans.
  5. Prius Prime plugin had a pure EV range of 25 miles, and Volt hit 53 miles. Toyota used that "achievement" to push plug-in hybrids would catch on far more quickly than battery-electric vehicles. However, already Prius sales stopped expanding, only replacing past Prius sales.
  6. Toyota admitted in that the Tesla Model 3 alone is responsible for half of Toyota’s customer defections in North America — as Prius drivers transition to all-electric.
  7. Will co-develop next-generation solid-state cells with its long-term partner Panasonic after latter was ditched by Tesla.

  8. Keep on RoIC on traditional ICs - why writeoff old ICs - till you have to! Toyota may simply want to retain its legendary profit margins in mass-volume vehicles. It would almost certainly lose money on its first car with a battery pack providing 200-plus miles of range.

  9. INNOVATORS DILEMMA - Prius EARLY SUCCESS Dominated - Easy Money - Don't want to cannibalize Toyota’s core two-motor hybrid powertrain has been through multiple generations since it launched in 1997. The company has now built close to 15 million hybrids, considerably more than half the hybrids on the world’s roads. Prius early advantage was its high MPG but cost of fuel remaining at relatively low historic levels, fuel efficiency isn’t an important metric for most new-car buyers. Moreover, the CAFE standards in place since 2012 have improved every competitor’s gas mileage. GM by 2019 killed its Volt hybrid, likely deciding explaining and marketing plug-in hybrids is incredibly hard once you get past early adopters. However, its hybrid systems isn’t cheap either, with a high-voltage battery pack, power electronics, and a pair of electric motors—all pricey components, even in volume.

  10. BLINDSPOT at VERY TOP of Toyota Losing Sales in Luxury to Economy to EVs. But Toyota has refused to launch a single battery electric vehicle. BLINDSPOT at VERY TOP has been an outspoken laggard in the race to electrification. For years, Toyota leadership has shunned investment in all-electric cars, laying out a more conservative strategy to “electrify” its fleet — essentially doubling down on hybrids and plug-in hybrids Arrogance, Slowness, Inability to work with Tesla hyper-innovative culture - gave up very profitable stock holding and access to collaboration in early days

  11. Lack of RARE EARTHs, Battery Investments as an Excuse Toyota claims that it is limited by battery production capacity. Toyota is able to produce enough batteries for 28,000 electric vehicles each year — or for 1.5 million hybrid cars. Toyota has neglected to invest in battery production, so it claims it can only produce enough batteries for a trivial number of all-electric vehicles. Sadly, it also claims it cannot procure batteries elsewhere in the near term. But some other carmakers are doing this - Hyundai and GM both contract with LG for battery packs for the new Kona Electric and the Chevy Bolt, respectively. It arrogantly proclaimed that the only suitable use for batteries were low-range urban vehicles. In contrast Elon Musk focussed on FUTURE costs of EV batteries and replacing and recycling to meet the rare earths/Lithium problems.

  12. POLITICAL POWER/POLICY IN JAPAN. Challenging "Green" EVs - claiming that its limited battery capacity better serves the planet by producing gasoline-electric hybrids. Basically BoJ will bail them out -old Toyoda family keep control as it is decimated from within. For years, Toyota leadership has shunned investment in all-electric cars, laying out a more conservative strategy to “electrify” its fleet — essentially doubling down on hybrids and plug-in hybrids

  13. LONGTERM FUTURE is Hydrogen focus - like GM Eventually Toyota hopes to twiddle its thumbs as a bridge to a future generation of hydrogen fuel cell vehicles. 2015 production of the Mirai, its first hydrogen fuel-cell vehicle. This seemed promising as in that year Nissan Leaf launched with an EPA range of 73 miles—and the Tesla Model S was still two years away from production.

