TLDR: EV within the subsequent 10 years goes to grow to be the largest trade on this planet, not due to it is inexperienced power however due to automation. They’ll result in the biggest mass unemployment rise as they make drivers pointless
I might love individuals’s opinions about my tackle the way forward for EV and whether or not I am off base or too optimistic
Disclaimer: In NIO for 140 shares @ $22
My fundamental argument: EV firms are at the moment amazon of their bookshop section
I’d argue that the valuations of each TSLA, NIO and different giant EV firms is severely undervalued – I am not basing this on the variety of automobiles they manufacture nor the effectiveness of their electrical battery potential however on the billions they’re investing within the improvement of full self driving automation.
Within the subsequent 10 years, we’re prone to see full automation particularly with the arrival of quantum computing resulting in an enormous improve in computational energy (https://www.sciencemag.org/news/2020/09/ibm-promises-1000-qubit-quantum-computer-milestone-2023) – The businesses which are closely investing in growing this expertise aren’t the traditional automotive manufactures akin to GM, Chevrolet or Chrysler however as an alternative the massive EV firms which have grown exponentially up to now yr. Like many individuals I am viewing firms like NIO or TSLA as tech firms and never automotive producers. They’re fundamental worth is within the code they develop for automation.
As soon as full autonomous driving turns into practical, these firms can lease their code as a service and mainly exchange the necessity for any job which requires drivers i.e. supply drivers, truck drivers, taxi drivers.
The principle instance I have been utilizing for that is Domino’s Pizza within the UK – They’ve about 1126 shops within the UK, to illustrate they conservatively they rent 5 supply drivers per retailer and people drivers on common work about 5 days every week and a complete of 6 hours per day (the three hours round lunch and three round dinner) – Let’s additionally assume they solely receives a commission minimal wage – This comes out to a complete expenditure of about £80mill per yr ($110 mill) for dominoes simply primarily based on paying their drivers wages, not countering in gas or different expenditures that they do additionally cowl – And that is just one firm within the UK.
If automation happens, which once more these firms are investing closely in and the underlying infrastructure and expertise is starting to achieve primary necessities, these EV firms can create a code as service mannequin together with the revenue from truly promoting the automotive and mainly make drivers redundant
My argument is that mainly for the time being these EV firms are amazon of their bookshop section, individuals are betting that they’re going to promote a number of books (automobiles on this case as a result of they’re clear power) and I feel they’ll find yourself changing into juggernauts that mainly take over our every day lives to the identical extent amazon now does
Obvs I is likely to be flawed and in reality I might love to listen to some bearish arguments – I am not saying we’re not in a bubble however I feel these firms in 10 years time will probably be steals at their present costs