Holy Scrap

Drivers are ditching their gas-guzzlers for electric vehicles (EVs) left, right, and center, and car companies – both new kids on the block and industry veterans – are putting the pedal to the metal to keep up with the green revolution…

 

🕰 Recap

  • More than half the cars sold in Norway last year were electric, setting a new record.
  • General Motors said last year that it’s upping its game when it comes to EV development.
  • In January, Tesla said it’d grow its vehicle deliveries 50% a year going forward.
  • And Volkswagen announced on Tuesday that it’s aiming to sell one million electric vehicles this year.

 

✍️ Connecting The Dots

The shift from petrol-powered engines to electric vehicles could be one of the biggest changes you’ll see in your lifetime. And it’s already well underway: global sales of EVs were up 43% in 2020 from the year before, even as the pandemic dragged overall car sales down by 20%. In fact, sales of EVs and hybrids went from 2.5% of all cars sold in 2019 to 4.2% last year. Norway even set a new world record, with sales of EVs overtaking sales of those powered by petrol, diesel, and hybrid engines last year. And this could be a slow start for what’s to come: analysts reckon EVs will be cheaper than gas-guzzlers by 2023, and that’s when sales should really take off.

For investors, the billion-dollar question is which EV maker will ultimately come out top: Tesla’s the current market leader, sure, but it’s facing stiff competition from contenders in the booming Chinese market and incumbents like Volkswagen and General Motors. After all, GM said in January it’d only sell electric vehicles from 2035, and Volkswagen made headlines this week when it announced its goal of becoming the world’s biggest EV manufacturer by 2025 at the latest.

And investors seem to agree these old-school carmakers will be able to successfully reinvent themselves as EV producers: every major car company has seen its share price climb more than Tesla’s this year. Of course, Tesla’s 2020 turned out to be pretty phenomenal, so they still have a lot of catching up to do…

 

✍️ Connecting The Dots

1. Electric vehicle stocks might be a “market delusion”

One research firm thinks the fact that both EV and traditional car companies’ stocks are climbing is a little weird. One carmaker’s expansion should, it reckons, come at the expense of its competitors, given that the overall number of cars sold worldwide has been falling since 2017. It points to the scenario as an example of a “big market delusion”, where all companies involved in an exciting new technology rise together even if they’re direct rivals.

2. There’s more to investing in EVs than investing in carmakers

Investing in the companies that manufacture EVs might be the most obvious way to profit from the trend, but it’s tricky to forecast who the eventual winners will be. And in any case, most EV stocks have already made a significant move higher. So other parts of the EV ecosystem – from lithium producers to battery manufacturers, electric utilities to EV charging stations – are worth considering as well. By investing in stocks across the entire value chain, you should benefit no matter which EV maker comes out on top – and it could be considerably cheaper too.

 

🎯 Also On Our Radar

UK energy company National Grid announced this week that it’ll buy England’s biggest electricity distribution business from US company PPL for $11 billion. National Grid supplies gas and electricity to millions of customers, but the portion of its assets in electricity will increase from 60% to 70% after the deal – which should help position it for its eco-conscious move from gas to electric power.

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