>10 Listed Electric Vehicle (EV) Stocks You Can Invest in Besides Tesla

18 min readMay 11, 2021

Tesla aside, what this article will cover

Tesla (NASDAQ:TSLA) has been making waves in the stock market for the past few years in controversial ways, with its share price graph resembling that of pandemic curves for worst-hit countries during the covid19. However, does share price action make them the best EV[1] company to invest in? In this article, we explore the EV industry and highlight salient factors investors need to be mindful of before allocating capital to an Automotive (Auto) related EV business. On top of that, this will be a discovery process for numerous listed stocks and companies related to the EV industry if you are an investor contemplating owning companies related to the EV domain.

[1] EV refers to pure Battery EV (BEV), Plug-in Hybrid EV (PHEV), Hybrid Vehicles (HV) and Fuel Cell Vehicles (FCV)

What’s crazy about the Automotive industry now

What’s amazing about Tesla is that, an Auto company which sells less than 1% of the world’s Auto vehicles, dominate more than 30% of the total market capitalization of leading Auto Original Equipment Manufacturers (OEM) globally, from the Detroit Three (D3), Japan Three (J3), German Three (G3) to the Chinese Seven (C7). For perspective, market capitalization of Toyota (NYSE:TM, TYO:7203) and Volkswagen (FRA:VOW, ETR:VOW3) make up 13% and 8% respectively of the prior total and they each sell around 11% of the world’s Auto vehicles, with a combined total of circa 22%. Compare 22% with less than 1% market share of Tesla, and yet the latter is priced by the market at circa 1.5 times (1.5x) more than the two combined. What an irony? Collectively, the major Auto groups listed in Table 1, own more than 80% share of Auto vehicle unit sales globally and form the bulk of the market that’s perceived to be disrupted by the burgeoning EV industry.

Major Auto Groups and the companies that comprise within — Table 1. Major Auto Groups and companies in the EV industry

Amongst all the euphoria in the EV industry, how should one think if an investment into EV-related Auto businesses is rational and not succumb to the Lollapalooza effect, made famous by Charles Munger, the alter-ego of legendary value investor Warren Buffett? One approach is to leverage “first principles thinking” popularized by Elon Musk; seek to form a view by first understanding the basic fundamental building blocks of a typical EV business, what key problem(s) are they solving, how they go about it and what challenges they face in doing so.

Mobility is one of the core problem statements being addressed by EV companies and it’s vital to be informed on the key factors that influence the delivery of mobility as a service or solution for the challenge. The differentiation of an EV from an Internal Combustion Engine (ICE) Auto vehicle in terms of batteries, range, cost, infrastructure and incentives, though important, will not be covered in this article. Why? Because there’s already copious amounts of literature out there on these topics. Instead, the focus will be on growth catalysts, the landscape for the EV industry to help offer potential investors a view on the global operating environment where a typical EV business competes in, and how other Auto companies out there with a legacy head start from the ICE vehicles business are evolving with the development of their own EV business unit(s). This journey will aid discovery of less conspicuous listed Auto companies globally. Lastly, risks, concerns and questions investors ought to ponder on before owning a piece of the EV business are suggested, in a bid to help potential investors anticipate where they will “die” so as to never go there.

Secular Growth Catalysts for EV

The Auto industry, its benefits and why sovereign countries want to home them

Despite the knowledge and capital intensive nature of automotive industries, countries that are home to the bellwethers of the Auto industry derive various direct and indirect benefits, albeit debatable margins at the automotive business owner level. They include, but are not limited to:

Even though there are lesser parts in a typical EV as compared to ICE vehicles (circa 20k vs. 30k respectively), newer parts like efficient batteries with higher power densities and short charging times, sensors and cameras catalyse the emergence of new supply chains for Auto OEM and allow host countries’ domestic economies and ecosystems (e.g. small medium businesses, higher-learning institutions) to be plugged into global supply chains for ICE, EV Auto parts and related information technology e.g. telematics, level 5 autonomous driving software and In-Vehicle Infotainment (IVI)
More capital investment into foundational sciences will enable development of newer, supporting technologies that contribute to the electrification of the Auto ecosystem. Generating a virtuous cycle that creates new jobs and enables upskilling of the local workforce which drives productivity, and contribution to national GDP growth rates.
Depth in new technologies and human capital that uplifts Deep Tech ecosystem(s) is required for development of mobility solutions for the future e.g. Artificial Intelligence (AI) empowered autonomous driving which requires advancement in object recognition technology, sensors (e.g. cameras), edge computing for alleviation of sensor load amongst many others.

Given projected benefits from a socioeconomic and technology standpoint at the sovereign level, the ability of Auto OEM to maintain relevance in view of the electrification trend becomes closely interrelated with national interests of countries that house their core operations.

U.S.-China rivalry across all dimensions; U.S.’s 2.3 trillion infrastructure budget

The new U.S. administration will be a tougher opponent to China going forth given existing trust issues and this can imply a more challenging bilateral relationship between superpowers, with Anchorage serving as a strong signal. The ensuing impact to the rest of the world, from Auto OEM supply chains to their capital expenditure and Research & Development (R&D) roadmap is far reaching.

Signals are sent by the U.S. in a bid to regain its international repute and “soft-power” post-Trump, with the commitments and communications it made in 2021. On the military front, Biden reaffirms the pledge to maintain a strong U.S. military presence in the Indo-Pacific that was made in late 2020 by the prior administration as a projection of interest and influence in the region. To re-invigorate the economy, the new USD2.3 trillion jobs and infrastructure budget was designed to create jobs aligned with emerging technologies and rebuild the country’s debilitating infrastructure. As it stands, Biden comments that the U.S. ‘s market share of plug-in EV sales is only one-third the size of the Chinese EV market and this has to change. To address the market leadership of China in EV, the administration proposed USD 174 billion (7.5% of budget) to uplift the EV ecosystem, rendering support to automakers for supply chain re-calibration, incentives for end-users to adopt EV and enabling the build-out of charging infrastructure countrywide. All of which sets up the stage for competition and balance of power with emerging China?

China’s economic expansion phase and New Energy Vehicle (NEV) policy

China’s economic liberalisation plan commenced in late 1978 as part of the late statesman’s (Deng Xiaoping) push for reforms to instill competition between the private sector and state-owned enterprises, by catalyzing economic growth through introduction of foreign capital whilst maintaining commitment to Chinese form of socialism. In 1980, China’s GDP per capita was only USD$193, lower than that of Bangladesh, Chad, and Malawi[2], present-day “bottom-billion”[3] countries.

Onwards to 1994, a 50% limit on foreign ownership was officially introduced by the Chinese authorities and this applied to all international automobile groups investing in China except for Tesla Shanghai’s dispensation, catalyzing the Chinese Joint Venture (JV) model for collaboration between foreign companies and Chinese Auto OEM. Volkswagen AG (FRA:VOW) and SAIC Motor (SHA:600104) established the first JV in 1984 for the automotive industry. Fast forward to October 2020, the development plan for NEV related industries from 2021 to 2035 was published on the back of China’s longer-term commitment to address strategic national issues on climate change and sustainability. The promulgation of this sovereign policy catalyzed a slew of timely announcements from industry associations e.g., China Society of Automotive Engineers (SAE) and Chinese Technology companies in the subsequent few months and into 2021. As with any Chinese public policies, it is quintessential for companies in China to identify the relevant core policy objectives for their industry and form a strategic approach in order to stay relevant and viable.

