Alternative to Tesla’s Electric Vehicle Play

Even with a 34% decline so far this month (through Sept. 8), Tesla shares are up 295% this year and 626% over the past 12 months. That is such a tremendous run-up that it defies conventional fundamental valuation methodology. The shares trade for 138 times the consensus earnings estimate for the next 12 months, among analysts polled by FactSet.

So, is there alternative to Tesla’s Electric Vehicle (EV) play? Here we listed down:

1. Alternative to Tesla’s Electric Vehicle (EV) play
2. Suppliers to EV
3. Electric Grid
4. Battery

Electric Vehicle

EV market in China is a gold mine because of the government’s commitment to the industry and focus on cutting pollution. However, the challenge is “when the government effectively controls the local industry, there can be special risks to investors who cannot know which of the early-stage pure-play EV makers will rise to the top”. In other words, Chinese EV companies listed above are “basically government plays”.

Table below listed the alternative to Tesla’s play – Electric Vehile Manufactures:

Tesla has advantages over Chinese EV companies in terms of brand recognition, product quality and sales. The impact of trade tensions on Tesla is limited, as Tesla China is well positioned to produce vehicles locally, benefiting Chinese industry, consumers and long-term development goals.

Suppliers Play

Alternative to expensively priced EV stocks are suppliers of parts and technology to EV manufacturers as these suppliers would benefit from the trend toward higher-tech driver-assist and safety features in all cars.

Aptiv is a “global tier 1 supplier” of electronic systems and components as well as safety systems, around the world. Aptiv’s major competitors in the safety space are Bosch, which is privately held, and Continental AG.

Lear is one of the largest suppliers of vehicle seats.

Infineon Technologies is a global leader in semiconductors that manage power coming out of a motor. “When you transition from a combustion vehicle to an EV, you need three or four times the power management content”.

Electric Grid

In Europe, opportunities could be in electric companies, including National Grid, and Red Electrica, which are electric utilities; Schneider Electric S.E. and Easton Corp PLC, which make electric components, and Alfen NV, which designs and builds vehicle charging equipment and energy storage systems as follows:

Battery Manufacturers

Here are the battery manufacturers for the EV:

Reference:

MarketWatch, 2020-09-12, “Did you miss out on Tesla’s big run? There are still good alternatives to play the electric-car revolution”