Why buy an electric car when oil has fallen to $40 a barrel? A lot of people apparently appreciate the long-term value of reducing carbon emissions, while protecting themselves from a reversal in oil prices. Global electric-vehicle sales continued to grow rapidly, from just 14,500 monthly units at the start of 2014 to 48,500 in September, even as oil prices dived.
The future for electric cars is bright. The second wave, including
General Motors GM 2.199041443473358% General Motors Co. U.S.: NYSE [SUP]USD[/SUP]36.25 0.78 2.199041443473358% /Date(1449266420542-0600)/ Volume (Delayed 15m) : 11419269 AFTER HOURS [SUP]USD[/SUP]36.26 0.01 0.027586206896551724% Volume (Delayed 15m) : 143339 P/E Ratio 13.119322500090478 Market Cap 56970282287.5977 Dividend Yield 3.972413793103448% Rev. per Employee 705333
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Your Value Your Change Short position ’ Chevy Bolt, will come to market in 2017 with a 200-mile driving range and a price around $30,000. As such, electric-vehicle bulls who find
Tesla Motors TSLA -1.001246186240385% Tesla Motors Inc. U.S.: Nasdaq [SUP]USD[/SUP]230.38 -2.33 -1.001246186240385% /Date(1449266400093-0600)/ Volume (Delayed 15m) : 2545219 AFTER HOURS [SUP]USD[/SUP]230.9 0.52 0.22571403767688167% Volume (Delayed 15m) : 28384 P/E Ratio N/A Market Cap 30168492947.4536 Dividend Yield N/A Rev. per Employee 372828
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Your Value Your Change Short position ’ (ticker: TSLA) stock too volatile—a fifth of its outstanding shares are borrowed by short sellers—can turn to Korean battery makers
LG Chem 051910.SE -2.0602218700475436% LG Chem Ltd. S. Korea: KRX [SUP]KRW[/SUP]309000 -6500 -2.0602218700475436% /Date(1449262828000-0600)/ Volume (Delayed 20m) : 179325 P/E Ratio 21.8213518269549 Market Cap 20477770382812.5 Dividend Yield 1.2944983818770226% Rev. per Employee N/A
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Your Value Your Change Short position (051910.Korea) and
Samsung SDI (006400.Korea) at much cheaper prices.
Electric cars are starting to make economic sense in China, the market with the most growth. Beijing doesn’t want more foul air, so in big cities like Shanghai, a license plate for a traditional car costs a whopping 80,000 yuan ($12,500) but is free for electric cars. As a result, after government subsidies, residents in Shanghai can buy
BYD 1211.HK -2.322641807552536% BYD Co. Ltd. China: Shenzhen [SUP]CNY[/SUP]61.82 -1.47 -2.322641807552536% /Date(1449262936000-0600)/ Volume (Delayed 15m) : 10907826 P/E Ratio 76.16114327953677 Market Cap 127717372722.991 Dividend Yield 0.08087997411840828% Rev. per Employee 348058
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Your Value Your Change Short position ’s (1211.Hong Kong) high-end E6 electric model for just over CNY200,000, 20% less than the gasoline-powered
Kia 000270.SE 0.18450184501845018% Kia Motors Corp. S. Korea: KRX [SUP]KRW[/SUP]54300 100 0.18450184501845018% /Date(1449262814000-0600)/ Volume (Delayed 20m) : 397755 P/E Ratio 8.291342189647274 Market Cap 22011231262500 Dividend Yield 1.8416206261510129% Rev. per Employee 1419780000
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Your Value Your Change Short position (000270.Korea) K3 compact, according to Barclays. The bank sees the electric-vehicle market growing to $12.4 billion in 2020 from $4.3 billion in 2014.
In battery technology, the rest of the world is headed in the direction opposite Tesla, a pioneer in packaging arrays of cheap, commoditized laptop batteries to power cars. The other car makers have turned to the two Korean suppliers, which claim that their larger batteries are safer. They also are more expensive.
“Korea is steaming ahead,” says Bernstein Research’s Mark Newman. Market leader LG Chem, which supplies GM (GM), has made significant cost reductions by packing more energy density into its batteries—in the case of GM, by 30% to 40% from the first-generation plug-in hybrid Chevy Volt to the all-electric 2017 Bolt. LG Chem supplies 13 of the top 20 global auto makers and six of China’s top 10.
Shares of LG Chem have risen about 20% since the
Volkswagen (VLKAY) diesel emissions scandal refocused attention on electric vehicles. But the stock is still cheap, trading at just 1.8 times book, below its five-year average of 2.1 times. Barclays has a price target of 396,000 won ($340), promising 25% upside. The bank expects LG Chem’s battery unit to turn profitable by 2017, when the next-generation vehicles arrive.
While LG Chem is the No. 1 supplier, its stock isn’t a pure play—about 15% of its revenue comes from batteries and the rest from petrochemicals. The purest play would be technology runner-up Samsung SDI, which now gets three-quarters of its revenue from batteries, after shedding its chemical business for $2.6 billion in October. Trading at only 0.7 times book, Samsung SDI is dirt cheap, but there’s a reason for that. It’s part of the Samsung conglomerate, or
chaebol, controversial for its opaque management. Investors fret that SDI will make an ill-advised move with the $2.6 billion to help out Samsung Engineering, in which SDI has a 13% stake. But Bernstein’s Newman thinks such worries are priced in. His price target of 160,000 won, about 33% above recent levels, values SDI at just 0.9 times book. That’s a lot less than Tesla’s 23 times.
What the hell will Porsch say that is important in 2019 or 2020, maybe that EVs are bad an by the end of next decade FC will be the next big thing and in the meantime selling all these great turbo ICE engines for years and years and years.
