Is An EV Winter Coming? Should We Bargain Hunt?
๐๐๐Electric Vehicle or EV stocks are experiencing a challenging start this year. $Tesla Motors(TSLA)$
The ripple effects have extended to major players with $BYD COMPANY(01211)$
Since the price cuts were announced, the whole EV sector has been affected. $Rivian Automotive, Inc.(RIVN)$
Despite the recent price reductions, EV prices remain a significant obstacle to widespread adoption.
The main issue is that EVs are typically more expensive than their petrol counterparts - often by up to 30% before factoring in incentives. In particular, higher interest rates, the end of EV incentives, expensive and inconsistent charging networks and a limited range of EV models are compounding the industry's challenges.
Amidst this prevailing sense of doom across the EV sector, there is a silver lining.
A recent report by Goldman Sachs said that decreasing costs of raw materials such as nickel, lithium are expected to lead to a 40% reduction in EV battery prices within the next 2 years. This decline in battery prices may enable EVs to achieve cost parity with traditional internal combustion vehicles by 2025.
The introduction of Tesla 's budget car by 2025 could play a key role in market expansion, making EVs accessible to a larger market who were previously unable to afford the existing EV lineup.
S&P Global Mobility projects global sales for Battery Electric Vehicles (BEVs) to reach 13.3 million units in 2024, comprising 16.2% of global vehicle sales. In 2023, an estimated 9.6 million BEVs were sold, accounting for a 12% market share. This is a solid 39.5% yearly revenue growth by the EV industry.
In the long term, the EV sector will continue to grow due to improving battery technologies, decreasing costs, reduced EV prices and an increase in public charging points globally.
However in the short term, the EV sector is facing tough challenges due to intense competition as well.
Nonetheless I believe it is a great time to bargain hunt EV stocks especially Tesla which has dropped by a massive 25% year todate to hold long term.
As Warren Buffett likes to say When there is Fear in the markets it is time to be greedy.
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