Tesla shares are on fire, up 65% YTD. Tesla is a story stock. Even more so than the FANGs. Tesla’s investors seem to be convinced that the world is moving toward electrification of the global auto fleet (probably true) and Tesla is going to lead the way and in the process become the most profitable car business the world has ever seen.
The latter assumption seems suspect. The auto business is fiercely competitive. The GM’s, Mercedes, BMWs, and as outlined here, Volvos of the world, aren’t going to sit idle.
Volvo Cars announced that every model from 2019 onwards would have an electric motor, making it the first traditional carmaker to call time on vehicles powered solely by an internal combustion engine.
Volvo said on Wednesday that it would put electrification at the core of its business. From 2019 it will only make three types of cars: pure-electric, plug-in hybrids, and so-called “mild” hybrids combining a small petrol engine with a large battery.
“This announcement marks the end of the solely combustion engine-powered car,” said Håkan Samuelsson, chief executive.
“Volvo Cars has stated that it plans to have sold a total of 1m electrified cars by 2025. When we said it, we meant it. This is how we are going to do it.”
The Swedish carmaker was purchased by Chinese domestic carmaker Geely in 2010.
The new owners have proven to be a catalyst in the race to electrify its models, as China is already the world leader in electric car sales and Geely is the only Chinese-owned carmaker producing vehicles for the US.
Nearly 265,000 pure-electric vehicles were sold in China last year, versus 110,000 in all of Europe, according to data compiled by EV-Volumes.com.
Read more here.
Jeremy Jones, CFA
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