  14. Hybrid SUVs is Toyota High Profit Hope Some volume has been made up by the RAV4 Hybrid, which has sold 44,900 units this year, second only to the Prius. Hybrid Camry and Corolla sedans made up another 38,500. Still, Toyota and Lexus between them sold only 247,000 hybrids in 11 months—just slightly higher than 2012’s Prius sales alone, but spread among twice as many hybrid models now.

Nissan Leaf

  • The Nissan Leaf is the top selling plug-in car in Japan ever, with close to 140,000 units sold by February 2020.

EVs by Region

--- China 1.2m 3%

Chinese manufacturers BYD, BAIC, and SAIC were world leaders after Tesla the number one.. - With 1.2m EVs/year far leads combined EV production over rest of the world. In 2019, China still stood for 53 % of global BEV&PHEV, down from 56% in 2018. - China has been "right-sizing" incentives causing a recent crash in EV sales growth - it is now pushing higher range EVs emphasizing battery technology - China's NEV sales still showed 3% small increase in 2019, despite the crash in H1. - 2019 growth was a brisk 70 % for H1 until the 2nd round of subsidy reductions and further technical requirements strangled demand and supply. - 2019 H2, when usually 70 % of NEVs are delivered, sales contracted by 31 % versus 2018 as subsidy cuts finally hit hard. - The total car market was down 12 % y/y during H1 and 4 % y/y during H2.

China Top EV Market in World

  • 2017, 777,000 EVs were sold in China, up 53 per cent compared to 2016
  • EVs were only about 2.7 per cent of overall auto sales of 28,879,000 = a far cry from CCP goals of 12% of total auto by 2020

SRC: China Association Of Automobile Manufacturers (CAAM).

--- USA 318k -12%

  • USA in 2019 saw an unexpected loss of 12 % versus 2018. T
  • Older style GM EVs still being sold though both Tesla and GM have now lost their subsidies and often HOV carpool lane benefits.
  • Tesla fought back with price reductions to compensate.

USA sales of OEMs other than Tesla show a combined decrease of -17 %, vs -6 % for Tesla. US and Japanese brands stood for most of the decline, while European and Korean OEM gained from new model introductions, like the Audi e-tron Quattro and the Hyundai Kona.

The lower diagram shows the share development NEVs in China. Monthly demand anticipated the 2 steps of subsidy cuts, becoming effective in April and July, with many deliveries pulled ahead into March and June. After that, the crash became a fact, hitting especially the price-sensitive segments and most domestic EV makers. Some of the smaller Chinese companies have only sold a few hundreds of cars during H2. How and when they can return to normal business is still uncertain.

  • The Chevrolet Volt is the all-time top selling EV especially in Canada.

  • In USA

  • EVs were only 1.2% of 17 m autos in 2017
  • EV unit growth rate slowed down to 24 per cent in 2017 from 37 per cent the previous year.

Canada 51k 20%

2019 (51k sales, +19 %)

--- Europe catching up fast 590k 44%

  • 2019 saw 44 % volume growth y/y. and its share in global BEV&PHEV sales increase from 20 % to 26 % within a year. Largest volume growth contributors were Germany and the Netherlands but nearly all European markets posted gains in 2019.
Country Year BEV PHEV
Europe 2019 360k 199k
Netherlands 2019 112k 96k
Germany 2019 63k 45k
France 2019 50k 18.5k
Spain 2019 9k 6k
  • These are NEW registrations

EU Sales Tracking

  • 2020 July YTD of 16,800 EVs sold in July, and 61,100 for full year
  • Customers are running away from scandal ridden traditional German diesels (and high climate emissions) - RAPIDLY turning to EVs
  • Sales recovered in June/July as Covid-19 hurt sales in Mar,April,May
  • Tesla is building an assembly plant in Germany, based in $1b+ of tax credits - mostly coming from other automakers
  • Looks like the other automakers have ramped up EV sales to compete on compete on price, service, quality, reliability

Germany

Largest volume growth contributors were Germany and the Netherlands but nearly all European markets posted gains in 2019.

