⚡ Top 3 EV Stocks That Could Catch Tesla

00:00
a lot of investors are missing the big
00:01
picture when it comes to electric
00:03
vehicles ford expects 40 to 50 percent
00:05
of its global vehicle volume to be
00:07
electric by 2030 same with bmw and gm
00:11
plans to go fully electric by 2035
00:14
[Laughter]
00:27
the problem with these plans is simple
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thanks to advances in battery
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technologies industrial robotics and
00:33
automotive engineering electric vehicles
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will be cheaper and better performing
00:37
than gas-powered cars years before these
00:39
legacy automakers will make this shift
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in fact by 2025 electric vehicles could
00:44
be undercutting gas powered ones by more
00:46
than 20 percent in terms of costs while
00:49
beating them in terms of performance
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that means if you're running on gas
00:53
you're running out of time in this
00:55
episode i'll highlight some of the
00:56
latest investing research on electric
00:58
vehicles and show you which auto
01:00
companies could win the market over the
01:01
next decade including a company held by
01:04
both kathy wood and warren buffett your
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time is valuable so let's get right into
01:08
it starting with the super cut of
01:10
arkhamvest's latest research on electric
01:12
vehicles as presented during their 2022
01:14
big ideas summit but today the big idea
01:17
is electric vehicles
01:19
and currently the two biggest
01:21
uh bottlenecks really for people
01:23
purchasing an ev are you know the
01:26
upfront price being too high and people
01:28
have a lot of range anxiety
01:30
but looking at the technology we're
01:31
seeing that costs are coming down
01:33
and we're seeing that ranges are going
01:35
up and charging times are also
01:37
decreasing
01:38
we're forecasting that there will be 40
01:41
million electric vehicles sold in 2026
01:45
that's up from 4.8 million electric
01:48
vehicles sold in 2021 uh that comes out
01:51
to about a 53 percent annual growth rate
01:54
which is very impressive uh and really
01:57
the biggest risk to this is whether or
02:00
not traditional automakers can
02:02
successfully transition from gas-powered
02:04
vehicles to autonomous electric vehicles
02:07
wright's law is that for every
02:08
cumulative doubling in production you
02:10
get a fixed percent cost decline that's
02:12
what we're seeing here on the chart on
02:14
the left and that fixed percent cost
02:16
decline for lithium-ion batteries is 28
02:20
the reason we're choosing the battery is
02:22
because it's the single largest cost
02:24
component of the electric vehicle so it
02:26
typically makes up roughly 20 to 25
02:29
of the total cost of the vehicle so by
02:32
looking at the cost decline for that
02:33
component you can get a pretty good
02:35
sense for the total cost to produce the
02:37
vehicle how we've extended our research
02:40
relative to last year is by looking at
02:42
lithium iron phosphate cells nickel
02:44
cells are more energy dense so you
02:47
should have a longer range but they're
02:48
more expensive but with the lithium iron
02:51
phosphate cell you get a much cheaper
02:53
battery cost and it's at a lower
02:56
production base and so what we think is
02:58
going to happen is that you're going to
03:00
have somewhat of a split in automakers
03:03
who have the efficiency uh whereas
03:06
you'll have people who are laggards in
03:08
the industry who will still be using
03:10
that more expensive cell to to achieve
03:12
the same level of range and all of this
03:15
is driving to that tipping point that
03:16
we're talking about and when electric
03:19
vehicles could hit price parity
03:21
with gas powered cars and we think that
03:24
this is could occur in 2023 most people
03:28
think you know price parity is this end
03:30
point the battery costs will come down
03:33
and then they'll stay level with gas
03:35
powered cars
03:37
that's not what happens uh the cost
03:39
decline should continue and so you can
03:40
see that in 2025 we think that it's
03:43
going to be
03:44
you know 25 to 35 percent cheaper to
03:47
produce an electric vehicle relative to
03:49
the gas powered counterpart so we were
03:52
just talking about you know vehicle
03:53
price and costs which is one barrier to
03:56
entry for consumers and the other is
03:59
range anxiety
04:00
and what we see here is that wright's
04:02
law also models improvements in electric
04:05
vehicle charging rates and so the
04:07
ability to charge an ev quickly is
04:09
impacted not just by the vehicle and
04:13
the power electronics there but by the
04:14
charging infrastructure a lot of money
04:16
is being invested in improving this
04:19
metric ed performance is improving you
04:22
just saw that with charging rates uh the
04:24
median performance of electric vehicles
04:25
in 2021 is approaching tesla's
04:28
performance in 2018.
