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While 2020 was the year electric vehicles went mainstream, 2021 has revealed a gaping flaw in the EV boom.
Demand for the new technology has skyrocketed, both in the United States and across Europe.
And this has major companies rushing to get onboard this surging trend.
That includes everyone from legacy automakers like Ford and GM… to trillion-dollar tech giants like Apple.
But the global pandemic has hurt the auto industry in a completely unexpected way.
With millions of people working, schooling, and entertaining from home, the number of tech devices has exploded beyond what we had just a year ago.
And as the number of devices has grown, chipmakers have struggled to keep up with production of the semiconductors needed to bring those devices to life.
Nearly every electronic device requires these chips to run. Every iPhone, Xbox, laptop, TV and more.
But because electric vehicles often require over 100 semiconductors, it’s put them in a position where automakers don’t have the pieces to build the cars.
Which is why automakers are now seeing backlogs of 40+ weeks before they’ll get the tiny chips needed to build their electric vehicles.
That means it could be another 9 months before they’re able to add more chips to start production again in some places.
And that could explain why companies helping to bridge that gap are surging right now.
Facedrive (TSXV:FD,OTC:FDVRF), for example, has seen success growing its business over the last year.
They recently acquired EV subscription company, Steer, from the largest clean energy producer in the United States.
And while automakers are struggling to produce enough new vehicles for every customer to buy their own EVs…
Steer’s subscription model is putting a major twist on the traditional car ownership model, where customers can borrow one whenever they need it instead – and at a fraction of the cost.
With Facedrive’s acquisition of Steer, customers pay a simple monthly fee like with Netflix, and they get access to their choice of EVs from a fleet at their disposal.
It’s these kinds of innovative moves that have helped Facedrive lock in a number of important partnerships and deals with government agencies, A-list celebrities, and major multinational corporations.
And their business has multiplied several times over in a year where many companies suffered during the global pandemic.
As we monitor the growing semiconductor crisis, it’s likely that creative solutions will be key in bridging the gap to the inevitable EV future.
Big Companies Feeling The Shock
It’s caused several automakers to even go as far as to shut down production plants altogether in some places.
This growing issue is already costing automakers billions of dollars.
That’s why they’ve gone as far as to develop a lobbying body that represents GM, Ford, and other US automakers.
And they’re pressing the government to convince Asian chipmakers to send more chips their way for EVs.
So instead of allocating chips to tech devices with higher profit margins like iPhones and computers…
They hope to have them directed toward building new EV Suburbans and Mustangs.
Given the amount of resources being poured into solving this issue though, it’s only a matter of time until production ramps up and EVs are expected to roll off the production lines faster than ever.
But in the meantime, Facedrive’s moves are putting them squarely in position to let more consumers drive in EVs
And in addition to the monthly membership model used with Steer, their signature ridesharing service is making the need for new auto sales less urgent.
Their model is simple.
When customers hail a ride, they can choose to ride in either an electric vehicle or a standard gas-powered car.
Once they arrive at their destination, the Facedrive algorithm sets goes to work. It sets aside a portion of the fare to plant trees, offsetting the carbon footprint from the ride.
Through next-gen technology and partnerships, they’re giving their customers the option to ride in EVs without the need to buy their own.
They’re now delivering over 4,100 orders per day on average. And after growing to 19 major cities, they plan to expand to more cities throughout the U.S. and Canada soon.
It’s this kind of innovative thinking that has many feeling optimistic about the opportunities that lie ahead in the auto industry.
EV Markets Racing Ahead
As the issue of chip production gets ironed out, the surge in demand for EVs has many companies in the industry racing ahead toward massive gains.
Tesla locked in over 700% gains on its way to becoming one of the largest companies on the S&P 500 last year.
And Biden’s “green” platform is giving the EV markets a healthy boost as well..
He recently announced he plans to build out 550,000 EV charging stations across the country, so it leaves no question what direction the auto industries will be heading in the years to come.
With the growth we’ve seen in this area already, it’s caused shares for companies like Plug Power to soar over 1,000% in 2020.
And Facedrive has seen incredible gains of 834% over the last year as well.
But while they’re helping putting customers into EVs, they’ve also been busy doing their part to solve the other crisis on everyone’s mind.
Last year, they created a wearable contact tracing technology called TraceSCAN.
