Electric cars power ahead
2020 was a good year for electric cars. Not only were there more on the roads, but the share prices of electric vehicle companies skyrocketed, too. The leader of the pack is, of course, Tesla. Thanks to the success of the Model 3 as well as high expectations for the future, the stock gained an incredible 743% in 2020. And it got off to a flying start this year, too, with a further increase of 20%.
Electric vehicle companies in China took off in similar fashion. NIO, one of the new Chinese companies to launch an in-house produced electric car, rose a whopping 1,112%. Competitors Xpeng and Li Auto didn’t do too badly either, with a doubling in their share price after IPOs in 2020.
Electric car part manufacturers benefited too in the wake of these companies. The most important component, and in any case the most expensive, is the battery. Major battery manufacturers also saw their market value more than double last year. While perhaps not as spectacular as Tesla and NIO, that’s still an impressive climb.
Whether the high expectations for electric vehicle companies can be met in the form of earnings remains to be seen. The use of electric cars will undoubtedly continue to grow, but so too will the underlying competition. All of the major established car makers are working hard to claw back and secure a piece of the pie in the new market.
This is in any case good news for a more sustainable world. The high share prices are a big incentive for new investments in electric vehicles. There will be more variety for consumers, and technological developments will push production costs down.
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