For the first time in Tesla’s history , the company delivered over 200,000 cars in the second quarter of 2021. The total delivery 201,250 vehicles, more than doubles the deliveries of last year in the same quarter (up 121%). GM and Ford remain the largest US-based auto manufactures with 688,236 and 475,327 vehicles sold in the US alone in the 2nd quarter, respectively.
The greatest growth is being achieved by the Chinese electric vehicle manufacturers, however. Li Auto increased deliveries by 166%. XPeng’s year-over-year auto sales soared by 439%. Nio’s deliveries were 116% higher than last year.
Nio specializes in the premium EV space, while XPeng is making a play for the Tesla 3 market. In April of this year, Nio became the top-selling brand in the electric SUV space in China, beating out Tesla’s 17% market share (Model Y) with 23%. Tesla’s Model Y was the top-selling EV in China in April with 5,520 cars sold.
The new electric vehicle manufacturers are leaving Ford in the dust in terms of sales growth. Ford achieved a mere 9.6% increase in auto sales over last year’s pandemic-plagued 2nd quarter.
General Motors is making a big play to transform their entire fleet to electric. GM has made it clear that the future is one of “zero crashes, zero emissions and zero congestion.” The company will release two EVs within the next 18 months, with the goal of 20 new EVs by 2023. GM has also made investments in lithium mining and batteries.
The real question, however, is can American manufacturers compete with China’s ability to produce things at such a lower cost? Will American manufacturers lose the Chinese market to Chinese-based EV companies? How soon will Chinese auto manufacturers invade the European market?
For now, the Chinese manufacturers are limited to the Chinese consumer, which is the largest vehicle market in the world. However, Nio is planning to expand into Europe within the next five years. XPeng received a 4-star review from a UK’s auto website, which said that its performance fares well with higher-priced competitors.
The Tesla S scored the highest safety ratings the NHTSA has ever given. XPeng has that honor In China. Nio’s safety was ranked even higher than Tesla’s by the Chinese.
What Semiconductor Shortage?
Auto industry experts have warned that inventory levels of the lowest they’ve ever seen. So far, the semiconductor shortage seems to be impacting the legacy car companies more. It may well be that the 3rd quarter is where the semiconductor shortage will have an even deeper negative impact. We should learn more about this in the second quarter earnings calls of each of the companies. The earnings season will likely start with Tesla, Nio, Ford and General Motors reporting at the end of July, followed by XPeng and Li Auto in August.
Valuations on EVs are Astronomical
As with many equities, the valuations on all the electric vehicle companies are astronomical. The excellent news of electric vehicles being on fire is already priced in. Tesla’s $602 billion market cap is larger than Nio, XPeng, Li Auto, Ford and General Motors combined, with a forward P/E of 152. The Chinese manufacturers are all still cash negative.
When valuations are so high, the plunge can be rapid and steep, like trying to catch a falling knife. The drop can happen faster than you can protect your gains. Of course, the prices can also go higher, particularly since the U.S. and China are expected to have a gangbuster year of GDP growth, with 7.0% in the U.S. and 8.4% predicted in China.
Trying to time when to jump in and out can be perilous to your profits. Regular rebalancing and capturing gains affords you the opportunity (and the cash) to buy low in the event of an unexpected downturn. As examples, both Nio and Tesla hit highs of $67 and $900 in January of this year, respectively, and dropped as low as $35 and $563 within three months of their summits.
Both Tesla and Ford are Junk Bonds
According to S&P Global, there is a one-in-three chance that Ford Motor Company will receive a downgrade from BB+ to BB in 2021. Tesla is at BB currently. Both of these are speculative ratings. However, the difference is that one company is growing rapidly and borrowing to build factories to keep up with demand. Ford will be using the profits from its recent $2 billion in senior unsecured convertible notes to pay off prior debts.
Stocks are on fire hitting new highs every day. Electric vehicles are one of the fastest growing industries. Semiconductor shortages didn’t slow down EV sales in the second quarter, but could impact the third quarter. Investors tend to be forward thinking. There will be a mix of euphoria over amazing GDP growth, combined with concern over the semiconductor shortage and valuations, in the remaining months of 2021. Your best strategy will be to be properly diversified and to rebalance your investments on a regular basis.
If you'd like to learn how to learn how to pick and invest in great companies like Nio, Tesla and XPeng, then join me for our 3-day Investor Educational Retreat. You will also learn how to properly diversify your 401k, IRA, insurance and pension, so that you can earn money while you sleep while protecting your wealth. Wisdom is the cure. It's time to become the boss of your money. Call 310-430-2397 or email info@NataliePace.com to learn more now.
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Shoot the Moon Stock Picks
2021 Crystal Ball.
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
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Real Estate Prices are Going Up. And Down.
Cannabis is Decriminalized. Stocks Triple.
Thanksgiving in a Pandemic. The Sustainability Silver Lining.
Money Stress Killed My Friend
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Real Estate in a Pandemic. Interview with Mike Fratantoni, the Chief Economist of the Mortgage Bankers Association.
Bonds are Illiquid & Negative-Yielding.
Annual Rebalancing is a Buy Low, Sell High Plan on Auto-Pilot.
Is Your Bank a Junk Bond
Put Your Money Where Your Heart Is.
Schwab's Chief Fixed Income Strategist on What's Safe.
China's Tesla (Nio). 2Q Sales Soar.
Why Are You Still Renting? (Errr. There is More Than This to Consider!)
Wealth Myths That Keep You Poor. Prosperity Truths That Make You Rich.
Technology and Silver are Golden.
Real Estate: Feeling Equity Rich? Make Sure That Feeling Isn't Fleeting.
Airline Revenue Plunges 86%.
10 Questions for College Success.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
Why Are My Bonds Losing Money?
The Bank Bail-in Plan on Your Dime.
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.
ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.
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About Natalie Pace
Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 4th edition of The ABCs of Money was released on October 17, 2020.
Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.
Natalie Pace is the co-creator of the Earth Gratitude Project and the author of The ABCs of Money, The ABCs of Money for College, The Gratitude Game and Put Your Money Where Your Heart Is. She blogs on Huffington Post and Medium, and is a frequent guest contributor to national news shows and magazines. She has been ranked the No. 1 stock picker, above over 830 A-list pundits, by an independent tracking agency, and has been saving homes and nest eggs since 1999.