The electric vehicle (EV) space is forecasted to experience a Compound Annual Growth Rate (CAGR) of 29% over the next ten years, with total EV sales growing to 11.2 million in 2025, and then 31.1 million by 2030. It is estimated that EVs will secure 32% of the overall market share for new car sales in 2030. Deloitte expects new car sales to remain below pre-pandemic levels until at least 2024, which means it could be a good time to invest in the space.
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Here are our 3 cheaper alternatives to Tesla, suited for any investor looking for exposure in the growing EV industry.
Although subject to controversy in the past, NIO (NYSE: NIO) stock rose more than 1,100% in 2020. In 2019, many analysts and spectators argued that the company was a hoax and that it would hit zero — but the company got its discrepancies in order and saw huge growth. The company’s plans have started to materialize at a great pace, making me now confident of its long-term potential success.
The company has since fixed its balance sheet issues, closing Q3 2020 with over $3 billion in cash, which will allow it to carry out extensive R&D. NIO has developed advanced battery swapping, a concept Tesla scrapped long ago, and also operates a Battery as a Service (BaaS) program, which allows consumers to buy NIO cars without paying for the battery. NIO’s delivery figures are also exciting. In Q4 2020, NIO delivered 17,353 vehicles — a 121% year on year (YoY) increase, and a 42.2% increase over Q3 2020. It also recently unveiled its first autonomous vehicle, the ET7, a luxury sedan that will have 621 miles of range. NIO’s intelligent innovation and delivery growth gives me confidence this will be a long-term winner.
General Motors (GM)
General Motors (NYSE: GM) has been manufacturing, distributing, and selling vehicles for 112 years. In November 2020, GM announced that it would increase its expenditure on electric vehicles and autonomous cars by 35% to $27 billion by 2025. The investment will aid the development of 30 new all-electric vehicles which will be for sale in the next 4 years. GM will be releasing new GMC, Cadillac, and Chevrolet EV models.
GM has invested heavily in the engineering of its batteries, creating the Ultium-based vehicle range which will be capable of 450 miles on a full charge. In the coming years, over half of GM’s capital expenditure and product development team will be devoted to electric and autonomous vehicle programs. GM is innovating on a huge scale, hiring 3,000 employees with expertise in electrical systems, infotainment software, and mobile software development. I expect GM’s EV growth to be slower than Tesla’s, but I am confident that this intense innovation and investment will allow them to be one of the primary EV manufacturers in the world.
Global X Lithium and Battery Tech ETF
This exchange-traded fund (ETF) is a great way to gain exposure to the EV revolution at its foundations. To produce EVs, lithium is needed, and the average EV has 22 pounds of lithium within its ~5000 battery cells. To manufacture one million electric cars, approximately 60,000 tonnes of lithium is required. This ETF invests in the full lithium cycle — including the mining and refining of the metal, all the way to the final-stage battery production.
With the EV industry forecasted to experience a CAGR of 29% over the next ten years, as well as increasing demand for other electronics, the global demand for lithium is expected to more than double over the next four years. It is estimated that China alone will experience a lithium-ion battery-manufacturing capacity increase of 48% by 2024.
This fund has returned over 143% since its inception in 2010 with investments in Tesla, Samsung, Panasonic, EVE Energy, and Albemarle Corporation.
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