04:31
you can see the way that we're defining
04:33
this index is looking at charging rate
04:36
divided by vehicle cost
04:38
and we think there will be a roughly
04:39
eightfold increase in performance of
04:42
electric vehicles uh over the next five
04:44
years it could be faster charging it
04:47
could be a cheaper vehicle you know we
04:48
believe that autonomous could take shape
04:51
in that time frame
04:52
so with all of these improvements we're
04:54
seeing electric vehicles continue to
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take share from gas-powered vehicles uh
04:59
and it's pretty remarkable in 2021 ev
05:02
sales soared they were up 112
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year-over-year while gas powered sales
05:07
were estimated to be up just 1.7
05:10
off of you know very uh depressed levels
05:13
from covid
05:15
and what we're seeing is that electric
05:17
vehicles are breaking traditional
05:19
s-curve dynamics so in this chart on the
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left you're seeing that traditional
05:23
s-curve and you see even in the very
05:25
early years with high growth rate
05:27
there's a declining year-over-year
05:29
growth rate every year so it goes 140
05:32
138 135 and with electric vehicle sales
05:36
they've gone from 60 in 2013 and now
05:39
they're at 112
05:41
in 2021 and the reason for that is that
05:44
we're seeing uh layered s-curves on top
05:47
of each other uh one of the last things
05:49
i'll leave for you here is that an
05:51
interesting dynamic that we're seeing
05:54
is the emergence of neighborhood
05:55
electric vehicles and so these are
05:57
vehicles that aren't designed to go on
05:59
the highway uh they're extraordinarily
06:01
inexpensive
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and they're ramping extremely quickly
06:05
and we think that these will continue to
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take off and could be a significant part
06:08
of those 40 million units so let's break
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down a few of the biggest points in that
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super cut the biggest barriers to
06:14
widespread ev adoption have been sticker
06:16
price and range anxiety let's talk about
06:19
sticker price first in 2020 sandy monroe
06:22
showed a really interesting breakdown
06:23
between the costs to make evs and
06:25
internal combustion vehicles it turns
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out that a whopping 51 percent of
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electric vehicle costs come from their
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powertrain which includes the battery
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packs power connectors and inverters the
06:36
cooling system and so on if we combine
06:38
that with what sam cora said about half
06:40
of that 51 percent of the cost comes
06:42
from the battery pack itself so one
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thing electric vehicle investors should
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be looking out for is how companies are
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innovating to lower their powertrain
06:50
costs in general and their battery pack
06:52
costs specifically let me give you a
06:54
clear example to really connect the dots
06:56
here tesla is moving away from battery
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packs and towards using batteries as
07:00
part of the car's structure kind of like
07:02
how modern aircraft wings aren't really
07:04
just wings but wing-shaped fuel tanks
07:06
fuel literally fills the entire wing of
07:08
a plane maximizing the amount of fuel it
07:11
can hold and minimizing the amount of
07:12
metal that's doing nothing but adding
07:14
weight that's what tesla plans on doing
07:16
with the bottom of the vehicle by making
07:18
a structural battery pack also current
07:21
car bodies are made up of hundreds of
07:23
individual parts which are made from
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many different materials and have to be
07:26
joined together in several different
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ways by welding bolting or adhesives
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tesla is going to use two giant castings
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for the front and rear underbody
07:34
sections and then connect them with the
07:36
structural battery pack the final result
07:38
of building the car using these giga
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castings connected by a structural
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battery pack is that teslas would be up
