Green
Putting EV Valuations Into Perspective
Putting EV Valuations Into Perspective
The global push for lower emissions has created a mania around pure-electric automakers. While Tesla leads the charge, institutional investors have also piled into many of its younger rivals.
For example, in 2019, Saudi Arabia’s sovereign wealth fund invested $1.3 billion into Lucid Motors. One year later, it was revealed that Amazon had a 20% stake (worth $3.8B) in Rivian.
To see how quickly EV valuations have ballooned, we’ve visualized the historical market capitalizations (market caps) of 10 prominent automakers.
Legacy vs Pure-Electric
The legacy group includes five top traditional automakers, while the EV group includes the five most valuable pure-electric automakers that are listed on an American exchange.
The following table lists the market caps of these companies at various dates. While XPeng and NIO are listed on the New York Stock Exchange, they do not currently sell cars in the U.S.
| Automaker | Type | 2010 | 2015 | 2021 | 02/22/2022 |
|---|---|---|---|---|---|
| 🇺🇸 Tesla | EV | $3B | $31B | $1,061B | $849B |
| 🇯🇵 Toyota | Legacy | $124B | $191B | $255B | $256B |
| 🇩🇪 Volkswagen Group | Legacy | $59B | $79B | $129B | $128B |
| 🇩🇪 Mercedes-Benz | Legacy | $61B | $94B | $83B | $89B |
| 🇺🇸 Ford | Legacy | $63B | $57B | $83B | $69B |
| 🇺🇸 General Motors | Legacy | $55B | $51B | $85B | $68B |
| 🇺🇸 Rivian | EV | N/A | N/A | $93B | $55B |
| 🇺🇸 Lucid | EV | N/A | N/A | $63B | $42B |
| 🇨🇳 NIO | EV | N/A | N/A | $50B | $35B |
| 🇨🇳 Xpeng | EV | N/A | N/A | $41B | $30B |
Source: Companies Market Cap
At the end of 2021, Tesla and its four EV rivals were worth a combined $1.3 trillion. This was more than double of the legacy group, which was worth $635 billion. EV valuations have cooled since then, though Tesla is still the world’s most valuable automaker by a significant margin.
U.S. Sales in 2021
Comparing U.S. sales gives an interesting perspective on these companies’ relative scale. Once again, note that XPeng and NIO do not sell cars in America. We’ve provided figures for their home market (China) instead.
| Automaker | U.S. Sales in 2021 |
|---|---|
| General Motors | 2.3 million |
| Toyota | 2.2 million |
| Ford | 1.9 million |
| Volkswagen Group | 630,000 |
| Tesla | 361,000 (est.) |
| Mercedes-Benz | 330,000 |
| XPeng | 98,000 (China) |
| NIO | 91,000 (China) |
| Rivian | 920 |
| Lucid | 520 (est.) |
Source: Good Car Bad Car
Impressively, Tesla has overtaken Mercedes in the U.S. to become one of the country’s top luxury brands.
The Long Road Ahead
To satisfy investor expectations, Rivian and Lucid will need to rapidly scale their production and sales. Failing to do so could lead to significant stock price volatility.
Investors should also note that both companies could experience similar challenges as Tesla, which Musk has referred to as “production hell”. Rivian has already pushed back deliveries of its first SUV, while Lucid customers have been notified of delays due to “fit and finish” issues.
Nevertheless, these young manufacturers are setting some serious goals. Rivian aims to produce one million cars annually by the year 2030, while Lucid is targeting a more conservative 49,000 cars in 2023.
Tesla Goes on the Defensive
Tesla is still the undisputed EV leader, but competition is rapidly heating up.
On one hand, legacy automakers have been investing heavily in EV development, and new models are coming en masse. The Volkswagen Group is the biggest threat, selling 453,000 EVs globally in 2021 (up 96% over 2020). For reference, Tesla reported global sales of 936,000 in 2021.
