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Market cap: EV companies getting bigger as competition increases


CAIRO/MOSCOW: The valuation of the Saudi PIF-backed US electric vehicle company, Lucid, increased to over $91 billion last week, surpassing Ford and General Motors.

A recent stock market rally added over $17 billion to its valuation, up 24 percent, Bloomberg reported.

The increase in shares comes after Lucid’s announcement to produce 20,000 vehicles in 2022.

This happened amid the growing demand for EVs, as more consumers consider adopting the technology.

Earlier, the stocks of the US automaker company, Rivian, jumped 15 percent, surpassing Volkswagen’s market value, while Tesla gained 4.1 percent.

Rivian has become the third-largest car company in terms of market capitalization, according to Bloomberg. Its value reached $150 billion. These two companies, along with Tesla, are among the top 10 largest automakers by market capitalization.

As of last Wednesday, Tesla, which is almost in a league of its own, took the lead with a market valuation of $1.06 trillion, significantly higher than the second-placed Toyota, which had a market cap of 29.66 trillion yen ($260 billion), according to data obtained from the Wall Street Journal.

Looking at their growth year-to-date, Tesla’s share price went up by 49 percent to close at $1,089 on Nov. 17, 2021, data from the New York Stock Exchange website showed.

Meanwhile, Lucid’s share skyrocketed by over 400 percent year-to-date to reach $52.55.

Rivian, which was recently listed in Nasdaq, saw its share price rise from $100.7 on Nov. 10 to $146 a week later, according to NYSE.

In another notable development for these companies, sales of EVs will almost double next year to 5.6 million, according to calculations made by BloombergNEF in collaboration with the COP26 conference.

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Observing debt-equity ratios, Tesla and Lucid had much lower ratios when compared to their traditional counterparts, as they stood at 0.3 and almost zero in the case of Lucid respectively as of Sept. 30, 2021. Toyota and Volkswagen were more leveraged as their indicators were 0.97 and 1.45 respectively.

Meanwhile, American carmakers, General Motors, and Ford had even higher values as they reached 1.81 and 3.94 respectively.

The debt-equity ratio was calculated as total interest-bearing liabilities divided by total equity.

Hence, these two EV manufacturers did not rely as much on debt to obtain their assets. Concerning production levels, EV companies are also seeing some significant improvements in their operations and deliveries. Tesla’s total production for the nine months of 2021 rose year-on-year by 89 percent to reach 624,582 vehicles, the company’s latest quarterly report showed. This was more than double the comparable output level in 2019.

In addition, the number of deliveries experienced a stronger trend, going up by a yearly rate of 97 percent in the first three quarters of 2021 to stand at 627,572 automobiles.

Tesla’s market share was also nearing 2 percent by the third quarter of 2021 in the US and Canada following a market share of around 1 percent in the period between 3Q 2019 and 1Q 2020, a graph in the company’s latest quarterly earnings report showed.

Lucid is similarly experiencing an upturn in its operations. Reservations were greater than 13,000 by the end of this year’s third quarter but went up even further to be greater than 17,000 by Nov. 15, 2021. The company also had estimated bookings that exceeded $1.3 billion in value by the end of 3Q, Lucid said in a recent report.

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The PIF-backed EV maker is also expected to expand its retail and service network into different regions to pursue a more globalized demand. The company wants to enter the Canadian market in the fourth quarter of this year, the European, Middle Eastern, and African market in 2022, and the Chinese market by 2023, the company added in its report.

However, in terms of profitability, EV companies still have some catching up to do with the other traditional automakers.

While Tesla’s net income surged six-fold to $3.2 billion for nine months of 2021 compared to the same period last year, this was still a lower profit when compared to other market leaders.

Volkswagen’s earnings after taxes for this period reached a much higher €11.4 billion ($12.9 billion). Moreover, General Motors’ net income attributable to stockholders was $8.28 billion while Ford’s net income was $5.7 billion.

Toyota, in a shorter period, made a higher net income when compared to Tesla as its net income reached 1,565 billion yen ($13.7 billion) in the six months ending on Sept. 30.

On the other hand, Lucid made a net loss of $1.53 billion for the nine months ending on Sept. 30, as it continued to grow its core operations.

Moreover, Tesla had a very high estimate for its price-earnings ratio, PER, for 2021, valued at 265.61 which might mean that either the company is overvalued or that investors are predicting high growth for the company. Due to its losses, Lucid had a negative PER ratio of -30.03.

Traditional automobile manufacturers that Arab News examined had much lower PERs. General Motors and Ford’s estimated values for 2021 were 9.89 and 10.85 respectively while Toyota’s actual PER for 2021 was a higher 12.42.

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Data concerning PERs were obtained from Nasdaq’s website.

Therefore, it seems that EV companies are becoming more attractive for stock market investors, evident through their skyrocketing share prices, but they are still relatively young companies that need some time to achieve their counterparts’ profitability positions.



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