More electricity, less fuel: what happens to the shares of electric vehicle manufacturers?
The growth trend in the demand for electric vehicles, which started with concern about global warming, grew stronger for two main reasons: government reforms designed to promote "zero emissions", but no less than that - the spike in fuel prices that made the electric vehicle more affordable.
What happened to stocks in the field?
Thursday, July 28, 2022, 08:26 Updated: 09:53
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Electric vehicle charging.
Beyond green thinking, the energy crisis contributed to demand (Photo: ShutterStock)
The drivers are no longer interested in the roar of the engine and devote themselves to the electric vehicle trend, the price of which does not stop rising.
The increase is so sharp that even the car importers prefer to return their money to customers due to supply problems, only to sell the same car for tens of percent more when it docks at the port.
According to the International Energy Agency, approximately 2 million electric and hybrid vehicles were sold worldwide during the first quarter of 2022, which is an increase of approximately 75% compared to the first quarter of 2021, a year during which a record number of approximately 6.6 million electric and hybrid vehicles were sold. (Throughout the year).
The market share of electric cars has also increased to about 10% of all vehicle sales in the world, and the agency attributes this mainly to the subsidies of the various governments on the subject, which amounted to about 30 billion dollars that year.
Shares of the electric vehicle companies (photo: Walla! system, no)
The agency's conservative estimates show that the number of electric and hybrid vehicles will be around 200 million by 2030, but will still not reach the growth rate set as a threshold of 60% of all vehicles that will travel on the world's roads by 2050. The
blame for the delay lies mainly in the supply chain that has lengthened since then The corona virus, along with inflation and price increases, gives the impression that they do not constitute any barrier for the customers of the new vehicles, which only increase the demand for the electric cars, with the encouragement of the governments.
This is also evident in the demand for the sector's shares, which have increased by an average of approximately 379.19% since the Corona crisis, and in the first place one of the companies most identified with the sector - Tesla, which increased by 979% for the same period, and by 830% since the end of 2019, and this despite suffering a decrease of approx. 26.5% since the beginning of the year.
The Chinese electric vehicle company BYD currently leads the electric car sales table since the beginning of the year with the sale of approximately 640 thousand vehicles in the first half of 2022, and it is also the only one that received the trust of investors during this period with a 6.47% increase in its stock, when all the other sectors (and the stock exchanges) decreased (see table).
The one who has been struggling to rise since the end of 2019 is the Chinese SAIC MOTOR company, which owns the MG car brand, which fell by 32.6% for the same period.
SAIC has an innovation center in Israel, but its manufacturing plant is located in Shanghai, China, which faces repeated shutdowns due to the government's policy on the corona virus.
Madeline Reid, the research analyst of the American ETF company Global X, explained to Walla!
Money because "even against the background of the difficulties of inflation and the disruptions in the supply chains, the demand for electric vehicles is soaring, and some of the latest models launched by the various companies attract tens of thousands of orders and create long waiting lists.
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Madeline Reed, research analyst for the American ETF company Global X (photo: courtesy of GLOBAL X)
Fuel price contribution
The high gas prices also contribute to increasing consumer interest in hybrid and electric vehicles, even in the US, where during the first half of 2022 online searches for hybrid and electric vehicles increased by 25% and 73% respectively.
The increase in electric vehicle prices in 2022 , due to the problems in the supply chains and the high prices of materials, it also did not stop the high demand, which only supports these price increases.
To this can be added the summary of the policies of the European Union countries from last month to stop carbon emissions from new cars by 2035. This means that after 2035 the Union The sale of new vehicles powered by gasoline or diesel will be banned.
This decision will drive continued growth of electric vehicles, and for investors who want to profit from the electrification of the transportation sector, this decision is a positive development that has the potential to benefit these companies along the sector's value chain.
After 2035, the European Union will ban the sale of new vehicles powered by gasoline or diesel (Photo: ShutterStock)
This industry also has a built-in headwind in light of the world governments' policies on climate change, which have given rise to significant commitments on the part of vehicle manufacturers to electrify their fleets, alongside the growing consumer interest in them and the decrease in battery production costs (which are one of the components that make electric vehicles more expensive).
For example, more than 135 countries have committed to a goal of net zero emissions in all areas of their economy, with many aiming for 2050 or earlier.
In addition, in light of the fact that the growth of sales of electric vehicles exceeds the growth of sales of conventional vehicles, we estimate that companies that prepare themselves for the future of electric transportation are better positioned to profit from the trend.
For example, in May 2022, Herbert Diess, CEO of Volkswagen, stated that the latter expects its business in the electric field to be just as profitable as its combustion engine business - and earlier than originally estimated.
Volkswagen plans to develop only electric vehicles after 2026, and in 2030, nine out of 14 models are planned to be battery-powered electric vehicles. The company aims to reach a situation where its electric vehicles will make up at least 70% of its sales in Europe by 2030. In
March 2022, it also announced its electrification strategy, especially for the US market, where it plans to launch 25 new models of electric vehicles and take over a 55% share of electric vehicle sales by 2030.
In the first quarter of 2022, it sold approximately 98.4 thousand Cars from this sector, which represented 6.8% of the sales of all vehicles in the sector in this quarter.
However, we estimate that the electric vehicle environment may be more competitive, when the other traditional vehicle manufacturers will shift to focus on electrification."
Although the American Tesla leads by a wide margin in terms of company value, and even led the number of electric car sales in the first quarter of 2022, the one who leads the field is none other than China.
International Energy Agency data show that half of the new hybrid and electric vehicles in 2021 were sold in China, about 35% in Europe, and only about 10% of them were sold in the US.
The field has already conquered the capital market, as well as the gas pedal in the drivers' pockets. The question The only question now is who will press the brake pedal first: the consumers or the investors?
the price of fuel
The European Union