Do Global EV Trends Justify Tesla’s Red-Hot Stock Price?
Tesla stock launched higher in the wake of Q3 earnings, and based on the trajectory of global electric vehicle sales—especially in Europe—the rally looks justified.
Tesla’s (TSLA) recent Q3 earnings report clearly dazzled the market—TSLA stock is up roughly 30% since October 20.
Investors and traders appear uber-bullish on Tesla’s continuing ability to satisfy the world’s growing thirst for electric vehicles (EVs).
But what do the broader trends say? Are EV sales taking off globally, as indicated by the direction of Tesla stock? In some areas of the world, absolutely. But in others, less so.
A quick review of recent EV sales statistics provides insight into current trends, as well as the ongoing status of the 21st century EV revolution.
In terms of background, the three largest markets in the world for new vehicle sales in any given year are China, the United States and Europe—in that order.
China accounted for roughly 20 million new vehicle sales in 2020, while the U.S. registered about 15 million vehicles, and Europe roughly 12 million. Japan was a distant fourth, with about 4 million new vehicle sales in 2020.
Diving into the biggest EV trends of 2021, the European region appears to be making the biggest splash in 2021. This year, Europe overtook China as the top region in the world when it comes to new EV sales. From 2016 to 2020, the European region boasts a compound annual growth rate of 60% for new EVs. That compares to 35% in China and 17% in the United States over the same period.
One telling statistics from Europe: nine of 10 new cars sold in Norway are now electric or hybrid.
However, in terms of the largest overall fleet (in absolute terms), China is still the biggest EV player on earth. Of the estimated 10.2 million EVs currently in operation around the world, 4.5 million are in China, 3.2 million are in Europe, and 1.7 million are in the United States. The next largest market is Germany, with approximately 700,000 EVs.
And while the above numbers are impressive, one has to keep in mind that the overall vehicle fleet on earth is close to 1.5 billion, which means EVs constitute a minuscule percent of the total fleet.
However, that’s expected to change in a big way by the end of the current decade. By 2030, it’s expected that the total fleet of EVs will increase to 150 million vehicles.
Trends within the Trends
As indicated by the above figures, the United States is currently lagging the world in EV adoption.
In each of the past three years, EVs have accounted for only about 2% of total new vehicle sales in the U.S. And most of those purchases have been Teslas. According to research conducted by IHS Markit, Tesla accounted for 79% of new EV sales in the United States during 2020.
Tesla also accounts for a large percent of sales in Europe, but to a lesser degree. The list below highlights the top EV models sold in Europe year-to-date (YTD):
- Tesla Model 3 – 100,993
- Volkswagen ID.3 – 53,037
- Renault ZOE – 45,694
- Volkswagen ID.4 – 38,305
- Ford Kuga PHEV – 36,193
- Kia Niro EV (e-Niro) – 33,929
- Hyundai Kona Electric – 32,299
- Volvo XC40 PHEV – 31,736
- Fiat 500 electric – 30,922
- BMW 330e – 29,847
Interestingly, conventional hybrids have now fallen behind EVs in Europe when it comes to new vehicle sales. 23% of new vehicle sales in Europe are from the pure EV category, while 21% are from the hybrid category. Diesel sales have started to spiral and currently represent just 18% of total new vehicle sales in Europe.
By comparison, EV sales in China represented only 6% of the total new-vehicle market in 2020.
The scaling up of EV manufacturing—along with the introduction of new models—will undoubtedly push global sales figures higher in the near future. Investors and trading seeking to track and trade the EV sector might therefore want to add the following symbols to their watchlists:
- BYD (BYDDF)
- Canoo (GOEV)
- Faraday Future (FFIE)
- Fisker (FSR)
- Ford (F)
- General Motors (GM)
- Hyliion (HYLN)
- Li Auto (LI)
- Lordstown (RIDE)
- Lucid (LCID)
- Nio (NIO)
- Tesla (TSLA)
- Toyota (TM)
- Volkswagen (VWAGY)
- Workhorse (WKHS)
- Xos (XOS)
- Xpeng (XPEV)
In term of exchange-traded funds (ETFs), some of the better-known electric vehicle ETFs include: Global X Autonomous & Electric Vehicles ETF (DRIV), KraneShares Electric Vehicles & Future Mobility ETF (KARS), iShares Self-Driving EV and Tech ETF (IDRV) and SPDR S&P Kensho Smart Mobility ETF (HAIL).
For more context on the EV revolution, readers may want to review a past installment of Jones & Grace on the tastytrade financial network.
For timely insights on everything moving the markets, readers can also tune into TASTYTRADE LIVE weekdays from 7 a.m. to 4 p.m. Central Time at their convenience.
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Sage Anderson is a pseudonym. He’s an experienced trader of equity derivatives and has managed volatility-based portfolios as a former prop trading firm employee. He’s not an employee of Luckbox, tastytrade or any affiliated companies. Readers can direct questions about this blog or other trading-related subjects, to support@luckboxmagazine.com.
