Blue Planet Study
The electric vehicle sector has been shaken in 2023 by the realization that the green tidal wave thesis of early 2022 is unlikely to unfold as planned. Inflation and macroeconomic pressures have created a serious affordability problem for consumers. that seems to be pushing the adoption curve. Some forecasts now see electric vehicle sales stagnating over the next six months.
Investor sentiment about the sector is at an all-time low amid devastating returns for EV players like Faraday Future Intelligent Electric (FFIE) -95% year-to-date, Arrival (ARVL) -84% , Arcimoto (FUV) -80%, Volcon. (VLCN) -84%, Canoo (GOEV) -77%, Blink Charging (BLNK) -75%, Workhorse Group (WKHS) -71%, ChargePoint Holdings (CHPT) -68%, Polestar Automotive Holding (PSNY) -57 %, Centro Electric (CENN) -57%, Nikola (NKLA) -47%, Ayro (AYRO) -43%, VinFast Auto (VFS) -41%, Fisker (FSR) -37%, Lucid Group (LCID) – 32% and TuSimple (TSP) -27%. That list does not include companies like Lordstown Motors (OTC:RIDEQ) which restructured or Sonos Group (OTC:SEVCQ) which was delisted.
Meanwhile, Tesla (NASDAQ:TSLA) has been a winner in 2023 with shares up more than 70%. The electric vehicle giant hasn’t lost much market share, despite the flood of new competition around the world. TSLA’s market share of the global BEV market was 19% as of the end of September and its share of the US BEV market was 56.1%. Both brands are above where Tesla (TSLA) skeptics warned the automaker would find itself. Also working on behalf of the Austin company, Ford Motor (New York Stock Exchange:F) and General Motors (New York Stock Exchange:GM) have backed away from their aggressive EV production goals, and the new UAW contract will put even more financial pressure on legacy players.
Chinese electric vehicle makers XPeng (XPEV) and Li Auto (LI) have also seen big profits this year, while the biggest winner to date in the sector is electric motorcycle seller LiveWire Group (LVWR), with its 90 % so far this year. meeting.
What is the path that awaits the electric vehicle sector? For new companies, it is a battle for survival and to reach production levels that can put them in a position of equilibrium. For major OEMs, caution appears to be the operating paradigm. Toyota (TM) reduced its electric vehicle sales forecast by almost 40% and revealed that it would lean towards hybrids to avoid price competition in the electric vehicle market. As for Detroit, Morgan Stanley analyst Adam Jonas believes it is clear that legacy OEMs will operate at a slower pace of EV investment and a more frugal level of spending due to the focus on capital discipline. This leads to the question of how large OEMs can be frugal if automobiles are a “scale business” where achieving low cost leadership will be deterministic for the success of EV strategies. Morgan Stanley believes one option for traditional automakers is to pull the collaboration lever. General Motors (GM), Ford Motor (F), and Stellantis (STLA) could work with China, work with electric vehicle startups, work closely with each other, or even work with Tesla (TSLA) on a licensing or supply deal . That strategy would mark a reversal of the previous plan to copy Tesla (TSLA) through huge initial ownership investments in the supply chain, unique manufacturing capabilities, software development from scratch, internal battery sourcing and downstream infrastructure. Of note, Tesla (TSLA) CEO Elon Musk said earlier this year that the company was in talks with another major automaker about licensing full self-driving software. Rivian Automotive (NASDAQ:RIVN) is working to free itself from its exclusivity partnership with Amazon (AMZN), which could set it up for a major partnership or new production deal. Some analysts believe that NIO’s (NIO) aggressive moves in Europe could be the precursor to a partnership there with a local player.
Apart from the collaborative measures, another development that could boost the electric vehicle sector is that battery prices are expected to fall to $99 per kilowatt hour of storage capacity by 2025, which would be a 40% decrease. compared to 2022. Goldman Sachs estimates that almost half of the decline will come from falling prices for EV raw materials such as lithium, nickel and cobalt. Battery pack prices are forecast to fall by an average of 11% per year between 2023 and 2030 and potentially reach cost parity with internal combustion engine vehicles by the middle of this decade on a full cost basis. property. Of course, that would solve some affordability issues for consumers if it comes to fruition.
Quantitative verification: The automaker stocks with the highest Alpha Quant Search Ratings are Toyota Motor (TM), Subaru (OTCPK:FUJHY), Li Auto (LI), Nissan Motor (OTCPK:NSANY), and BYD Company (OTCPK:BYDDF) . The top-rated auto supplier stocks are Modine Manufacturing (MOD), Adient (ADNT), and Holley (HLLY).
