EV Startups Have Increasing Market Value. When Will the Bubble Burst?

On June 10, the startup Nikola specializing in electric trucks (both with hydrogen fuel cells and batteries), re. It surpassed Ford despite that the newcomer had not yet delivered a single vehicle, compared to the more than five million annually of the historic American brand.

Other similar initiatives such as Fisker, Rivian, Xpeng, or Canoo have also followed in Nikola’s footsteps. However, the palm goes to Tesla, whose shares have risen so much in recent months that it has come to surpass Toyota as the most valuable car manufacturer in the world, even though the Japanese sell more than ten million units a year, compared to the half-million that Tesla wants to reach by the end of 2020.

In addition to Tesla, another good example is found in the Chinese NIO, whose value in the United States is around 37 million dollars, compared to 71.5 million of the Volkswagen Group or 50 million General Motors larger groups, with greater capacity, resources, and sales. Is this trend sustainable?

Some analysts believe that these startups’ values are so separated from the reality of their profits that the situation could end up collapsing, just as it happened with the dot-com bubble at the beginning of the century. Investors are not usually well informed of these startups’ real situation since most of them have entered the stock market through the merger with a SPAC. A reasonably quick process that avoids disclosing specific information that is usually required in these processes.

Some reports also point out that investors trust the electric car but not traditional manufacturers. The stock market believes that “old economy” brands will not be as relevant in the transition to the new mobility. However, this is likely to be disproved in the short term, as the large groups have the financial muscle, production capacity, and manufacturing experience, elements that most new players lack.

Startups like Fisker or Nikola are also failing to create additional value on their own. Their first models, the Ocean electric SUV and the Badger pick-up, will be made from platforms of origin Magna and General Motors, respectively. At the moment, everything seems to indicate that only Tesla and NIO have elements that support their high value (the first has its network of Superchargers and the second with more than one hundred battery exchange stations in China, for example).

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