Consequently, China’s SAE subsequently announced the Energy saving and New Energy Vehicles Technology Roadmap 2.0 (chi/eng), commissioned by the Ministry of Industry and Information Technology (MIIT) of China, with core objectives as listed:

Carbon emissions from China’s Auto industry will peak around 2028, ahead of prior national reduction commitment. By 2035, emissions will be reduced by more than 20% from the peak.
NEV will gradually become mainstream products and the Auto industry will attain basic electrification as part of transformative aspirations.
Foundation for China’s Intelligent Connected Vehicle (ICV) technology ecosystem will mature with widespread product applications, at scale.
Material improvement in level of independence for key core technologies to form an automotive industrial value chain that’s controllable, collaborative, safe and highly efficient.
Establish intelligent mobility systems for automotives; forming an integrative ecosystem of automobiles, transportation, energy and smart cities.
The ecosystem that spurs technology innovations will be continuously refined for maturity, and China will have the ability to lead the world in original innovations.
By 2035, 50% or more market share in China for new vehicles in the Auto industry will be NEV and 95% of them will be Battery EV (BEV).

It is worthwhile to note that an earlier version of the roadmap, version 1.0 was announced in 2017 and that the percentage of NEVs for new vehicles in China was set to 40–50% by 2030 then. Fast forward to late 2020, key milestones for NEV were updated in Roadmap 2.0 and the plan was made more granular e.g., preferred testing standards to assess fuel economy of passenger cars was identified i.e., Worldwide harmonized Light vehicles Test Procedure (WLTC) or China Light-duty vehicle Test Cycle (CLTC) to replace New European Driving Cycle (NEDC) standard. Most importantly, a bold strategic aspiration of phasing out conventional energy (ICE) passenger vehicles by 2035 was declared i.e., energy savings for passenger cars using conventional energy will be incentivized by the government to increase the ratio of Hybrid EV (HV) to make all passenger cars HVs by 2035.

[2] In 1980, measured by current U.S. dollars, China’s GDP per capita was equivalent to Malawi’s and only about 88 percent of Chad’s and Bangladesh’s. World Bank Database, http://data.worldbank.org/indicator/

[3] “Bottom billion” refers to the world’s poorest countries (Collier 2007).

Climate change; ideal ingredient to drive development of the EV ecosystem?

Bill Gates’ latest book tells us how to avoid a climate disaster and one of the core pillars of the proposals was to get to zero carbon emissions. A deep dive into core human activities that generate emissions inform us that how we make things, plug in for electricity and get around places account for circa 74% of emissions; no surprise that the Auto industry has a significant contribution to the aforementioned 74%. Intuitively, EV gets touted as if it is the convenient solution to address decarbonization since pure Battery EV (BEV) generates zero emissions at the tailpipe. Marrying the aforementioned with sustainability factors e.g., Environment, Social & Governance (ESG) that institutional investors are integrating into their investment decision-making models, the EV ecosystem is well positioned to receive capital allocation flows from both public and private institutions? A deeper dive into the issue will unravel how hard it is to remove dependence on fossil fuels given positive correlations for improvements in standards of living for humans versus energy consumption and select activities of civilization that account for around 10% of global emissions: making of steel, plastic and cement.

Battery pricing approaching cost competitiveness with fossil fuels

Battery prices are projected to be close to $100/kWh by 2023 due to rising order sizes and sales growth of BEV that benefit manufacturers with scale. Advances in battery technologies or energy storage systems in recent years by key players in the domain, Contemporary Amperex Technology Co Ltd (CATL) (SHE:300750), Build Your Dreams (BYD) (HKG:1211, SHE:002594, OTCMKTS: BYDDF), and QuantumScape Corp (NYSE:QS, BMV:QS) is a development catalyzed by huge R&D investments into the space given how factors like range, charging time and cost of EV are impacted by this fundamental building block. In 2020, Lithium-ion battery pack prices have fallen 89% to $137/kWh where previously they were above $1,100/kWh in 2010. For widespread adoption of EVs, a key requirement is further reduction of costs with continued improvements to energy efficiency, power density and charging time e.g. quick-charging performance of Lithium-ion batteries and mass commercialization of solid state batteries that can be charged from zero to full in 10 minutes whilst offering a range of 300 miles (500km) e.g. Toyota (TYO:7201), Volkswagen (FRA:VOW)

Industry Competitive Landscape

On 18th July 2001, Warren Buffett was invited to give a talk to students of University of Georgia at Sanford Hall and his commentary (14:25–16:30) on the Auto industry offers a viewpoint on the nature of the Auto business ecosystem and how it might be easier to win by picking the losers i.e., horses and shorting them. However, considering that this thinking goes way back, it does beg the question whether it’s still relevant to the Auto landscape of today? Especially given how the landscape has evolved and consolidated over the past century?

