Electric cars: what’s out there for investors?
The electric vehicle revolution, it appears, is well underway. More manufacturers are announcing fully electric models all the time, as technology finally catches up with demand making the traditional complaints of lessened performance and battery life redundant.
So far, Elon Musk and Tesla Motors have been at the forefront of this revolution, with the Tesla S considered by many to be the world’s flagship electric car.
Such success has distilled onto the markets in a big way. Since its IPO in 2010 (which valued Tesla at $17 per share), the company has seen growth of over 1000% to a current price of around $220.
That is a staggering rise, which has led some commentators to change their opinion of Tesla’s stock. The peak of $240 that it hit earlier on this year has not been replicated and the company looks set to announce little to no profit in its upcoming earnings announcement. Of course, most investors have chosen the stock because of what they believe Tesla will achieve in the future – and the impending release of the SUV Model X and smaller Model 3 should increase sales dramatically – but for many the popularity of Tesla shares makes them prohibitively overpriced.
So what else is there on the market? No other companies exist as battery power-only manufacturers, but plenty of major brands are putting some major investment into electric:
Despite Tesla grabbing the headlines in the electric car market, it is in fact the strategic partnership between Nissan and Renault that has sold the most electric cars globally. That’s mainly down to the success of the Nissan Leaf, the world’s top-selling highway-capable electric car, though Renault also makes a significant contribution with its Kangoo, Fluence, Zoe and Twizy models.
The nature of Nissan-Renault’s relationship (they share a CEO but are entirely separate companies) means that traders can pick which company they would like to invest in. Since the launch of their first electric car in late 2010, both companies have seen growth: but Renault’s listing has been the most successful. They have reported 50% growth, compared to Nissan’s 20%.
The alliance looks well placed to increase sales of electric cars in the future, as the Leaf and Kangoo especially have proven to be popular offerings. Whether that translates onto the markets, however, remains to be seen.
Later to the party, but perhaps just as set to be a big player in electric cars, is BMW. The company launched its first electric model, the i3, in Europe in November last year (it arrived in the US a few months later, in May).
Despite its newcomer status, the i3 has sold well in the first half of the year, perhaps as it is placed nicely between the affordability of the Leaf and luxury of the Tesla S. The company is also aiming well above both Nissan and Tesla with the impending i8 model, which can cost up to $300,000.
Like Tesla, BMW is offering to share its battery technology in a move to make electric cars cheaper in the future. So it’s making moves in the right direction, and has seen some healthy 16% growth since the release of the i3.
It’s always going to be hard for BMW, Renault or Nissan to replicate the clear focus or meteoric growth of a newer, smaller company like Tesla. And investors hoping that lightning might strike twice should be wary of the risks that come with new technologies. But, as electricity overtakes the traditional motor industry, these companies look like they might be set to take advantage.
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