On the other hand, Tesla must also defend its market share from an onslaught of Chinese entrants. This includes XPeng and NIO, which appear to be on similar trajectories. Both firms were founded in 2014, both sold nearly 100,000 EVs in 2021, and both have recently expanded into European markets. A U.S. expansion also seems to be imminent.
With the entire auto industry moving towards battery powered vehicles, will the market rethink its valuation of Tesla?
Agriculture
Here’s Why the Amazon is So Important for Global Food Security
The Amazon rainforest plays a critical role in supporting crop growth by stabilizing the climate and balancing water cycles.
Why is the Amazon Rainforest Important for Food Security?
The Amazon rainforest is home to 400 billion trees and covers 6.7 million square kilometers, but the ‘Earth’s lungs’, as it is commonly referred to, is so much more than that.
Aside from being a key carbon sink, it also plays a critical role in supporting crop growth by stabilizing the climate and balancing water cycles.
In this infographic, our sponsor Brazil Potash looks at how the Amazon regulates rainfall and temperature and how crop yields can be optimized. Let’s dive in.
Rainfall as a Primary Water Source
“Flying rivers” are air currents that carry enormous amounts of water vapor over thousands of kilometers. These airborne rivers are responsible for influencing regional and global weather patterns, including rainfall.
The Amazon flying river cycle begins with water evaporating from the Atlantic Ocean. Wind currents then transport these vapors across the continent, exchanging moisture with the Amazon rainforest through evapotranspiration. Finally, these aerial rivers distribute the moisture as rain.
The trees in the Amazon rainforest release around 20 billion tonnes of water into the atmosphere daily—this is more water than the Mississippi River discharges in 13 months.
Because only around 6% of cropland in Brazil is irrigated, the region relies heavily on this rainfall as a primary water source to support crop growth that feeds both local and global communities.
Temperature Regulation
The Amazon also absorbs billions of tons of carbon dioxide (CO2) a year through photosynthesis. By absorbing this CO2, it helps regulate temperatures and lessen the effects of climate change.
According to NASA research, the cumulative effects of climate change, accelerated by deforestation, may result in the loss of up to 11 million hectares of agricultural land in Brazil by the 2030s.
The continued sustainable production of Brazil’s crops is essential to food security, but deforestation can harm these efforts.
How to Grow More With Less
Brazil hosts the largest section of the Amazon rainforest at around 60%. The country is also one of the world’s largest exporters of agricultural goods.
It’s essential for global food security and for climate change that crop yields in Brazil are increased in areas already allocated for agriculture, instead of clearing new areas in the Amazon rainforest.
A recent study highlights a significant yield gap in Brazil’s primary export, soybeans.
A yield gap is the difference between actual crop yield and potential crop yield.
| Region | Yield | Yield Gap |
|---|---|---|
| Cerrado | 62% | 38% |
| Amazon | 69% | 31% |
| Atlantic Forest | 76% | 24% |
| Pampa | 92% | 8% |
The following steps proposed could optimize land usage:
- Increase crop yields: This can be done in part by optimizing and increasing fertilizer use. Local fertilizer suppliers are essential to this by providing affordable and accessible fertilizer year-round.
- Double Crop: Continuing to grow a second crop of corn on soybean fields between seasons to optimize land usage. Additional fertilizer is essential to maintain the soil’s nutrients after harvests.
- Raise cattle on smaller pastures: By streamlining the space provided for cattle, additional cropland can be added to support food for both people and livestock.
The Role of Brazil Potash
Brazil Potash aims to support the preservation of the Amazon rainforest by working with farmers to increase crop yields and improve the quality and quantity of food grown, without the need for land expansion.
By keeping farmers informed of fertilizer’s benefits and supporting a more stable supply of local fertilizer, Brazil Potash will continue supporting farming communities for generations to come.
Click here to learn more about sustainable crop growth in the Amazon and Brazil Potash.
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