It’s designed to help alert those without cell phones after they’ve been in contact with someone who’s tested positive for COVID-19.
With devices like the Fitbit and Apple Watch making wearables so popular, the demand for TraceSCAN has proven itself in recent months.
And in the weeks ahead, they plan to release an updated version with key health and safety benefits like temperature checking and vital sign monitoring.
Plus, they are currently in discussions to continue TraceSCAN’s growth with major multinational corporations.
As the demand and interest in EVs continues on in 2021, there are sure to be growing pains on the path to ramping up chip production.
And in the end, the companies seeing the biggest success may be those helping smooth out the gaps as we race towards a future driven by electric vehicles.
Here are a few other companies to watch:
TSLA (NASDAQ:TSLA) is the de facto leader in the electric car race. As one of the world’s most innovative car manufacturers in history, it has single-handedly made EVs cool. Its slick design has become the standard in car production. In fact, you would have to go out of your way to not see a Tesla when walking around major cities like San Francisco and Hong Kong.
Tesla is now trading at nearly $600, just when you thought it had no further space to soar. As Morgan Stanley put it when it raised Tesla’s rating: “Tesla is on the verge of a profound model shift from selling cars to generating high margin, recurring software, and services revenue … To only value Tesla on car sales alone ignores the multiple businesses embedded within the company.”
Billionaire Elon Musk had his eye on this trend far before the hype started building. He released the first Tesla Roadster back in 2008, making electric vehicles cool when people were still snubbing their noses at the first-generation EVs. Since then, Tesla’s stock has skyrocketed by over 14,000%.
Much like Tesla, NIO Limited (NYSE:NIO) got off to a rough start. In fact, it was even on the brink of bankruptcy in 2019. But China’s answer to Tesla’s dominance powered on, eclipsed estimates, and most importantly, kept its balance sheet in line. And it’s paid off. In a big way. The company has seen its share price soar from $3.24 at the start of 2020 to a high of $50 earlier this year, representing a massive 1443% returns for investors who held strong.
And it hasn’t stopped there. NIO recently unveiled a pair of sedans that would make even the biggest Tesla devotees turn their heads. The vehicles, meant to compete with Tesla’s Model 3, could be just what the company needs to pull back control of its local market from Elon Musk’s electric vehicle giant.
While NIO’s sales struggled earlier in 2020, they quickly rebounded in the second quarter and have maintained an upward trajectory ever since. By its Q4 report in October, NIO announced that its sales had more-than doubled, projecting even greater sales in the months to come. The EV darling has come a long way from its rumored potential bankruptcy in 2019, and if this year shows investors anything, it’s that its CEO William Li is has big ambitions and enough drive and skill to see them through.
Leading a revolution on another auto-revolution is Waymo, a subsidy of tech giant Alphabet Inc. (NASDAQ:GOOGL). Waymo may just be the de facto leader in the emerging autonomous vehicle industry. It’s already had cars driving themselves across the United States for several years. In fact, in Arizona alone, Alphabet’s self-driving cars have logged over 6.1 million miles. To put that in perspective, that means that Alphabet’s autonomous cars have driven the distance between New York City and San Francisco over 2100 times. Or, as the company explains, “over 500 years of driving for the average licensed US driver.” Even more impressive, however, the vehicles were only involved in 47 “contact events”, and the vast-majority of the collisions were the result of human error and none resulted in any sort of severe injury for anyone involved.
While these tests are extremely promising for Alphabet’s Waymo, there are still some hurdles to overcome. First and foremost, these lengthy trials took place in Phoenix, a city not exactly known for extreme weather. Second, an issue that may frustrate many drivers, the vehicles operated in a sort of hyper-cautious mode, driving at slower speeds and taking sometimes unnecessary precautions to avoid conflict.
And though Alphabet gets a lot of the credit for the autonomous vehicle revolution, a widely loved and wildly popular chipmaker is at its core. Intel Corporation (NASDAQ:INTC) and Waymo teamed up way back in 2017, and have worked together to fine tune their technology together ever since. Through their mutual knowledge of hardware and software, the tech giants have made leaps and bounds towards building the car of the future.
In addition to its efforts with Waymo, Intel has also been on the forefront of developing its own artificial intelligence and vision hardware. Back in 2017, it acquired MobileEye, a supplier of camera-based chips and software to the global mobile industry. And now, in a new deal with Luminar, another emerging tech company on the forefront of this movement, Intel is positioning itself as its own giant of this new sector.
