The spectacular rally that the electric vehicle (EV) industry in 2020 has slowed down in 2021 but is still going strong. This is evident in the performance of the Global X Autonomous & Electric Vehicles ETF (DRIV), which was up about 60% in 2020, and has gained 18% in the first half of 2021.
The shift towards clean energy solutions, as well as infrastructure and subsidy incentives from federal governments, is bound to support exponential growth in the EV space for the foreseeable future.
In this article, I’m going to take a look at XPeng (XPEV) and Fisker (FSR). These two EV stocks are less well-known than Tesla (TSLA) and NIO (NIO) but are both multi-billion dollar companies making strides within the industry.
XPeng continues to impress investors
Xpeng is a China-based EV manufacturer valued at a market cap of $35.6 billion, The company designs, develops, and markets EVs in China. It offers SUVs under the G3 brand while its four-door sports sedan vehicle is sold under the P7 brand.
Additionally, XPeng also provides sales contracts, maintenance, vehicle leasing, supercharging, and ride-hailing services, thereby diversifying its revenue base.
In Q1 of 2021, Xpeng’s vehicle deliveries were up close to 500% year over year at 13,340 units. The company’s sales rose 616% year over year to $450.4 million in the quarter while revenue was up 3.5% on a sequential basis. Vehicle sales rose 655% to $429 million, accounting for 95% of revenue.
Investors can expect this momentum to continue in the upcoming quarters as well. In April, XPeng’s deliveries rose 285% to 5,147 units while in May it was up 483% at 5,686 units, and the company is on track to deliver between 15,500 and 16,000 vehicles in Q2, allowing it to generate between 3.4 billion CNY ($526 million) and 3.5 billion CNY ($542 million) as previously forecasted.
Analysts tracking XPeng expect sales to rise by 150.5% to $2.28 billion in 2021 and by 89.9% to $4.42 billion in 2022. It will allow the company to narrow its losses from $1.23 per share in 2020 to $0.48 per share in 2022.
XPeng stock is currently trading at a forward price to 2022 sales multiple of 8x which is not too steep given its stellar growth estimates and improving profit margins. The shares of this EV giant have more than doubled since it went public in Q3 of 2020 but are also trading 21% below record highs giving investors an opportunity to buy the dip.
Fisker has massive upside potential
Valued at a market cap of $5.7 billion, Fisker is also an EV manufacturer. However, unlike XPeng it does not generate sales and is pre-revenue. Fisker ended the March quarter with $985 million in cash and increased its operating expense guidance by an additional $30 million in 2021.
The EV company has confirmed it has 16,000 pre-orders and half of these reservations are outside its SUV segment providing Fisker with a larger addressable market than initial estimates.
Last month, Fisker disclosed its partnership with Foxconn to accelerate the development of the PEAR (Personal Electric Automotive Revolution) project and develop a breakthrough electric vehicle.
Fisker said it will begin production of the Ocean SUV in Q4 of next year while production of the PEAR automobile will begin in Q4 of 2023 after the companies identify a manufacturing unit in the U.S.
The final verdict
In my opinion, right now there’s too much uncertainty surrounding FSR. FSR investors are betting on the company’s management team to deliver on their promises and production deadlines. Therefore, because of FSR’s lack of sales and earnings visibility, I believe XPEV is the better EV stock to invest in in 2021. Currently, XPEV is delivering thousands of cars to customers and is growing at an impressive rate.
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XPEV shares fell $0.14 (-0.32%) in after-hours trading Wednesday. Year-to-date, XPEV has gained 3.71%, versus a 15.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditya Raghunath
Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...
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