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to 10 percent lighter and gain 14
07:46
percent increased range just to be clear
07:48
14 on a 300 mile range is an extra 42
07:52
miles per charge this idea of battery
07:54
cell to vehicle integration is such a
07:56
huge differentiator that it actually got
07:58
its own slide in arkhanvest's 2021 big
08:01
ideas report because the impact of this
08:03
design choice is enabling many longer
08:05
range vehicles at much lower price
08:07
points if tesla's competitors don't
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start doing this as well they'll need to
08:11
find a different way to close that 14
08:13
range gap this year arc invest has
08:15
created an ev platform performance index
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to compare evs over time this
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performance index divides the vehicle
08:21
charging rate by its cost at first i
08:23
didn't really understand this metric so
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i had to do a little digging long story
08:28
short there are a few reasons that this
08:29
metric actually checks out first if you
08:31
can quickly charge a battery safely then
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you can also quickly discharge that same
08:35
battery safely meaning that energy can
08:38
be spent on performance like
08:39
accelerating quickly or towing more mass
08:42
second because the charging rate is in
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units of miles per minute the efficiency
08:46
of the car outside the battery and
08:47
powertrain are included in the metric
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this is why elon musk is so hyper
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focused on tesla's drag coefficient he's
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technically upping the miles per charge
08:56
in a way that doesn't have anything to
08:58
do with the powertrain directly third
09:00
the denominator of this ev platform
09:02
performance index is the vehicle's cost
09:04
so the final performance per dollar is
09:06
what matters most not just performance
09:08
itself so this really is a pretty
09:10
elegant system level metric for making
09:12
apples to apples comparisons between
09:14
electric vehicles this comparison is
09:17
actually where things start to get
09:18
really interesting as sam cora said the
09:20
median electric vehicle today is
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approaching the tesla model 3's
09:24
performance from back in 2018 that's a
09:26
three-year performance gap in last
09:28
year's big ideas report arkhamvest
09:30
compared the model 3 to a lot of the
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mainstay electric vehicles out there
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like the audi e-tron the mustang mock-e
09:36
the nissan leaf and the chevy bolt tesla
09:39
had the best combination of efficiency
09:41
and performance by a pretty large margin
09:43
for example the model 3 was just a
09:45
little slower from 0 to 60 than the
09:47
mustang mach e but it got almost twice
09:49
as much range per kilowatt hour on the
09:52
flip side the model 3 was just a little
09:54
less efficient than the hyundai ioniq
09:56
but it was almost three times faster
09:58
getting from zero to 60. that's an
10:00
insane difference going back to this
10:02
year's ev performance slide tesla's four
10:05
models are scoring much higher than
10:07
other evs from other automakers on this
10:09
performance index according to arc
10:11
invest the price to performance gap
10:13
between teslas and the rest of the
10:14
industry is only expected to grow as
10:16
tesla introduces new battery chemistries
10:19
cell designs and software upgrades that
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stack up these advantages in their favor
10:23
as a result tesla cars could offer
10:25
almost twice as much performance per
10:27
dollar as cars from other automakers in
10:29
2026 said another way that's like being
10:32
able to buy a car from 2030 in the year
10:34
2026 that's pretty crazy right in my
10:37
opinion the average consumer is already
10:39
starting to feel this performance gap
10:41
which is why tesla was able to sell
10:43
close to a million cars in 2021 an 87
10:47
year-over-year increase despite the chip
10:49
shortage that disrupted auto production
10:51
around the world tesla is arc invest's
10:53
number one holding for a ton of reasons
10:55
and we could spend all day talking about
10:57
their massive advantages in artificial
10:59
intelligence robotics and energy storage
11:02
if that interests you check out my all
