Tuesday, February 4, 2020

EV on SB2020

EVs, aka Electric Vehicles, were the big winners of the Super Bowl 2020. Everybody had an electric car for the occasion. Audi and even a new EV version of the gas-guzzling Hummer.
Imagine the king of EVs, Tesla, jumping $130 per share on Super Monday! TSLA popped 20% up to almost $800 per share, nearing a $150B market cap firmly – 3 times the value of GM. Then on Super Tuesday, Tesla jumps another $100 to reach over $900 (to $164B market cap). Arguably, there are a few extra factors making Tesla’s stock pop: an upgrade and short squeeze. Maybe a little overpriced?
Tesla has a market share of about 1.5%, so… it does have room to run. But only if you believe that we have reached an inflection point where a shift to most or all cars will be electric. Fortunately, the charging stations are now pretty will established.
But, the average age of cars on the road today are 11 years old. Even if we move to 50% EV in 10 years, it will take decades for half of the cars on the road to be electric. Longer, of course, for trucks because they are just now starting to ship.
Still, the trend toward EVs is definitive. Everyone has a few. Some auto manufactures are no longer introducing new gas or diesel models.
You would think that the drop of oil prices (down to $50 for WTI) this week on the corona virus scare might be a boost to gas models?
Related to market cap, remember that Tesla bought sister company Solar City so it does solar systems and battery banks (PowerWall). Tesla GigaFactories crank out batteries (with partner Panasonic). With the cost of batteries dropping, both EV and storage become more and more affordable. The big thing to look for in battery technology is the move to safer and/or more powerful technology. Big break throughs in battery tech – cheaper, better, lighter – will be game changing. Tesla stands to win in every case, old lithium or new whatever.
I could not bring myself to buy Tesla stock at $200 in June; over $900 is nose-bleed levels today. But, it does suggest a momentum shift to EVs in our future.