Ford, Volkswagen, Tesla, NIO, & Xpeng Market Caps — Do They Make Sense?
These 5 companies are each quite different from the other. The point here is not to debate whether any of these companies should be worth more or less than the others. Tesla’s got its whole energy business, its giant internal software business (which is venturing into gaming), and potential autonomous driving hardware and software. Ford and Volkswagen have giant legacy auto production facilities and networks, but not the same structures or core markets. NIO and Xpeng are open to booth Chinese EV startups, but NIO has battery swapping, outsources a lot, and targets a more expensive portion of the market, while Xpeng is already constructing its second vehicle factory and is more interested in developing the software into its vehicles, and is offering much lower priced models. (Full disclosure: I own shares of all of these companies.)
The stock market has seemed pretty wild lately, or even for the last year if you look at the full picture. Or basically from the beginning of the market itself if you want to make that argument. The point is, though, that volatility has looked at the world of auto stocks and said, “Let me dive into that!” And many have been wondering and debating what actually makes sense for these companies’ valuations/market caps at the moment. So, I thought I would jump in with a little intro about these companies’ market caps and see what kind of comments pop out from you about them. After all, in my opinion, there’s no better place to find great discussions about these kinds of matters than from the thoughtful, fact-filled, and mostly civil human beings here on CleanTechnica.
I will include a one-year stock chart for each of these companies at the beginning of each section.
Ford’s market cap is sitting at 49.43 billion. In the cleantech space, it has just released the Ford Mustang Mach-E and is planning an electric Ford F-150. I think both could be huge hits that propel Ford into the EV transition and Ford is clearly putting its biggest names behind its electrification efforts, but all indications so far are that production capacity will be quite limited, and these two models will hardly put a dent in the brand’s traditional, fossil-fueled models in the foreseeable future. What’s the broader plan?
When it comes to the 2020 auto industry struggle, Ford wasn’t one of the worst performers in the pack, but it also didn’t do great. Talking grades, it basically sat in the “C” or “D” area of the market.
Then there’s the matter of debt … which is never simple. This piece from Barron’s seems to run through a good discussion on the matter, or some of the matter.
At the moment, the market thinks Ford’s $49.43 billion market cap looks reasonable. What do you think?
Volkswagen Group is of course the giant of the auto industry (alongside Toyota). It sells so many models under so many brands. And, importantly, it’s making a fairly sharp turn to electric vehicles. As I noted earlier today, its 2021 EV sales are starting out fairly strong in Europe. It is still far, far from becoming an electric automaker, but it is moving in that direction basically as it said in the past few years that it would be.
As with Ford, one of the core questions is how it phases out fossil fuel vehicles and retires production facilities for those while ramping up EV production. It almost seems to me like having to surf on a needle. At the very least, it’s like having to surf a difficult wave (even if not on a needle). Throw in questions of battery mineral supply (which could limit EV growth beyond what would be natural), Volkswagen’s efforts to secure those before others, and the tech side of the EV future.
Oh, the tech.
Is Volkswagen a dinosaur with regards to software and will this be its downfall? Or is it smart to be focusing on that heavily now and will it find a way to transition into a software leader as well as an automotive leader? Clearly, where you fall on answering that question heavily influences what you think of Volkswagen Group’s current $130.13 billion market cap.
I don’t know how much needs to be said about Tesla here. Everyone knows its play — tens of millions of EVs as fast as possible. That includes battery cell development, involvement in battery mineral mining, rapidly scaling up ginormous production facilities, etc. Then there’s the similarly growing solar and energy storage business. But then there’s the truly big question for Tesla: where’s the software headed?
What will Tesla infotainment look like in a few years and what kind of cut will Tesla be getting from it? What about “Full Self-Driving” (FSD) and robotaxis? What about licensing FSD software to other automakers?
There’s a lot up in the air. Tesla could either see its rising star fade a bit, or it could get truly disruptive with unmatched leaps in autonomy and software.
Does all of this justify a market cap of $540.4 billion?
NIO, like Tesla, doesn’t have the baggage of a legacy fossil auto business. However, it’s also not a software-driven Silicon Valley company like Tesla. It’s been relying on outsourcing for vehicle production and for software. But many people love the company and its products, making it the top selling Chinese EV startup on the market.
The question of the day is: Will NIO’s advantages lead to such massive growth that a $55 billion market cap is sensible? How much can and will NIO expand in the coming years?
Xpeng launched with some very Tesla-like vehicles, but it is trying to become a leader on the software development side.
Xpeng is at #10 on the Chinese market. Its G3 and P7 are holding fairly well. For now.
The company’s big selling advantage, though, is that the G3 and P7 are relatively cheap for what you get. How is that possible? When do the big hits flop?
That’s it for a short rundown of these five companies. Where do they stay going forward in the next year or three in terms of companies finances, company growth (or shrinkage), and these charts?