[MUSIC] Seemingly every month,
a legacy automaker makes
an announcement outlining bold plans to
de-carbonize its operations by
investing in electric vehicles or EVs.
Simultaneously,
we've seen plenty of new players enter the space.
A few years ago Tesla seemed like
the only true EV investment opportunity.
Today, the industry feels more
crowded and competitive than ever.
I am Kate with The Motley Fool,
and I dove into the world of EVs with
contributing writer Daniel Foelber,
and we discussed the future of EVs,
the latest on Lucid and Rivian,
what makes Tesla unique,
and some other investment ideas worth considering now.
[MUSIC]
Lucid and Rivian have a lot in common,
they're both relatively new to the public markets,
have little to no revenue,
but great management teams,
really impressive technology, and a lot of cash.
Lucid actually went public on
July 23rd when it merged with
a SPAC called Churchill Capital IV,
and that gave it 4.4 billion in net cash that it's
going to need to scale its operations
and fund 2022's business.
I think Lucid's real claim to
fame is its battery technology.
Its CEO and CTO, Peter Rawlinson,
is very adamant about battery efficiency,
not just the size of the battery pack.
Lucid has a better battery efficiency than Tesla,
than Jaguar I-Pace,
than a lot of the big luxury brands out there.
Its roots are actually in
battery technology before it
became its current Lucid group.
It's been around for a long time.
That's something we will touch on with Rivian too,
is these companies are new to the public markets,
but their technology has been in
development for 10-plus years.
In addition to having a very efficient battery pack,
Lucid's done a very good job in
2021 on delivering on its promises.
It set a lot of
pretty ambitious goals and to its credit, it hit them.
Much as Churchill Capital,
got access to a lot of cash,
it had very ambitious range,
ratings, and horsepower ratings that
the environmental protection agency or
EPA validated actually higher than Lucid estimated.
So the EPA gave its stream edition
range a 520-mile rating,
which was higher than Lucid estimated.
The fact that it under estimated a very,
very good range rating is
just a testament to how good it's technology really is.
It also began mass production on
time and customer deliveries on time,
so they began mass production late September,
customer delivery started in late October.
When you go through the timeline of Lucid,
that is really what it's
done is it's delivered on promises.
Transitioning to Rivian,
the R1T pickup truck has really taken
the market by storm compared to Lucid,
which has 17,000 reservations
across its air luxury sedan line.
Rivian has 71,000 reservations for its R1T truck.
It's pretty jaw-dropping,
and that's coming from,
I think 48,000 reservations just as of September 30th.
You can see that Rivian is growing
its reservations just in
a few months what Lucid has in totality.
The demand is really, really there,
it's got over 300 miles of range,
pretty competitive [inaudible] to
the existing pickup trucks out there.
What Rivian has done very well is build a brand that
is in that outdoorsy Jeep style,
and they are actually building
their own charging network too.
They're investing in
a new manufacturing plant in Georgia.
Growing production from their Illinois plant from
150,000-200,000 vehicles a year.
Both companies, a lot of cash,
great management, really good technology,
big packing, Rivian is backed by Ford and Amazon.
I think the big difference between Lucid and
Rivian is Rivian is a bit bulkier,
it's going to spend a lot more money,
it's going to produce more cars from the get-go,
and that's a higher-risk,
higher-reward play in my mind,
it's also a more expensive valuation,
has a market cap above 90
billion whereas Lucid's 64 billion.
They're really these growth stories.
Those are the big differences between the two.
But again, both companies deserve
a lot of credit for making
some really impressive technology that
certainly has legacy automakers on their toes.
[MUSIC] A lot of
people want to compare Lucid and Rivian to Tesla,
but the idea that there's going to be the next Tesla,
it might really never happen
because everything that went into Tesla's success,
it was this perfect storm
of the industry doubting if it could
happen similar to the oil and gas industry
doubting renewable energy.
Then Tesla, again, they made so many mistakes early on.
It's easy to look at the end result where
their stock chart is today and say, "Wow,
that was just an easy call,
easy pick," but I
remember five years ago they were over-promising,
under-delivering all the time.
Musk is talking back to analysts on conference calls.
It was a very dicey situation,
and Tesla had so many ups and downs,
so many market underperforming years.
But the good thing is that it
made all those mistakes early.
Now if you look at Tesla in 2022,
it's a very polished company.
It's incredibly profitable.
They had one of the highest operating margins
of the automakers.
Their other businesses, energy storage
are also very, very profitable.
They may not make
as many cars as the GMs and Toyotas of the world,
but they're converting more of that
revenue to actual profit.
Tesla as the stock,
people will go back and forth about that.
But Tesla as a company is a very,
very impressive company and it's just going to be
very hard for a new player that's
years behind Tesla to achieve
that same competitive advantage when you have
so many other legacy automakers chopping
at the bit to take a slice of that EV pie.
[MUSIC] The legacy automakers
certainly get forgotten about
a lot in the EV conversation,
we look at Lucid and Rivian and
all these new companies and a very exciting,
they're making these big promises,
they have all this new tech,
but make no mistake
these legacy automakers are not just going to sit
idly by and let these new guys come
in and take market share that took them decades to build.