The Ideal Scenario for EV Auto OEM or related businesses

The most coveted scenario for an investor in the EV industry is one where every new Internal Combustion Engine (ICE) Auto vehicle sold on earth, whether it’s powered by petrol or diesel, gets replaced by an EV. This represents the most optimistic estimation of the market or growth opportunity (target addressable market) for any company in the EV business.

The big picture of the Auto industry; the Movers and Shakers

To appreciate the industry nuances and whether any Auto business has any edge (see here, for an article on screening businesses with competitive advantages), a typical approach is to look at how it stacks up against their peers or peer groups at the global stage, and whether they secure a respectable market share that translates to meaningful margins.

Select metrics of the major auto groups introduced earlier are illustrated in Table 2 below to offer the big picture view on the lay of the land at the global level. Collectively, >80% of new vehicle sales and the market capitalization of Auto companies belong to the global Auto companies.

The Major Auto Groups’ (Challenger, D3, G3, J3 and C7) Influence in the Auto industry via revenue, unit sales, market share and market capitalization — Table 2. The Major Auto Groups’ (Challenger, D3, G3, J3 and C7) Influence in the Auto industry

Metrics of Tesla and her more common competitors in the EV space are listed in Table 3 below. So how do they compare to the bellwether industry groups above?

Numbers for direct comparables of Tesla in the EV domain — Table 3. Direct Comparables in the EV domain

A focus on just the direct competitors of Tesla in the EV space is at best myopic. Bellwether representatives from each major auto group are selected and illustrated in Table 4. How would the group leaders match up to the EV-centric companies in Table 3 and how easy would it be for them to 2x, 5x or 10x their business?

Numbers for the bellwether representatives of D3, G3, J3 and C7 respectively — Table 4. The Bellwether Representatives for D3, G3, J3 and C7

A noteworthy point is that despite the challenger group’s less than 1% share of total vehicle unit sales for both ICE vehicles and EV, their market share of EV vehicles sold globally stands at circa 10% per appended Figure 1 given their head-start and focus. More than 80% of the challengers’ group production capacity is for EV as compared to the other major Auto groups, which only made serious capital investment and commitments in recent years to develop EV brands and related partnerships (e.g. GM, VOW, Toyota, SAIC), with Covid19 acting as an unexpected catalyst.

Figure 1. Estimated Electric Vehicles (EV) Market Share by unit sales

However, questions to ponder on included but am not limited to whether the other major Auto groups are too late to the EV game? Or the pure EV players and local Chinese Auto OEM have already cornered a huge share of the market and it’s too late to wrestle it away? A look into the success of an EV brand by the JV (SGMW) in China controlled by SAIC (SHA:600104) with GM (NYSE:GM) and Wuling Motors[4] (HKG:0305, FRA:6LY, OTCMKTS:WLMTF) as non-controlling shareholders, Wuling Hongguang Mini EV, might lend some perspective. Since the brand’s launch in July 2020, their monthly unit sales had eclipsed that of Tesla within China in early 2021 and became the top selling EV model. SGMW claimed unit sales of 200,000 units in 200 days from launch in July 2020 as per Figure 2. A deeper dive into their approach and context later might unravel takeaways on the importance of hyper-localism for a complex market like China in the Asia Pacific region?