11:04
things tesla playlist i'll leave it in
11:05
the top right hand corner of your screen
11:07
right now and in the description below
11:09
as well let's take a step back and talk
11:11
about the rest of the electric vehicle
11:13
market evs have long been known to have
11:15
lower overall costs of ownership than
11:17
equivalent gas-powered vehicles for
11:19
example plug-in america studied the cost
11:21
of ownership of a 2019 hyundai kona ev
11:24
versus the equivalent gas-powered kona
11:26
and found that the electric version was
11:28
cheaper by a whopping 75 dollars per
11:31
month a lot of that difference comes
11:32
from the price of electricity versus
11:34
gasoline as well as the maintenance
11:36
since electric vehicles have fewer
11:38
moving parts and thus fewer points of
11:40
failure the ongoing growth in the global
11:42
automobile population is projected to
11:44
increase from 1 billion vehicles in 2016
11:47
to over 2 billion in 2040. rapid
11:50
population growth and rising incomes in
11:52
developing countries like china and
11:54
india are projected to fuel the
11:55
increasing supply of evs on the road no
11:58
pun intended overall ev sales for 2021
12:01
were up over 100 percent year over year
12:04
while gas-powered sales remained
12:06
relatively flat and have been shrinking
12:07
over the last few years well before the
12:10
chip shortage and these supply chain
12:11
issues began the auto industry as a
12:14
whole is on track to invest nearly half
12:16
a trillion dollars in the next five
12:18
years alone to make the transition to
12:20
evs and my question is is that going to
12:22
be enough let's start with american-made
12:25
evs from ford and gm gm has had a ton of
12:28
amazing coverage about their plans to go
12:30
fully electric by 2035. and i can
12:32
remember your dramatic announcement
12:35
that by 2035 gm would be 100 electric
12:39
you changed the whole story mary
12:41
wherever wherever you are
12:43
there you are
12:44
you did mary
12:45
[Music]
12:47
you electrified the entire automobile
12:50
industry i'm serious you lead
12:52
and it matters
12:54
but right now their only current
12:55
electric vehicle is the chevy bolt which
12:58
is actually pretty fire no i mean it's
13:00
literally been recalled due to
13:02
spontaneously combusting batteries leave
13:04
it to gm to switch from gas to electric
13:06
but keep the combustion
13:08
uh i'm here till friday folks on the
13:11
other hand ford has really started to
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ramp up production of the mustang machi
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which sold over 27 000 units in 2021
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making it the third best-selling ev
13:20
after the tesla model y and the tesla
13:22
model 3. each of which sold over 5 times
13:25
more than the mustang tesla has really
13:27
opened up an insane sales gap besides
13:30
tesla there are a few other ev stocks
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that you should be aware of x-pong
13:34
motors ticker symbol xpev is a
13:36
relatively new startup that was founded
13:38
in 2014. they design develop manufacture
13:41
and sell evs in china x-pang is geared
13:44
towards the mid to high-end segment of
13:46
china's eevee market and currently has
13:48
two models an suv called the g3 and the
13:51
four-door sport sedan called the p7
13:53
x-pan went public on the new york stock
13:55
exchange in august of 2020 and initially
13:57
shot up over 250 percent in its first
14:00
few months of trading reaching a market
14:02
cap of over 55 billion dollars since
14:04
then the stock has hit some turbulence
14:06
due to this global chip shortage and now
14:08
they're trading at roughly a 32 billion
14:10
dollar market cap kathy woods started
14:12
buying the dip on xpeng in rq in
14:14
december and has accumulated almost 900
14:17
000 shares worth about 32 million
14:19
dollars today xbang's share price
14:21
recently dropped by over 30 percent and
14:24
kathy wood has been buying the dip
14:25
increasing her share count by a similar
14:27
amount i'll talk more about x-pung when
14:29
i cover autonomous ride hailing in a
14:31
future episode since they have some
14:33
exciting features in their pipeline
14:34
related to autonomous driving neo ticker
14:37
symbol nio is another chinese ev company
14:40
that started in 2014. the interesting
14:42
thing about neos vehicles is that they
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offer the battery as a service remember
14:47
the battery is about 25
14:49
of an evs total price today what that
14:51
means for customers is that they pay way
14:53
less for the car since it doesn't
14:55
include the batteries saving about 128
14:58
000 chinese yuan or about twenty
