Advice From Goldman Sachs on Electric Car Shares

Advice From Goldman Sachs on Electric Car Shares Advice From Goldman Sachs on Electric Car Shares: Reducing carbon emissions is the hot topic of green policy these days. Whether you believe in the effectiveness of these policies or not, one thing that cannot be denied is their impact on our daily lives. In particular, the impact of the cars you drive is noticeable, including fuel and electricity bills. It was no secret that the Trump administration preferred the oil and gas industry. Despite this, gasoline prices have been on the decline in the last four years. It is expected that Biden Management, which is in the installation phase, will look much more positively towards green policies and especially the transformation of the automobile fleet to electrification. Electric vehicles have been with us for a while and now, some models are popular and even get approval from drivers. The next step is to make electric vehicles cheaper to build and ensure that purchases are widespread. For this to be achieved quickly, there must also be political support through the state. A recent report from Goldman Sachs predicts that global sales of electric vehicle giants will be 1.8 million this year, reaching 8.3 million by 2025 and 34 million by 2035. As a result, there will be an 18 percent reduction in traditional car and electric car shears. With this in mind, Goldman's stock analysts are turning to two EV companies that are likely to succeed in the next four years. And they also offer another paper for you to watch from the side. The TipRanks database was used to better understand what other Wall Street analysts thought of this trio.   Li Auto (LI) Li Auto is just one of the numerous electric vehicle manufacturing companies that have emerged in China in recent years. If we consider the rapid development of China as a whole, of course the country's domestic car market should not be ignored. About 800 million of the country live in urban areas and the total population is close to 1.4 billion. Li Auto has integrated combustion engines into the technology it has created and specialized in plug-in hybrid vehicles. The use of hybrid vehicles is even more convenient, especially in a country with a limited electric vehicle charging network. Li Auto's first model, the Li ONE, was launched in November last year and sold over 22,000 copies by last October. Last month, Li ONE increased its sales volume to 3,700, becoming the best-selling electric vehicle model in China.   Li Auto made its public offering at the end of July 2020, entering the US stock markets. The stock entered the market at $ 11.50 above the initial projected range. Since the IPO, Li shares have gained 173 percent. Analyst Fei Fang, who conducted Li Auto's research for Goldman Sachs, said, “Li Auto manufactures vehicles with the Electric Vehicle consumer experience in mind. We believe that because it is willing to take the risk of unconventional technologies and act innovative, it differentiates itself in the broader Chinese automaking industry. "We are guiding transformations that will lead to the adoption of electric vehicles in the long term. We see Li ONE as the first step towards a bigger innovation plan." For this reason, Fang is in the Buy (Buy) rating for LI, with a price target of $ 60. At current levels, this means an annual increase of 91 percent. Looking at the consensus distribution, Wall Street is bullish against LI. 3 Buy (s) and 1 Hold (1 hold) in the last three months brought the stock to "Strong Buy" position. It should also be noted that the average price target of $ 36.65 indicates a 16 percent increase from the current share price. Tesla (TSLA) This company needs no introduction; With Elon Musk's advertising genius, everyone has seen this over the past few years. The company's successful efforts in addressing quality control and production bottlenecks helped them a lot during the introduction of the new models. Result: TSLA stock growth rate of 667 percent in 2020. The massive increase in share value accompanied record breaking profits. Tesla started to make a profit in the third quarter of 2019 and remained so despite the impact of the corona. The company's 3rd quarter results are remarkable. Revenue increased to $ 8.8 billion, a 39 percent gain compared to the same period last year and an even greater 46 percent consecutive gain. EPS increased 105 percent compared to the same period last year, reaching 76 cents per share. Even better for Tesla: Free cash flow is very solid, $ 1.4 billion for the quarter. Third quarter results are based on a solid production and delivery base. The company reported that 145,000 vehicles were produced in the quarter, of which around 140,000 were delivered. Improvements in delivery efficiency have helped the company reduce inventories of new vehicles. Goldman analyst Mark Delaney supports the upward trend about the future of Tesla and the electric vehicle industry in general. "We believe the transition towards the adoption of electric vehicles (EV) is accelerating and will happen even faster than our previous view. We believe that battery prices are falling faster than our previous predictions, which is good for the economy of the purchaser. Also, recently in some jurisdictions internal combustion engine ( There has been an increase in regulatory bids to limit the sale of ICE vehicles within 10-20 years or to ban them altogether. " Mark Delaney supports the bullish stance and sees the rank of TSLA as a Buy. The analyst's $ 780 price target will come true if the paper shows a 21 percent increase over the next 12 months. However, despite or perhaps because of its big gains in recent months, Wall Street continues to be wary of Tesla. The consensus of 25 analysts is a 10 Buy, 8 Wait and 7 Sales rating average of a Hold (Hold). The average price target of the stock is $ 403.24. This indicates a 37 percent deviation from the levels for now.

Nio (NIO) Last on our list is Nio, another Chinese electric vehicle company. Goldman's assessment for Nio is neutral. (neutral) Nio has managed to get out of China's crowded domestic market (electric vehicle) by introducing new models and innovative ideas in recent months. The company's current product range includes three mid-size SUVs powered by lithium-ion batteries and a 2-door sports car with a water-cooled electric motor. There are also two sedans, a minivan and an SUV model that the company plans to launch in the near future. Nio's customer-oriented ideas include "Battery as a Service" or BaaS system. This service allows vehicle owners to purchase with a monthly subscription by mobilizing the battery, or to "refuel" their vehicles by changing the battery pack. Earnings are still at a net loss, but have been improving for the past four quarters. Q3 revenue was $ 4.53 billion, the highest in more than a year. NIO shares have grown tremendously since last January. The paper increased by over 1000 percent. Goldman's Fei Fang pointed out Nio's strong and immersive position in the market and reported on the risks: “While Nio's brand is impressively established, we expect the competition to escalate in the coming years as major OEMs (OEMs) launch similar models such as ID4 (WV) and Model Y (Tesla). If the predicted battery prices fall and the excess capacity is not met, if the industry operates at full production capacity and high-profile electric vehicle parts prices remain high, this will cause Nio to focus on margin expansion. " Fang gives NIO a Neutral (Hold) rating. But the analyst could also say "buy", as he thinks that the stock, currently at $ 45.11, will approach $ 57 in a year, bringing 31 percent profit to new investors. Looking at the consensus rating of Goldman Analysts, we have a Moderate Buy with 7 Buy and 4 Hold. Meanwhile, the average price target of $ 49.01 means an upward move of about 9 percent.   Advice From Goldman Sachs on Electric Car Shares Source: https://finance.yahoo.com/ You may also be interested in: China Has Sold 25 Million Cars in 2020