I would argue that an EV manufacturer can be considered either has automobile business or a technology business or a mix of both. Personally I would say it has a greater component of automobile than tech.
Traditionally speaking, the automobile sector has not been successful in creating much wealth for shareholders (don’t get me wrong, as a part of GDP or Economic growth, it is crucial) unless you know who the winner is going to be – and this is extremely difficult to estimate with a high degree of probability. We can certainly find mispricing in this sector (once you get in, you need to know when you will exit), but if you are running a concentrated portfolio, an automobile business will not generate much of an edge for you.
The industry is such that there is just no competitive advantage that one EV company can have over the other. It’s just like the airline industry – its sexy but not worth it. China probably has the largest automobile market and the competition is intense. Xiaopeng has better AI than tesla and Neo has a 600+ km range on a full charge! It just seems very difficult to conclude with any reasonable accuracy as to who will the winner be.
Btw, I’m talking about the industry both internationally and domestically heavily on the 4 wheeler side.
Regards
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