Wuling Hongguang MINI EV achievement of 200,000 unit sales within first 200 days since launch — Figure 2. Wuling Hongguang MINI EV achievement within first 200 days of launch

[4] The immediate parent of Wuling Motors is Wuling HK and its ultimate parent is Guangxi Automobile.

Risks, Concerns and the Important Questions for Investors?

What other material developments are there and what lies ahead?

With the EV industry burgeoned by growth catalysts and exciting revenue growth for challenger Auto OEMs focused on pure EV, the volatility of their share price trajectory can be comparable to Technology upstarts in other domains at times. However, there’s a need to bear in mind that they are starting from a relatively low base for unit sales and production capacity as compared to established Auto OEM groups based on the landscape described earlier. Also, bellwether Auto OEMs have ramped up their capital expenditures, allocations for Research & Development (R&D) into EV-related innovation and strategic partnerships materially in recent years (e.g. Volkswagen, BMW, GM, Ford, Daimler) to enable their own line of EV brands with ensuing production capacity and ecosystems.

Foreseeable intense competition within EV industry further catalyzed by partnerships with leading Chinese companies across industries

With the whole of the Chinese government pushing forth the electrification agenda, numerous Auto OEMs have jumped onto the bandwagon to announce partnerships with Chinese Big Tech, Real Estate (e.g., Evergrande) company and even drone maker DaJiang Innovations (DJI), see in exhaustive list below. Collectively, they join Baidu (NASDAQ:BIDU, HKG:9888, FRA:B1C, BMV:BIDUN, FRA:B1CB), who had a head-start in the EV ecosystem with the Apollo project since 2017 which culminated in the genesis of the Robotaxi service launched in early May 2021:

[5] Beijing Electric Vehicle Co (BJEV) has changed its name to BAIC BluePark New Energy Technology [SHA:600733]

Given the extent and fluidity of the list which already omitted the partnerships made by the non-Chinese major Auto Groups e.g. D3, G3, J3 with Western Big Tech firms e.g. Waymo (Google/Alphabet subsidiary), Intel (NASDAQ:INTC), Microsoft (NASDAQ:MSFT) to name a few. One thing is certain, competition in the EV industry will intensify further as both eastern and western Auto OEMs launch a wide variety of EV brands with diverse models (e.g., battery operator) globally in these few years as EV turn mainstream (why would they not be?). Should this scenario unfold, investors ought to think about what might drive customer stickiness towards any Auto brand, and whether any of the Auto companies are able to deliver a mobility solution or service that catalyzes customer loyalty to the extent where the company is able to generate sustainable operating margins in a recurring manner? Also, what signs should potential investors in the industry monitor for risk management when the consolidation phase kicks in as intense competition erodes profitability?

Prima facie Auto industry operating margins

Operating margins of profitable (or non-loss-making) Auto OEMs in this early phase of EV wave are generally in their single digits, with the group leaders in the higher single digits range which include the likes of Tesla and BYD. For a potential investor, a natural question to ask would be whether one would prefer to own a piece of a business in a highly competitive and complex environment with historically low margins? Or a business with a demonstrable and durable edge in an industry that has a higher probability of translating to higher margins as they execute fervently on a long and wide growth runway ahead, whether due to their current status quo or proven paths to profitability by comparable companies?

Case study: MINI EV wave in China and what helped them to succeed?

Baojun E100 was launched by SGMW in July 2017. Baojun’s E-series (E100, E200, E300) collectively clocked unit sales of 46+k in 2020 (22% year-on-year decline from 60+k in 2019 with covid19 playing a strong role). Fast forward to July 2020, SGMW launched Wuling Hongguang MINI EV and within the first 200 days, it exceeded unit sales of 200,000. 120+k units of the Wuling Hongguang MINI EV were sold in 2020 which is 11x of Baojun E100 unit sales in 2017 when it was first launched and 2.6x of all Baojun E-series models sold in 2020.