Legacy automakers have much bigger work forces,
a lot of money,
and most importantly, they
are experienced to mass production.
This is something that Tesla really
struggled with back in the day.
Tesla had just an amazing technology,
but fumbled the mass production,
they're trying to over automate things,
use robotics too much,
over perfect the whole process.
I think one legacy automaker that
really stands out to me is
Ford because they are
really putting their money where their mouth is.
They're investing $11.4 billion into
twin EV production and battery
plants in Kentucky and Tennessee.
They expect to generate
40 percent of their revenue from EVs by 2030,
and they also have a management team,
which is a really big deal
in this space because it's going
to separate companies that are just making
pledges for months that are
actually really putting real dollars at work.
Ford also has a F-150 Lightning,
which is one of the coolest products out there.
It has over 150,000 reservations for this vehicle,
which just dwarfs Rivian's
71,000 for its R1T pickup truck.
It's also a lot cheaper than
Rivian's truck and of course Lucid's Sedan.
Then Ford has an existing brand as
the market leader in the pickup truck market.
They also have the Mach-E SUV,
which is going very well.
You look at a company like
Ford and then you think five years down the line,
there's probably going to be a lot
of other legacy automakers
that are similar to it,
but Ford has done a really good job
at assessing the industry and saying,
"We really think that there's going to be this shift,
the internal combustion engines to electric motor,
we want to emerge as
an even bigger leader in pickup trucks,
so we're going to start investing
really heavily now to do that."
From that I can tell, they've
done a really good job so far.
[MUSIC] A whole another segment of
the EV industry that we also don't think of
that much in the infrastructure
plays, that picks-and-shovels plays.
A lot of that is the EV charging network,
similar to all these gas stations
that underpin the way that we get around.
We're going to need a lot of charging stations,
both at home and at
businesses and workplaces and things like that.
ChargePoint is the industry-leader in this field.
I think they have 162,000 charging points.
But the thing that really piques my interest is that
they've grown a lot of their DC fast charging.
I think just as of June 30th 2021,
DC charging ports made up like two percent of
the total ports as of
early December when they reported in
those recent earnings,
DC charging ports are now seven percent.
A lot of their new ports that
they are building are DC fast
charging and that's what
the Tesla superchargers are there,
these DC fast charging,
you don't have time to just sit around on
a road trip thing.
So at home they can be slower,
if you're going into grocery store, they can be slower,
but a lot of use cases,
we do need faster charging,
and ChargePoint recognizes that.
They also went public at a very difficult time,
their fiscal year 2021 performance
was drastically a wet blanket.
They only grew revenue by one percent in
fiscal year 2021 compared to fiscal year 2020.
But this year, fiscal year 2022,
it's looking like they're going to
grow by over 50 percent.
So just like Lucid,
Rivian, it's a growth story.
It really depends on keeping the pace,
keeping the momentum going,
but I just think that charging
will be a really big part of this industry,
and the good thing about ChargePoint
is it doesn't actually
care if Rivian is better than Lucid, it's brand agnostic.
All it needs is just general tailwinds at
the industry to grow and that
will go along way with that.
[MUSIC] It's a very fun exercise
to think big picture about these kinds
of things and not look so much into
did Rivian deliver 600 cars or 500 cars?
Not reading too much into the quarterly performance of
these companies and zooming out and
thinking about the big picture.
When we think 10 years
down the line, long term investing,
which is something we try to talk
about a lot at The Motley Fool,
I think everyone would probably agree that
the auto industry is going to look
a lot different than it does today.
It's just a matter of what company is going to rise,
what companies are going to fall.
Starting with the legacy automakers,
I think it's going to be the ones
that put capital to work early.
Like the first five years of this decade,
like Ford, like GM are doing,
and not just companies that are making
these 2050 carbon-neutral goals,
but not a lot of short to mid-term goal is behind them.
We're seeing a lot of, it's called greenwashing
in this space in that regard,
and then with the up and coming players,
I think that because they're not going to have
the profitability or positive
operating cash flow for a long time,
it's going to really depend on building
a reputation for delivering on promises,
which is something I gave Lucid a lot of credit for and
something I certainly hope
Rivian will be able to do as well,
because that is going to keep the investment thesis alive
and keep the company
solid until they're able to become profitable,
mass produce, things like that.
My advice would just be, no matter
how good an opportunity looks,
no matter how big of a lead Tesla has,
no matter how exciting Lucid or Rivian is,
no matter how good of a jump Ford
has in the electric truck market, it's just,
no one really knows what's
going to happen and no one knows what
legacy automaker will suddenly announce
a huge investment similar to Ford has done.
I would just say keep
a basket of both EV charging stocks and
the automakers just because that will still leave
a lot of room for upside in case one of
them goes up five or 10 fold,
but it will also limit the downside risk in
case Lucid goes to zero,
it doesn't work out. [MUSIC]