Everything is going right for Tesla (NASDAQ: TSLA): electric cars, solar, tunnel boring in Las Vegas and Ft. Lauderdale, Fla., a stock price of $752.92 last night, a successful recent five-for-one stock split and an EV industry that is seen growing by ten-fold by 2030 and estimates that 50% of all new cars sold by 2040 will be electric from a 3% share today. What could possibly go wrong?
How about Rivian’s projected OEM electric vehicle $80 billion IPO this fall.
Rivian is the new EV vehicle company backed by both Amazon (NASDAQ: AMZN) and Ford (NYSE: F). It plans to start delivering new electric vehicles in January 2022. In its most recent bumper fund-raising round it generated $2.5 billion — making its total raise so far at $10.5 billion. This is a cash-rich company that will provide Tesla (NASDAQ: TSLA) some real competition. By comparison, Tesla raised just $2 billion before its IPO financing.
Studies from OEM analyst J. D. Power have also shown that a small segment of the American population are excited about electric cars — but are not loyal to brands, such as Tesla. That means for companies like Rivian, the electric car market may be wide open for grabs in the future. As some Tesla owners want new vehicles, they won’t necessarily buy a Tesla again. Loyalty to brands in electric cars is not automatic.
Not only that, but let’s get ahead of ourselves. In the future, either Amazon (NASDAQ: AMZN) or Ford (NYSE: F) can close the deal and buy Rivian. For either company, it put them squarely into the EV vehicle business instantly. For Ford, it would put that OEM car company even deeper into EV right away. Ford is already penetrating this nascent market with an all-electric version of its top-selling F-150 pick up truck (called the Lightning) with more orders than it can handle for its initial deliveries set for next year.
And let’s not forget the potential of the EV Charging Station market. It is projected to be worth $142.47 billion by 2028 — growing at a 37.51% CAGR — according to a new study by Market Research Future (MRFR). Globally and domestically, Tesla (NASDAQ: TSLA) may dominate after-market chargers today — but that could change, especially as federal, state and local governments push for alliances with other companies, too. Tesla’s network is proprietary today easing range-anxiety fear of its potential clients. Other brands are emerging and retailers (Macy’s), restaurants, convenience stores and others are entering deals with charging companies — the strategy is that EV owners will shop or eat at these establishments while waiting for these vehicles to charge.
More: 80% of charges are done at home, so OEM companies like Ford (NYSE: F) and General Motors (NYSE: GM) are partnering with solar firms like Sunrun (NASDAQ: RUN) on combo plug installs and solar system installations in the home.
Another challenge for Tesla (NASDAQ: TSLA) is the primary component: Lithium. Analysts see a 4,000% skyrocket in global demand. It is combustible and China controls some 80% of the global lithium market. Tesla is hoping to change that by mining for lithium domestically, in Canada and other locations. Guess where a large trove of raw lithium is located: Afghanistan. China may be in control of lithium worldwide, but that’s primarily through taking raw lithium and refining it.
Just as a shortage of silcon chips has idled some OEM vehicle factories for GM (NYSE: GM) and Ford (NYSE: F), companies are now seeking domestic manufacturing for chips. Reengineering vehicles to use fewer chips is only a temporary solution — domestic supply is more permanent.
Tesla (NASDAQ: TSLA) is in all the right eco-friendly green places: EV cars and trucks, EV Charging Stations, solar roofs and rechargeable storage batteries, under-ground bore tunnels and other green sectors. Known only as an electric car company, Tesla perceives its future growth in solar and related businesses as increasing faster by percentage than electric vehicles alone.
A survey of 22 stock analysts finds a ‘Moderate Buy” rating, including nine with a “Strong Buy” opinion, according to an aggregate analysis by BarChart.