15:00
thousand dollars then they pay about one
15:03
hundred and fifty dollars per month for
15:04
a separate battery subscription besides
15:07
normal battery charging neo has about
15:09
700 battery swap stations across china
15:12
where a battery can be swapped out in as
15:14
little as five minutes one of the direct
15:16
benefits of this model for consumers is
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that as battery chemistries and
15:19
technologies get better neo can simply
15:22
swap out your older battery for a new
15:24
one so the depreciation and risks
15:26
associated with batteries are on neo not
15:28
on the customer here's another pretty
15:30
funny fact their vehicles are
15:32
technically about twenty percent cheaper
15:34
without this battery and you can
15:36
technically give them a full charge in
15:37
as little as five minutes because of
15:39
battery swapping which is anywhere from
15:41
four to eight times faster than fully
15:43
charging a tesla with a supercharger
15:45
that means neo's vehicles are by far and
15:47
away the best performing electric
15:49
vehicles using arkhanvest's ev platform
15:52
performance index where they would score
15:54
anywhere between a 30 and a 60 today
15:56
depending on the cost of the model
15:58
you're looking at and the battery size
16:00
you choose this is obviously not an
16:02
apples to apples comparison because i'm
16:04
comparing battery swapping to super
16:06
charging but that's technically a viable
16:08
way to charge a neo car right anyway
16:11
arcanvest doesn't hold neosock today the
16:13
last company i want to mention is byd
16:16
which stands for build your dreams their
16:18
ticker symbol is b-y-d-d-y and the
16:21
company is held by both kathy wood and
16:23
warren buffett in late 2008 buffett made
16:25
a 232 million dollar investment in byd
16:29
giving him about an eight percent stake
16:31
in the company today that stake is worth
16:33
over six billion dollars making it one
16:35
of buffett's top ten holdings that's
16:38
three times more than his four percent
16:39
stake in general motors which is worth
16:41
about 2.2 billion dollars charlie munger
16:44
once called wang chanfu the ceo of byd a
16:47
combination of thomas edison in solving
16:49
technical problems and jack welsh in
16:51
terms of getting done what he needs to
16:53
do today we can see why byd sold almost
16:57
600 000 plug-in vehicles in 2021. 320
17:01
000 of those were battery electric
17:02
vehicles while 270 000 were plugged in
17:05
hybrids and they expect to double that
17:07
volume in 2022. beyond plug-in vehicles
17:10
byd sells a wide array of products
17:13
including buses solar panels and battery
17:15
packs so they're pretty well diversified
17:17
in terms of energy and transport arc
17:19
invest currently holds just over 300 000
17:22
shares of byd or about 16 million
17:24
dollars in rq their fund themed around
17:27
autonomous technology robotics and
17:29
energy storage which makes byd a pretty
17:31
small position for arc invest overall so
17:34
comment below or tweet me at ticker
17:36
symbol u with your thoughts on electric
17:38
vehicles and the companies building them
17:39
today are you surprised at just how far
17:42
ahead tesla is versus other us
17:44
automakers do one of these other ev
17:46
companies strike you as more interesting
17:48
than the others i'm excited to hear your
17:50
thoughts as for me i'll definitely be
17:52
diving into byd in a future episode
17:54
because i'm always interested in stocks
17:56
that are held by both kathy wood and
17:58
warren buffett i'll also make sure to
17:59
talk about tesla and x-pung again when i
18:02
cover autonomous ride-hailing which is
18:04
another multi-trillion dollar market
18:06
opportunity identified by arkhanvest in
18:08
their 2022 big ideas report so if you
18:11
want to know when i drop new market
18:12
research around electric vehicles and
18:14
autonomous mobility feel free to like
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18:20
a great way to invest in the channel
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18:31
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18:33
on whichever channels you already enjoy
18:35
surfing speaking of investing high-tech
18:37
growth stocks like these have been
18:38
incredibly volatile lately so if you
18:40
want to learn more about this area of
18:42
the stock market check out this episode
18:44
right here if you want to learn more
18:46
about arkhamvest's big ideas and market
18:48
research this episode is a great place
18:50
to start either way stay long stay
18:53
strong and thanks for watching until
18:55
next time this is ticker symbol you my
18:57
name is alex reminding you that the best
18:59
investment you can make
19:01
is in you