Combating climate change remains the main focus of the majority of countries around the world. The United States announced a $2 trillion climate plan, the UK announced a ban on sales of gasoline powered cars after 2030, and China announced its aim to go carbon neutral by 2030. The electric vehicle (EV) industry is poised to capitalize on this changing trend and is projected to grow at a CAGR of 21.1% over the next 10 years, delivering over 26 million vehicles by 2030.
Tesla, Inc. (TSLA) has established itself as the leading EV manufacturer, with the highest volume of EV sales across the world. The company has built an intricate supply chain over the years to assert its dominance, with production factories in key locations such as China, Germany and the United States.
However, the trending EV industry and robust growth potential has attracted new players. Niu Technologies (NIU), which is a relatively new EV company based in China, has the potential to emerge as an industry leader, based on its unique 2-wheeled vehicles tailor made to suit urban commutes, at lower prices.
As the demand for EVs rises globally, both TSLA and NIU are well-positioned to grow significantly.
Tesla, Inc. (TSLA)
TSLA has been a red-hot stock this year, with 586.1% gains year-to-date. In fact, the surging prices led to a 5-for-1 stock split earlier this year, in August, after CEO Elon Musk himself claimed the stock to be overvalued.
However, bullish investor sentiment was justified, as the company generated profits for five consecutive quarters, leading to its inclusion in the S&P 500 index, effective December 21st. Musk’s private wealth increased significantly with TSLA, success, as he is currently the second richest person in the world.
TSLA is currently planning to launch three new electric vehicles in the near future, including the Tesla Cybertruck and 2 electric cars. It is planning to invest up to $12 billion in electric vehicles and battery factories over the next two years, with manufacturing facilities in three continents. The company raised $4.97 billion through at-the-market stock offering in September to fund its capital-intensive projects in the near future.
Moreover, TSLA is reportedly planning to launch its products in India in 2021. With a huge population and thereby market base, this expansion is expected to ramp up the profits for the company. TSLA also has plans to open a new battery system project in Australia, which has been dubbed as ‘Big Tesla Battery’. In this regard, TSLA partnered with French renewable company Neoen to develop 300/ 450 MWh in South Australia.
After successfully dominating the electric vehicle industry, TSLA is currently venturing into other sectors. The company’s prior acquisition of Solar city in 2016 has given it a smooth entry point in the solar panel manufacturing industry. CEO Elon musk expects this segment to become the next “killer product” by 2021. Total solar deployments in the third quarter ended September 2020 more than doubled sequentially to 57 MV, while solar roof deployments tripled over this period.
TSLA also joined the tequila business on November 7th, launching its uniquely shaped tequila bottles through its official website, which sold out within hours.
Following the news release of Pfizer and BioNTech vaccine, Musk confirmed that TSLA became the manufacturing partner for German biotech firm CureVac, and is currently in the process of developing RNA micro-factories and version 3 vaccine printers.
TSLA reported impressive results for the third quarter ended September 2020, surpassing analyst expectations. Its EV deliveries increased 7% year-over-year (subject to operating lease accounting) over this period. Revenue increased 39% year-over-year to $8.77 billion, while gross profit rose 73% from the same period last year to $2.06 billion. Its net income and EPS rose 131% and 69%, respectively.
The consensus EPS estimate of $0.87 for the current quarter ending December 2020 indicates a 112.2% improvement year-over-year. The company has an impressive earnings surprise history as well, as it beat the street EPS estimates in each of the trailing four quarters. Analysts expect TSLA’s revenue to increase 35.3% from the same period last year to $9.99 billion in the fourth quarter.
How does TSLA stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Industry Rank
A for Overall POWR Rating.
You can’t ask for better. It is currently ranked #1 out of 34 stocks in the Auto & Vehicle Manufacturers industry.
NIU Technologies (NIU)
NIU specializes in two-wheeler electric vehicles, manufacturing four series of e-scooters, two series urban commuter electric motorcycles and a performance bicycle series. Though the company has a global market reach, its largest supply market is China. While the pandemic disrupted global sales, the company maintained and expanded its market presence domestically. It enjoys a dominating market share in China, with total e-bicycle GO sales accounting for 27.6% of the total China market volume over this quarter.
NIU launched a new e-bicycle model GO earlier this year in compliance with the new National Standard of Electric bicycle in China.
NIU e-scooters sales volume increased 67.9% year-over-year to 250,889 in the third quarter ended September 2020. This can be attributed to a 70.2% increase in e-scooter sales in China, and 6.3% growth in the international markets. NIU’s e-commerce sales grew 43.2% year-over-year in the first three quarters of 2020 to 451,187 units.
The consensus EPS estimate of $0.06 for the next quarter (ending March 2021) indicates a 250% improvement year-over-year. Analysts expect revenues to rise 136.2% in the next quarter to $78.62 million.
NIU gained more than 515% to hit its 52-week high of $37.44 in November since hitting its 52-week low of $6.08 in March. The stock has gained 263.4% year-to-date.
NIU is rated “Buy” in our proprietary POWR Ratings system, with an “A” for Trade Grade, and a “B” for Peer Grade and Industry Rank. It is currently ranked #12 out of 30 stocks in the Technology – Hardware industry.
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TSLA shares were trading at $585.76 per share on Friday afternoon, up $11.76 (+2.05%). Year-to-date, TSLA has gained 600.12%, versus a 14.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.
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