Six upstart electric vehicle companies to watch.
The biggest name in electric vehicles keeps getting bigger. On the heels of its 2020 induction into the S&P 500, Tesla (ticker: TSLA) is up nearly 30% year to date. But in late September, Cathie Wood, super investor and founder of Ark Investment Management, dumped around $270 million worth of Tesla stock, then another $41.5 million on Oct. 22. Though Tesla posted a record breaking $1.62 billion in net income in its third quarter earnings on Wednesday, investors may be searching for the next EV play to eat away at the giant’s sizable market share. “There are plenty of competitors in the electric car market now that Tesla has proven that there is indeed demand for the product,” says Josh Simpson, vice president of operations and investment adviser with Lake Advisory Group. While EV startups are going public in record numbers, you can also make a play on more familiar names that may be even more attractive from an investment standpoint, he says. The EV race has only just begun, and any one of these six automakers could take the lead.
General Motors Co. (ticker: GM)
GM may not have the excitement of an EV startup, but the company has committed to offering 30 new electric vehicles by 2025 worldwide. “Given their production capabilities, name recognition, distribution network and capital available to invest in their production, they will be a significant player in the EV market in the coming years,” Simpson says. “They already went after Tesla’s customers directly once before when Tesla introduced the Model 3 and was unable to meet the demand for the car.” Ron Madey, chief investment officer at Wealthcare Capital Management, also likes GM as an EV investment, noting that Engine No. 1, an impact investment group, purchased a stake in the company earlier this year based on its belief that GM will lead in electric vehicles. GM expects 40% of its global vehicle sales volume to be from EVs by 2030 and has committed to selling only zero-emissions vehicles by 2035. “If traditional automakers can make credible EVs they become very dangerous because their client experience after the sale is superior to Tesla,” Madey says.
Ford Motor Co. (F)
Ford is another solid option if you’re looking for a Tesla competitor that’s more established. The company’s new CEO Jim Farley, took the helm in October 2020, and has committed to refocusing Ford’s efforts on expanding and building its electric vehicle offerings, Simpson says. As part of an $11.4 billion investment in electric vehicles and batteries, Ford recently partnered with a South Korean energy firm to build manufacturing hubs in Tennessee and Kentucky. Beyond Ford’s investments in battery plants, it has seen increased demand for the new Ford Lightning, their all-electric truck, and has committed to doubling their production. Farley said the Lightning had “150,000 reservations and counting” in mid-September.
Li Auto Inc. (LI)
One of Tesla’s newest competitors is Chinese car company Li Auto, which went public to the tune of $11.50 per share in July 2020 and popped 43% on its opening day. Investors are clearly eager to learn more about Li’s range-extending generator, a small onboard gasoline generator that recharges the One — Li’s flagship compact SUV — giving the car a range of 500 miles, an impressive technological feat. This hybrid approach is perfect for an EV in China, where charging station networks have yet to be built out, causing “range anxiety, which limits use cases and impedes the wider acceptance of BEVs (battery electric vehicles) in China,” according to a filing with the Securities and Exchange Commission. Founded in 2015, Li has grown quickly in China, and delivered 25,116 in the third quarter of 2021, an increase of 190% year over year.
Nio (NIO)
In August 2020, Chinese EV maker Nio started selling its battery-powered cars without batteries. The electric batteries in an EV are one of the most expensive components in the vehicle. By selling an EV without a battery, Nio can effectively reduce the price of its cheapest model, the ES6 SUV, by around 25%; that’s a big difference for consumers who may be hesitating on the EV price threshold. Nio customers will instead get access to Nio’s battery-swapping stations, where they can exchange spent batteries for fresh ones. The success of this system is predicated on Nio’s network. With more than 300 battery stations in China, the company still has plenty of room to grow — and that’s exactly what it’s doing, with vehicle sales up 100% year over year in the third quarter of 2021. The company recently raised its target from 500 battery swap stations in China by year end to 700 stations, with more than 4,000 battery swap stations worldwide planned by the end of 2025.
Nikola Corp. (NKLA)
Nikola is a Tesla competitor that’s taken the competition as far as the courtroom. The companies have been at odds since Nikola filed a lawsuit against Tesla alleging Tesla’s EV semi-truck design stole from some of Nikola’s patented designs. The lawsuit was recently reopened in October 2021, prompting a spike in Nikola’s stock price. However, Nikola’s main focus will be on big rigs. The company gets points for originality by combining electric battery power with hydrogen fuel cells in its vehicles. Putting the two together gives Nikola automobiles some serious range — up to 900 miles on a single charge for its forthcoming 2024 TWO FCEV, an impressive distance for an EV that few competitors can beat.
Canoo Inc. (GOEV)
Canoo went public in December 2020 thanks to a reverse merger with special purpose acquisition company Hennessy Capital Acquisition Corp. In a market that seems to get more crowded by the day, Canoo is setting itself apart — for instance, when its consumer vehicle hits the road in fourth-quarter 2022, drivers will have the option to be charged a monthly subscription fee for Canoo cars, as well as insurance and access to recharging stations. Canoo plans to target young professionals with this unique value proposition, but in the meantime, the company will utilize its skateboard chassis technology to bring in revenue.
Six electric vehicle companies competing with Tesla:
— General Motors Co. (GM)
— Ford Motors Co. (F)
— Li Auto Inc. (LI)
— Nio Inc. (NIO)
— Nikola Corp. (NKLA)
— Canoo Inc. (GOEV)
