Shares of the largest electric-vehicle makers are still going up—even after epic 2020 gains and talk of bubbles forming. The continued rise of the EV-majors is boosting investor demand for all things EV—no matter the size of the company.
Stock in Chinese EV maker NIO (NIO) rose about 6% Friday after another analyst launched coverage with a Buy rating. NIO is now the world’s fifth most valuable car maker, with a market value of almost roughly $100 billion. Three of the top five most valuable auto makers are EV makers— Tesla (TSLA), BYD (1211.Hong Kong), and NIO.
NIO shares are up roughly 25% year to date after rising about 1,100% in 2020. Tesla stock, for its part, is up almost 20% year to date after rising 740% in 2020. BYD shares have gained 25% in 2021 after rising about 420% in 2020.
Tesla’s market cap is the largest, worth roughly $1 trillion based on its fully diluted share count—which includes management stock options and warrants. The stock’s run is great for Tesla shareholders, but it also creates a halo effect. Many EV stocks are valued based on Tesla’s valuation multiples. EV stock moves are “becoming self-reinforcing with Tesla,” Bernstein analyst Mark Newman tells Barron’s. “Telsa goes up, then NIO goes higher, then [EV battery maker] CATL can go higher, BYD can go higher.”
Newman doesn’t know how these rallies will end, but believes relying on relative valuation—and losing sight of absolute valuation numbers—is risky.
Small-capitalization EV makers are rising like the big EV makers. Electrameccania Vehicles (SOLO), Greenpower Motor (GP), Kandi Technologies (KNDI), and Arcimoto (FUV) have a combined market capitalization of about $2.6 billion. Their shares are up roughly 30%, 4%, 18%, and 60% respectively so far this year.
Most stocks in slightly larger EV firms are moving higher as well. Shares of Fisker (FSR), Lordstown Motor (RIDE), Workhorse (WKHS), Canoo (GOEV), and CIIG Merger (CIIC)—which is merging with Arrival—are up about 9% on average in 2020. Fisker and Arrival are down year to date, but the other three have posted double-digit gains.
Some battery makers are benefiting from Tesla and other EV companies’ gains, too. CATL is what the industry calls Contemporary Amperex Technology Company (300750.China), a leading EV battery maker based in China. Its shares are up more than 16% year to date.
But not all stocks within the EV supply chain are performing as well. Shares of QuantumScape, (QS) an electric-vehicle battery pioneer, are down 41% so far in 2021. But its steep decline is due, in part, to a rapid spike to more than $130 a share in December.
Some small-cap EV suppliers and infrastructure-support stocks are also down year to date. Shares of XL Fleet (XL) and Romeo Power (RMO), which supply EV powertrain components, have fallen about 12% and 13%, respectively, so far in 2020.
Climate Change Crisis Impact I Acquisition (CRII) is an exception. It rose 50% Friday after announcing it would merge with EVgo, bringing the nation’s largest fast-charging network to public stock markets.
Shares of other EV charging companies didn’t react positively to Friday’s EVgo news, however. Beam Global (BEEM) shares fell about 1.5%, while Blink Charging (BLNK) stock dropped more than 3%. Beam stock is down about 13% year to date, but has surged about 930% over the past year. Blink stock is still up slightly year to date and has rocketed more than 2,000% over the past year.
Perhaps investors see EVgo as a threat, although EVgo existed before the special purpose acquisition company merger was announced.
Overall, the EV sector is up roughly 17% year to date on average, adding about $220 billion in market value—roughly the market cap of Toyota Motor (TM). It doesn’t seem to matter if companies are small or large— investors want EV exposure and, for the most part, prefer EV makers to EV suppliers.
Write to Al Root at [email protected]
