Categories Analysis, Industrials

The electric vehicle industry is getting charged up but challenges still persist

General Motors plans to invest $27 billion in electric and autonomous vehicles over the next five years

Electric vehicles continue to gain traction and the market is happy with the recent delivery reports of two major players in the industry – Tesla (NASDAQ: TSLA) and Nio (NYSE: NIO). The government has also announced major plans to boost this industry but experts remain skeptical due to the challenges that continue to persist in this space.

Deliveries

Last week, Nio disclosed that it delivered 7,257 vehicles in March, which is up 373% year-over-year, continuing the triple-digit growth trend seen since the beginning of 2021. Deliveries were up 352% for January and 689% for February on a YoY basis. Total deliveries for the first quarter of 2021 were 20,060 vehicles, up 423% YoY.

In March, Nio had temporarily suspended its vehicle production at its Hefei plant for five days due to the shortage of semiconductors. The shortage had impacted the company’s March production volume and it expected Q1 deliveries to be approx. 19,500 at the time. However, as can be seen, the final number came within its previously provided outlook of 20,000-20,500 vehicles.

Nio reported total revenue of $2.4 billion in FY2020, reflecting a YoY growth of nearly 108%. Total deliveries more than doubled to 43,728 vehicles during the year.  

Tesla too came out with its Q1 2021 vehicle production and delivery metrics last week. The EV-maker produced 180,338 units, all of which were Model 3 and Model Y vehicles. Tesla delivered 184,800 vehicles in total for the quarter, of which over 2,000 were Model S/X while the remaining were Model 3/Y. Tesla produced 509,737 vehicles and delivered 499,550 vehicles in FY2020.

Other players

Traditional automakers like Ford Motor Company (NYSE: F) and General Motors (NYSE: GM) are also investing heavily in electric vehicles in order to keep up with the changing trends and rules. Earlier this year, Ford said it would invest at least $22 billion in its electrification plans. The company is investing $1 billion in Germany to set up a facility to manufacture electric vehicles, the first of its kind in Europe.

By the middle of 2026, Ford expects its entire passenger vehicle range in Europe to be zero-emissions capable, plug-in hybrid, or all-electric. The company aims to go all-electric by 2030.

General Motors plans to invest $27 billion in electric and autonomous vehicles over the next five years. The company will offer 30 all-electric models globally by 2025 and plans for 40% of its US models to be battery electric vehicles by the end of 2025.

Plans and challenges

According to a report by CNBC, President Joe Biden is planning to invest $174 billion for the development and adoption of electric vehicles. This will include money for retooling factories, supply of materials, tax incentives for buyers, and grants and incentives for charging infrastructure.

The report stated that, based on data from AlixPartners, the cost of building out a global charging network to accommodate the expected growth of EVs by 2030 is estimated to be $300 billion. This includes $50 billion in the US alone. AlixPartners projects 18 million EVs on US roads by 2030-end.

However, there are a few challenges in front of the electric vehicle industry. According to a report by Interesting Engineering, in order to build new fleets of all-electric vehicles on a mass scale, entirely new infrastructures would have to be rolled out.

Another headwind facing the industry is the availability of charging stations. It will take significant investment and effort to build a viable network of chargers and building this network needs to be done in line with the rollout of new electric vehicles.

Market outlook

Based on data from IHS Markit, global sales of electric vehicles are projected to rise by about 70% in 2021. In 2025, global sales are expected to top 12.2 million units.

Stock

Tesla’s shares were up 5% on Monday. The stock has gained 630% in the past 12 months. Nio’s stock has skyrocketed over 1,500% over the past one year.

Click here to read more on electric vehicle stocks

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

Most Popular

Earnings: JetBlue (JBLU) Q3 loss narrows on strong revenue growth; beats view

JetBlue Airways Corp. (NASDAQ: JBLU) reported a sharp increase in third-quarter revenues, reflecting the resumption of flight operations even as the market-reopening gathers momentum. As a result, net loss narrowed

GE (GE) Q3 2021 Earnings: Key financials and quarterly highlights

GE (NYSE: GE) reported third quarter 2021 earnings results today. Total revenues dipped 1% year-over-year to $18.4 billion, missing analysts’ projections of $19.2 billion. GAAP EPS was $1.08 compared to

UPS reports Q3 earnings above street target: Infographic

UPS (NYSE: UPS) reported Third-quarter 2021 financial results before the regular market hours on Tuesday. The package delivery company reported Q3 revenue of $23.2 billion, up 9.2% year-over-year and higher

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top