The value of electric car companies
I think electric car companies are assigned excessive values. With the exception of Tesla, these are start-ups that have just started manufacturing and receive valuations of many billions of dollars.
Currently Tesla has a market value that exceeds a trillion dollars ($ 1,000,000,000,000), well above the largest in the sector such as Toyota, G Motors and others.
It must be recognized that Tesla has at least delivered more than 620,000 cars in the first 3 quarters of 2021, and has begun to make a profit, but its valuation is far from what it would be due to the business it generates; and is based on their future expectations. Although we all know that the future is yet to come, and when it does arrive it may be quite different from what was expected.
But there are other new companies such as Rivian that has hit the market with a value of 12 billion dollars, and has only presented some prototypes that it offers for 75,000 dollars, although it is true that they are beautiful and luxurious. I think it has a long way to go to show that it is a viable company with a future, but for now, its first investors may get good capital gains if they sell the shares they have.
In favor of these new companies, it must be recognized that President Biden is promoting the purchase of electric cars by the administration and that means hundreds of thousands of new cars to buy in the coming years.
That the electric car is a success there is no doubt, but I doubt about the value that is given to the new companies that offer them, because the “lifelong” manufacturers such as GM, Ford, Toyota, Volkswagen, etc … do not stand idly by and they are appearing on the market with new models at competitive prices, and investing in new batteries to give them greater autonomy.
These “big guys” know how to make cars efficiently (they have been doing it for almost 100 years) and they are going to make it very difficult for the new ones (Rivian and others) to survive.
In a few years we will see how the value of electric car companies is, because they will all be electric, and who have managed to survive in this fight.
Some will be left by the wayside, and others will be bought by some “big” company and its shareholders may also do a good business with it.
Because I think that’s what it is about, that investors with a lot of money (they are large financial groups) risk investing in small companies with good prospects for the future, and hope to achieve good profits in a reasonable period of time.
Sometimes they win and sometimes they lose, but those who win more than compensate for those who lose.
And if not ask Mr. Bezos who he is one of Rivian’s main investors. Amazon almost certainly will buy from Rivian a few thousand cars to help them get started; and Mr. Bezos will win on both sides.
Those who have the most are always the ones who earn the most. Things of life.