Hi
I was wondering if manufacturers who make solely electric cars like $TSLA, $LCID and $RIVN will face intense competition fr the likes of more established car manufacturers like $F.
I was wondering if I should open a position in a more established car manufacturer that has its hand in the electric car pie also.
We have seen this in other industries where establishment brands now make vegan options
And oil companies like £BP and £SHEL are going ‘somewhat’ green.
I would be interested in hearing what people think about this too. Personally I have larger positions in Ford than I do Tesla. Ford already have huge commercial and servicing departments across the world and those departments are rapidly transitioning to supply and service electric vehicles.
My feeling is that Ford will outpace Tesla, simply by retaining their existing customers with new electric vehicles.
All the big car companies have new EVs coming out. I’ve held Ford since before the pandemic and it has more than doubled, although it has pulled back a bit with everything else recently.
The still make the best selling vehicle in America (F150 pickup) and an Electric version of that is coming out soon. Also They have electric version of the Transit coming out this year. I think they will do OK transitioning to electric.
I think a lot of investors have conflated a lack of consumer demand and subsequent slow movement from legacy auto companies with some big technical challenge to overcome.
At its core an EV is a pretty simple product, much simpler than an ICE vehicle - almost all the difficult parts are common to any car manufacturing. It wasn’t a so much a technical breakthrough that made them viable it was an economics/demand problem.
Tesla created a market by showing consumers what EVs could be, who knows how long it would have taken without them for consumer demand to pick up, but suddenly it’s here (and clearly faster than many expected) with the corollary of supporting infrastructure, albeit still somewhat nascent.
For the past decade the total market for EVs was effectively $0, no wonder no one bothered, but come 2021 suddenly there’s money to be made and markets don’t leave free money on the table, as demonstrated by the range of compelling EVs coming out over 2021-2023.
Once there is a competitive EV market I don’t see a strong reason for sustained margins much beyond the ICE auto market (very low) which is troubling because the auto sector market cap doubled in 2020 alone. So where is all this additional market cap coming from - are we going to be buying much more cars? More luxury cars? If not then who are the losers - because legacy auto and new EV entrants alike are being priced as if they will win big in this new market.
For what it’s worth I think legacy auto companies will do very well, VW might become the biggest EV player by 2023, but I’m not sold on the value proposition for shareholders from current prices.
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