  • The Smart electric drive led the plug-in electric car segment in Germany until 2013
  • BMW i3 - Audi e-tron SUV

France

  • The Renault Zoe has led electric car sales in France since 2013, and is the country's all-time best selling plug-in with almost 50,000 units registered through December 2016.

UK

Netherlands

Largest volume growth contributors were Germany and the Netherlands but nearly all European markets posted gains in 2019.

Eastern Europe

  • Two Mitsubishi i-MiEVs in Estonia. The majority of electric cars in Estonia are i-MiEVs.

--- South America - Economy models and Oil-savings

  • Nissan Leaf operating as a taxi is popular in Brazil
  • The BEV Renault Twizy quadracycle is the top selling electric vehicle in Colombia.

--- East Asia Emerging Leader

Japan 44k -ive

  • Ironically shrinking EV sales in 2019 over 2018.
  • Its tilt to hydrogen has hurt it
  • However Panasonic, etc. Japanese do lead battery technology

South Korea 34k 7%

2019 (34k sales, +7 %)

--- India

0December 2015, 6,000 plug-in cars were registered, consisting of 4,350 BEV cars and 1,660 PHEVs.

Indian government incentives

  1. Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) scheme which provides incentives for purchasing electric vehicles.

  2. Reduced GST rate on EVs from 12% to 5% in the Union Budget 2019 to encourage electric vehicles.

  3. Tax benefit of Rs 1.5 lakh on the interest paid on loans taken to buy EVs.

  4. EVs in India are exempted from paying road tax for vehicle registration.[

  5. Mahindra e2o - a popular small size car

Tesla

+A TSLA mb<500 b<600 T 900 - Will win - but watch price $500 not $1000 + China winner as tech,batteries,range vs fake tech Nio,etc. - JDPowers LOWEST quality car brand! June'2020

17% global market shares hit demand limits in USA

  • SEE DETAILS @ Tesla the EV and Luxury Industry Company

  • Tesla produces the vast majority of EVs in USA at ?200k/year

  • Also, Tesla ranked as the best-selling electric vehicle manufacturer worldwide after selling between 367,000 and 368,000 units in 2019.
  • Model 3 delivery shortfall as filling running demand in 2019 was less than backorders of 2018 - this was key factor in reductions.
  • Tesla skipped the 75 kWh battery version for Model S&X in Q1, increasing the starting price for the remaining 100 kWh version by $3000 on the S and by $6000 for the X, in exchange for improved range, notwithstanding. The market did not buy it all and S&X were down 35 % (by 17 600 units) for the year. US sales of the Model-3 increased from 140k in 2018 to 145k in 2019.

    1. Tesla exclusively builds all-electric vehicles; launched its first battery-powered car in 2008, the Roadster.
  • Tesla's model line-up included Model S, Model X.
  • 2018 Launched Model 3 - its "economy" model with prices from $45000

Covid-19 DID NOT hurt Tesla

  • January had fewer working days than last year, had a 50 % slump of NEV sales.
  • February shut-down of most car manufacturing after the COVID-19 outbreak.
  • February and March will reflect "state of emergency", with 80 % declines in February, hopefully less in March.
  • Imports most likely gain in this situation as Tesla cannot make enough.

8x stock rise!

CARS Major EVs Makers

EV Automaker Market Share%

Automaker Share%
VW 38
Renault 16
Hyundai 12
Tesla 9
Daimler 9
BMW 8
Groupe PSA 3.3
Nissan 2.4
Others 2.2
* Data as of 2017

GM

Volkswagen

GM

2021 little

Investing at Scale Too big

Ford

  • SEG: EVs - SUV focus
  • upcoming battery-electric Mustang Mach E crossover SUV.
  • upcoming electrified F-150, the best-selling vehicle in the US.

Batteries, Systems and Components - Market Analysis

BYD

BAIC

SAIC


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