Nvidia Corporation (NASDAQ:NVDA) is another one of the chipmakers and semiconductor makers fueling the revolution in transportation. And it’s also riding the ESG wave to boot. Nvidia has made major progress towards a more sustainable future. But what makes NVIDIA even more special is that it is tackling the ESG trend on all fronts. In fact, it was ranked as one of the world’s top 100 companies to work for due to its incredible working conditions, hiring practices and professional development programs. In addition to its ranking as one of the world’s top companies to work for, it was also ranked on MIT Tech Review’s 50 Smartest Companies list and the Human Rights Watch’s Corporate Equality Index.
Not only is Nvidia a role model for companies in its social and governance stance, it is also firmly committed to building a greener future, as well. From its push to use renewable energy in its day to day operations to its innovative technological advancements in chipmaking which reduce the amount of energy needed to power devices, Nvidia is checking all boxes for impact investors.
With more and more demand coming for semiconductors and new chip technology hitting the market, companies like Nvidia and Intel are going to be some of the biggest benefactors. They’re already well-known in the industry, and this could just be their time to really shine.
Canadian Companies Are Getting In On The Trend, As Well:
NFI Group (TSX:NFI) is another one of Canada’s home-grown electric vehicle pioneers producing transit busses and motorcycles. The company had a tough go at it towards the beginning of the year, but has since cut its debt and begun to address its cash flow struggles in a meaningful way. Though it remains down from January highs, NFI still offers investors a promising opportunity to capitalize on the electric vehicle boom.
In the previous months, NFI has seen an uptick in insider stock purchases which is often a sign that the board and management strongly believe in the future of the company. In addition to its increasingly positive financial reports, it is also one of the few in the business that actually pay dividends out to its investors.
GreenPower Motor (TSX.V:GPV) is a thriving electric bus manufacturer based out of Vancouver. At the moment, its focus is primarily on the North American market, but its ambitions are much larger. Founded over 10 years ago, GreenPower has been on the frontlines of the electric transportation movement, with a focus on building affordable battery-electric busses and trucks. This year alone, GreenPower Motor has seen its share price soar from $2.03 to $36.88 before correcting to the $23 range it is currently sitting in.
Magna International (TSX:MG) is a great way to gain exposure to the EV market without betting big on one of the new hot automaker stocks tearing up Robinhood right now. The 63 year old Canadian manufacturing giant provides mobility technology for automakers of all types. From GM and Ford to luxury brands like BMW and Tesla, Magna is a master at striking deals. And it’s clear to see why. The company has the experience and reputation that automakers are looking for.
Like Magna, Westport Fuel Systems (TSX:WPRT) is another hardware and tech provider in the auto-industry.It builds products to help the transportation industry reduce their carbon footprint. In particular, it provides systems for less impactful fuels, such as natural gas. In North America alone, there are over 225,000 natural gas vehicles. But that shies in comparison to the global 22.5 million natural gas vehicles globally, which means the company still has a ton of room to grow!
Another way to gain exposure to the electric vehicle industry is through AutoCanada (TSX:ACQ), a company that operates auto-dealerships through Canada. The company carries a wide variety of new and used vehicles and has all types of financial options available to fit the needs of any consumer. While sales have slumped this year due to the COVID-19 pandemic, AutoCanada will likely see a rebound as both buying power and the demand for electric vehicles increases. As more new exciting EVs hit the market, AutoCanada will surely be able to ride the wave.
By. Lars Andersson
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that the demand for ride sharing services will grow; that Steer can help change car ownership in favor of subscription services; that new tech deals will be signed by Facedrive and deals signed already will increase company revenues; that Facedrive will achieve its plans for manufacturing and selling Tracescan devices; that Facedrive will be able to expand to the US and globally; that Facedrive will be able to fund its capital requirements in the near term and long term; and that Facedrive will be able to carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that riders are not as attracted to EV rides as expected; that competitors may offer better or cheaper alternatives to the Facedrive businesses; changing governmental laws and policies; the company’s ability to obtain and retain necessary licensing in each geographical area in which it operates; the success of the company’s expansion activities and whether markets justify additional expansion; the ability of the company to attract drivers who have electric vehicles and hybrid cars; and that the products co-branded by Facedrive may not be as merchantable as expected. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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