The electric vehicle revolution is essentially here. It will be costly and confusing. This will create huge opportunities for investors of all stripes.
Real-money contributor Jim Collins believes much of this will come from the mainstream market that EVs have so far largely ignored. “Elon Musk can take a guy in a robot suit at Tesla on stage (TSLA) – Get the Tesla Inc report AI Day and get all the media attention, but the transition to electrification will not be so easy. Plus, it won’t just be luxury and entry-level cars, which make up the entirety of Tesla’s current offering, ”Collins recently wrote in Real Money.
The switch to electric vehicles is much bigger than any business, Collins adds. “What I’m talking about here is a process. The process of switching from vehicles powered by internal combustion engines to those powered by batteries. This process is huge, global and will cost billions of dollars. Governments will subsidize some of this, but the real economic value (and, presumably, stock price appreciation) will be created by the real innovators.
However, the global semiconductor shortage for nearly a year has caused grief for automakers as the COVID-19 pandemic has hit assembly lines in Southeast Asia. Production delays in Malaysia, Vietnam and the Philippines are forcing automakers to cut production. Indeed, chips are essential for new generations of vehicles, which require computing power.
The White House held its second semiconductor summit in five months on Thursday, with companies like Intel (INTC) – Get the Intel Corporation (INTC) report, General Motors (DG) – Get the report from General Motors Company (GM), Ford (F) – Get the Ford Motor Company report, Apple (AAPL) – Get the Apple Inc. (AAPL) report, Microsoft (MSFT) – Get the report from Microsoft Corporation (MSFT), Samsung and others. During the meeting, the White House asked companies to clarify supply and demand in the market, the Washington Post reported.
Chip shortages are expected to cost the auto industry $ 450 billion in global sales by the end of 2022, the Post reported.
Pat Gelsinger, CEO of Intel, the largest chipmaker in the United States, said he expects the shortages to continue until 2023.
Tesla chief executive Elon Musk is not too worried about the semiconductor shortage hampering auto production, saying he expects the problem to be “in the short term.” Musk’s optimism stems from expected production from new semiconductor factories planned or under construction.
“A lot of chip manufacturing plants are under construction,” Musk said in a joint session with Stellantis. (STLA) – Obtain the Stellantis NV report and Ferrari (RACE) – Get the Ferrari NV report President John Elkann during Italian Technology Week, Reuters reported. “I think we will have a good capacity to supply chips by next year.”
Ford announced last week that the company will spend $ 50 million in partnership with battery recycling startup Redwood Materials to reuse raw materials from their electric vehicle batteries to reduce its dependence on imports and avoid bottlenecks in the market. supply chain bottleneck.
Ford said the partnership with the lithium-ion battery supply chain company aims to develop a battery supply chain in the United States and battery recycling capabilities for electric vehicles.
“Our partnership with Redwood Materials will be essential to our plan to build large-scale electric vehicles in America, at the lowest possible cost and with a zero waste approach,” said Ford President and CEO Jim Farley , in a press release.
Here is a list of electric vehicle stocks to watch out for:
Tesla plans to expand fully autonomous driving capability; Cathie Wood could sell her Tesla shares
Cathie Wood of Ark Investment (ARK) said on Wednesday that it would likely sell Tesla if the electric vehicle maker’s stock hits its five-year goal of $ 3,000 by the end of 2022. We will get out of that, ”she said in a statement. investment conference, according to Bloomberg. On September 16, Ark sold 81,600 shares of Tesla, then valued at $ 61.7 million.
Tesla plans to expand what he calls its fully autonomous driving capability, but the new head of the National Transportation Safety Board might not be so keen on the idea. The move would help cars navigate their way through cities. For now, the driver assistance system is mainly intended for highways. But Jennifer Homendy, who took over as chairman of the NTSB last month, told the Wall Street Journal that Tesla should not make the change until it deals with what the agency sees as security issues in the system. .
Tesla stock rose 2.75% on Friday to close at $ 774.39.
TheStreet Quant Ratings classifies Tesla as Hold’em with a rating of C.
Ford unveiled the 2022 version of the expedition; Auto maker doubles production of F-150 pickup trucks
Ford has unveiled the 2022 version of the Expedition, its flagship SUV, which includes an array of driver assistance technologies.
Morningstar analyst David Whiston estimates the fair value at $ 20 for Ford stock. “Ford is recovering by focusing on light-duty truck models in the United States, which we believe is the right move given that light trucks account for over 75% of the US industry’s new light-duty vehicle sales. He wrote in July.
Ford shares have traded fairly well over the past few days, up 7% for the week. The automaker was one of the top winners on Thursday, helped by news the company was doubling production of its all-electric F-150 pickup.
TheStreet Quant Ratings classifies Ford as Hold’em with a rating of B-.
General Motors and Amazon Announce GM OnStar Guardian Emergency Services for Alexa Devices
General Motors and Amazon (AMZN) – Get the Amazon.com, Inc. report announced an extension of GM’s OnStar Guardian emergency services to Amazon’s Alex devices in homes to connect with certified OnStar emergency advisors by saying, “Alexa, call for help” during situations crisis, such as house fires, medical emergencies, burglaries and more.
GM has fallen 14% in the past three months as the global chip shortage has limited auto production. However, Morningstar analyst David Whiston estimates GM’s fair value at $ 62. “We view GM’s aggressive investment in an electric and self-sustaining future as more important than 2021 results,” he wrote last month after the company reported disappointing second-quarter earnings.
“We believe General Motors vehicles have been of the best quality and design for decades. The company is already a leader in the truck business, so a competitive lineup in all segments, combined with a much smaller cost base, tells us that GM is starting to achieve scale to match its size.
TheStreet Quant Ratings classifies GM as a purchase with a B rating.
Li Auto Lowers Third Quarter Delivery Estimate; Stocks fall sharply
Li Auto (LI) – Get the Li Auto report shares fell sharply last week after the Chinese electric vehicle maker downgraded its estimate of third-quarter deliveries to 24,500 vehicle deliveries, from 25,000 to 26,000 previously.
The company attributed the reduction to a drop in semiconductor production in Malaysia, thanks to the COVID-19 pandemic. “The recovery in chip supply has been slower than expected,” Li said.
Other Chinese shares of electric vehicles also fell, with NIO (NIO) – Get a Class A ADR report sponsored by NIO Inc. stock down 5.68% for the week and XPeng (XPEV) – Get the Xpeng report down 9.4% in the last five trading days.
TheStreet Quant Ratings does not have a rating for Li Auto.