Looking at the various comparable mini car models produced by SAIC, GM, Wuling or SGMW in Table 5 below with their respective launch dates, would anyone be able to guess that the bestselling mini EV which outsold Tesla in China for 1Q2021, is the Wuling Hongguang MINI EV? Barring pricing and vehicle specification (e.g. range, safety) considerations, if the focus was solely on aesthetics which might be a major factor of consideration for its core customer base that comprised mostly of females (circa 60%) born after 1990 (>70%), wouldn’t Baojun E100 and Roewe Clever look better especially when the E100 reminds one of Daimler’s Smart Fortwo? Trust this surface the idea that consumer preferences are subjective to cultural nuances and hard to fathom in complex markets like China. Being hyperlocal and really focused on actively listening for the voice of customers to discern local market nuances is a basic requirement for survival and perhaps success?

Table 5. How comparable models produced under different platforms and sold by SAIC, GM and Wuling look like

The success of Wuling Hongguang MINI EV ought to trigger critical questions for foreign (non-Chinese) Auto OEM seeking to succeed in a complex market like China within the larger Asia Pacific region. To what extent can similar success be replicated by GM or other foreign Auto OEMs in China or for the rest of Asia where cultures are less homogeneous compared to the likes of Europe or U.S., which inevitably shapes consumption behavior of local vehicle buyers? Notwithstanding that the success of the MINI EV by SGMW was built on learnings from experimentation for mini cars (e.g., Baojun E-series) developed via their Global Small Electric Vehicles (GSEV) platform and prior small EV experience e.g., Roewe E50. N.b.: Roewe E50 was a SAIC Motor brand launched in Nov 2012 that was replaced by Roewe Clever which was launched in September 2020, one to two months after the launch of Wuling Hongguang MINI EV by SGMW in July 2020.

Based on existing data and in hindsight, one might debate that success might be attributed to the “hyperlocal” element of the branding and positioning of the MINI EV, which influenced car design, pricing and ensuing Go to Market (GTM) strategy. A pricing point for a car that’s comparable to a motorbike locally appeals to a niche target audience segment of young working adults in China with lesser disposable income, seeking a mode of transportation that’s value for money, and yet offer a tinge of identity with options for personalization (e.g., colorful body wrap patterns for the female audience). Pair the aforementioned with a community-led growth model that integrates local Key Opinion Leaders (KOL) in China (or influencers in our local parlance) into the design of their user activation campaigns, in what way does it not resemble growth-hacking marketing playbooks for successful Fast Moving Consumer Goods (FMCG) in China e.g., color cosmetics and skincare brands like Perfect Diary, Little Ondine and Abby’s Choice? Hope this sample case study for China highlights the level of difficulty to succeed in the Auto industry for a complex market at this time and age where consumers are getting more sophisticated with their ease of access to information (and influence), especially given how diverse each Asian country is evolving to be.

The most important things

Every investor, with their own set of world views, sees a different future, therein impacting where they choose to invest their financial resources and their conviction for the allocation. Should you be considering an investment into an EV-related company today, what would be your view for the EV business and the Auto industry in the longer run? What would drive the conviction? Do you see them developing a competitive edge which translates to eventual pricing power and sustainable margins as they focus on the execution of their growth strategy? Lastly, would this long view be a really challenging feat for your target company or investee to deliver due to the sheer number of dependencies within and not within their control?

To end off, perhaps an extract from the Sage of Omaha’s 1996 letter to shareholders of Berkshire Hathaway might shine more light:

I would rather be certain of a good result than hopeful of a great one. I don’t look to jump over 7-foot bars. I look around for 1-foot bars that I can step over.

On this line of thought, would an investment into an EV company seem like jumping over a 1-foot bar or it resembles more of jumping over a 7-foot bar to you?

P.S.: How do you see the future of mobility evolve? As an extension of one’s living space that encompass solutions like Robotaxi e.g. Tesla (NASDAQ:TSLA), Baidu (HKG:9888) that optimizes energy consumption and cost automatically for each individual or household? Or otherwise? Please do share your comments or viewpoints.