Rivian and Lucid are shaking up the market – is the electric car boom just one big bubble?
– Is the electric car boom just one big bubble?
Tesla & Co. achieve gigantic weight on the stock exchange. Warner recall the collapse of the Internet stock market in 2000 and setbacks for e-car companies.
Walter Niederberger, San Francisco from San Francisco
Endless subsidies and cheap money: There is no other explanation for the fact that two US manufacturers of electric vehicles are valued as having sales and profits in the billions. But Lucid and Rivian are miles from breakeven and competition from established manufacturers is only getting tougher. A warning example is not only the collapse of the Internet stock market in 2000, but also the setbacks of other e-car companies.
Most European consumers, however, have to be given a closer look at the boom companies. On the one hand there is Lucid Motors, founded in 2007, from Newark, California – seen from Silicon Valley on the other side of San Francisco Bay.
At the end of October, the company delivered its first car – thereby overtaking the Tesla Model S as the longest-range electric car in the world: the Lucid Air can travel well over 800 kilometers on one charge. You cannot yet buy the car from Switzerland, but – depending on the equipment – you can reserve it in advance for a price of CHF 300 or more. The basic version of the Lucid Air costs $ 77,000.
“The bull market in the other electrical manufacturers besides Tesla is poorly founded. Although it looks wonderful, I advise you to stay away from it. “
Jim Cramer, CNBC-Börsenexperte
Rivian Motors is also based in California, but further south in Irvine in the Los Angeles suburb. Unlike Lucid, Rivian doesn’t build elegant limousines, but rather fully electric pick-up trucks and SUVs. So far, the company has only shipped a few dozen of them, and by the end of the year there should be 1,000. There are currently well over 50,000 pre-orders in the books. The Rivian companion can be bought for around $ 70,000.
The two companies not only have in common that they are currently delivering their first models, but also that they are currently making spectacular appearances on the stock exchange. The week before last, Rivian went public, and in the middle of last week the company even overtook the German Volkswagen group as the third most valuable carmaker in the world. In the meantime, the share has given way again; On Friday lunchtime, Rivian ranked fifth with a stock market value of $ 109 billion.
Lucid has been traded on the New York Tech Exchange, Nasdaq, since July and has since doubled its market value to almost $ 80 billion. The big profiteers are in Riyadh: The Saudi Arabian state fund owns almost two thirds of the shares.
The question, however, is how lasting the joy is. The bull market – that is, a market sentiment of generally rising prices – is real and spectacular in the case of Tesla, “said Jim Cramer, who has been a stock market guru on CNBC for 20 years, in August 2020.” The bull market in the other electrical manufacturers, on the other hand, is poorly founded. Although it looks wonderful, I advise you to stay away from it. “
He was partly right. Tesla has since increased its market value threefold, and other stock market stars from back then have been left behind. The truck manufacturer Nikola and the small US producer Lordstown are only worth a fifth as much as in summer 2020. The “Chinese Tesla” Nio has lost 40 percent since January. If Cramer continues to be right, Lucid and Rivian do the same.
Is it coming to déjà vu?
The gold rush sentiment is reminiscent of the collapse of the Internet bubble in 2000, when hundreds of tech firms flooded and were blindly bought. Most of them disappeared without a trace; only a handful – including Amazon, Ebay, and Priceline – survived the crash.
In the opinion of numerous market experts, only Tesla is likely to emerge from today’s boom as the sure winner, as Elon Musk has achieved a starting advantage of over ten years with an exclusive battery and drive technology. However, it took 18 years and several severe crises before the breakthrough was achieved. If Tesla is worth more today than many established car companies combined, it reflects the added value of a pioneering company that is comparable to the ambitions and success of Amazon.
Lack of alternatives
There are other reasons for the sky-high rating of Rivian and Lucid. First, both companies are surfing the wave of government subsidies. The Biden government is offering a 30 percent tax discount for companies when they order electric vehicles. Amazon has already ordered 100,000 Rivian trucks, and more are likely to follow as home deliveries increase.
Ford demonstrated how popular Rivian is. The 100-year-old company bought 12 percent of Rivian and beat General Motors, which was also interested. The IPO in July brought a book profit of over ten billion dollars; and Ford’s market value increased by over 100 percent. The electric boom is no longer limited to the specialized manufacturers; the auto industry as a whole is starting to benefit.
Second, e-manufacturers have tailwind from the lack of alternatives. The electronics market is still thin, despite forecasts that more than 30 percent of the vehicle fleet will be electrified in 15 years. In addition to Tesla, only Rivian and Lucid would offer themselves, says Shaniel Ramjee, Pictet’s asset manager. Investors are willing to take risks because real interest rates are negative. Cryptocurrencies are also climbing for the same reason.
Both markets are ripe for swindlers. The US judiciary has recently been investigating the Workhorse Group, manufacturer of electric delivery trucks. She is suspected of having manipulated the stock market price. The share has meanwhile lost 80 percent. The Lordstown company is also threatened with standstill after having warned of “serious doubts about the continuation of operations” in the summer.
When and whether Lucid and Rivian will make a profit is completely open. Both companies reported losses of $ 1.3 billion each at the end of September and can boast of being the highest-rated losing companies in history. However, Tesla did not make a cent profit in its first 12 years of production either; and it took Amazon 14 years before a net profit resulted.