Tesla (NASDAQ: TSLA) has been a magnet for attention and criticism for the past few years, but it’s hard to argue with the results.
Shares of the electric vehicle manufacturer have risen by more than 1,000% over the past three years as investors become increasingly excited about the wave of change coming in the automotive industry.
Tesla has come a long way in a short time, but it will hardly benefit from electrifying the car alone. This is why three contributors to Fool.com believe Fisker (NYSE: FSR), NIO (NYSE: NIO), en ChargePoint Holdings (NYSE: CHPT) has the potential to deliver Tesla-like returns in the coming years.
Image Source: Getty Images.
Asset-light can deliver great returns
Lou Whiteman (Fisherman): Henrik Fisker is a respected name in car design, but his dreams of starting up electric vehicles have suffered some setbacks. Its original company, Fisker Automotive, had no cash and was sold to Wanxiang Group in 2014. But he held on to the name, and his second attempt to build a company seemed much more promising.
Fisker focuses on what the designer does best: to create beautiful cars. This time, the company leaves the production and maintenance to others with more experience and more importantly, better scale. Fisker works with partners, including Magna International a long appeal supplier Foxconn Technology Group – also known as Hon Hai Precision – to build vehicles. It also has partners to provide delivery services, services and fleet management for its vehicles.
Manufacturing vehicles is difficult, as Tesla has discovered over the years as it tries to expand its operations. And with titans like in the industry General Motors and Volkswagen ready to flood the market with scale for electric vehicles is going to matter more than ever in the coming years.
There is a risk to this plan, as Fisker relies on many partners to put things right. But the asset-light model allows the business to focus on what it does best, including design, brand building and marketing.
Fisker’s share was volatile. It was almost a double-digit mark for the year from the beginning of March before returning most of the gains in recent weeks. I can not say with certainty whether any stocks will experience the kind of run that Tesla has had over the past three years, but the asset model, if successful, gives Fisker the opportunity to generate strong returns without significant investment in plants, supply chains and workforce.
The Fisherman Ocean. Image source: Fisherman.
The “Tesla of China” could really be the Tesla of China
John Rosevear (NIO): People in financial media so often call NIO “the Tesla of China” that at this point it is almost a cliché. But there are some reasons to think that the manufacturer of luxury electric vehicles in Hefei can really follow in Tesla’s footsteps.
First, its products are luxurious, stylish and packed with new technology, but not excessive. This combination hits the ‘sweet spot’ of the world’s largest market for new vehicles (China’s), where sales and margins are likely to be strong over time. A related point: owners really like the cars, and NIO wins many new customers orally – just like Tesla does in the United States.
Second, CEO William Bin Li and his team have done an excellent job of building relationships with local authorities. Among other things, the company has agreed to help make the city of Hefei, in the Chinese province of Anhui, a center for research and development for electric and self-driving vehicles.
This kind of relationship is important in every country, but it’s especially important in China – and Li and his company have shown their commitment to taking care of it.
Third, like Tesla, NIO’s shares are expensive because investors in electric vehicles have high expectations for the company. NIO’s market capitalization of about $ 60 billion is large for a company that sold only about 43,000 vehicles in 2020. Ford Motor Company, which sold about 4.2 million vehicles last year and has a market capitalization of about $ 50 billion.) But – as with Tesla – investors want to compensate for the potential for big growth.
In the short term, they are likely to be rewarded. NIO could very well sell 100,000 cars by 2021, and it looks very likely that by the middle of the decade it will sell several million a year.
There is one big caveat: just like with Tesla, much of the future growth is already built into NIO’s share price. I think NIO looks like the best of the emerging Chinese electric vehicle manufacturers, and I think the chances are good that it will flourish and grow and that investors will be rewarded over time. However, be prepared for some volatility: if and when investors recover their expectations, NIO’s share price may also recover abruptly.
It is a stock to look at in an overcrowded field of electric vehicle supplies.
ChargePoint is very large and expensive
Rich Smith (ChargePoint): In February, my colleague John Rosevear helped us compile a comprehensive list of each publicly traded stock, which can reasonably be called an ‘EV stock’. Which EV share is the next Tesla out of these two dozen foreign companies?
I wish I knew.
Tesla is a strange duck. It is the most successful manufacturer of electric cars in the world, but at the same time very expensive at an overdue P / E ratio of more than 1000 times. In this respect, I can think that ChargePoint is a lot like Tesla. According to its own data, ChargePoint offers its customers more than 132,000 ‘places to charge’ in North America and Europe. It’s seven times more charging than Tesla boasts, making ChargePoint the world leader in EV charging.
At the same time, this huge network ChargePoint achieved only $ 146.5 million in sales last year, and it cost $ 197 million in losses on the bottom line, resulting in a stock valuation of 54 times (and infinite times earnings). Valued on price after sales, ChargePoint is actually twice as expensive as Tesla!
At first glance, this probably does not sound like a good thing. However, this means that ChargePoint – just like Tesla – has a richly valued stock that he can use as currency to acquire and set up competitors, to raise cash to build his own network and to avoid the need to to continue. debt.
Whether this is how things play out and the rich valuation of ChargePoint becomes a self-fulfilling prophecy, help to convert ChargePoint into the next Tesla – or it means the stock is simply highly overvalued and doomed to fall – remains to be seen.
This article represents the opinion of the author, who may not be in agreement with the ‘official’ recommendation position of a Motley Fool premium advisory service. We are furry! Questioning an investment thesis – even one of our own – helps us all to think critically about investments and to make decisions that help us become smarter, happier and richer.