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The race to a world of electric cars has turbocharged the automotive industry. With numerous car startups competing with well-established corporations, car companies, especially EV makers, are poised for massive growth in the long term.
As global energy production switches toward renewable and clean energy, the demand for electric vehicles will keep growing. Most, if not all, automakers have some degree of EV representation in their product lineup or are pumping money into R&D to get into this field, which has been the primary revenue growth driver for car markers over the past decade.
This article will look at five car companies that could have a successful 2023 and are likely to recover from the sell-offs caused by the 2022 bear market.
Electric vehicles have been driving the growth in car sales for the better half of a decade. With plans in place to phase out internal combustion engines by 2035, automakers are in a race to be the first to assume a dominant position in the new global auto industry.
Industry experts expect gross EV sales to reach 10.6 million in 2022, which represents a 57% increase YoY; with 27 million EVs expected to be in operation by the end of the year. Some companies have been more cautious with their investments in electric vehicles, opting more toward hybrids and fuel-efficient vehicles, while others have been working hard to develop hydrogen cells as an alternative to the pollution and other issues associated with mining rare earth minerals for battery production.
The global car industry is broadly focused on renewable-powered vehicles for a greener future, aided by generous incentives from governments around the world who are all trying to avoid carbon-tax fines and the like.
Tesla designs, develops, manufactures, and leases electric vehicles, as well as energy generation and storage units in the United States and internationally. The company operates two distinct segments:
The company was founded in 2003 and is based in Austin, Texas, United States.
Tesla has shed more than half of its market value since the start of 2022. The company had been trading at some of the highest valuations ever seen for an automaker, and the 2022 bear market came as a due correction in the stock’s price.
While the operational results of Tesla remain solid, other issues have made investors fearful of the company’s future.
Elon Musk, the CEO and figurehead of the company, finalized the acquisition of Twitter, which has sparked fears that Musk would not be able to direct sufficient attention toward the daily operations of Tesla. The decision to acquire the social media service has been mired in controversy, which has added to the investors’ decisions to sell the stock. Along with this came a recall of nearly half a million of Tesla’s Model 3 and Model S vehicles over software and seatbelt issues. This came just shortly after news broke of a criminal investigation in the United States surrounding Tesla about claims that the company has made regarding its vehicles’ self-driving capabilities. All of this does not bide well for the automotive maker and left many investors questioning the future of the company.
|Q3 FY 2022||Q2 FY 2022||Q3 FY 2021||Full FY 2021|
|Revenue||$21,454 mln||$16,934 mln||$13,757 mln||$53,823 mln|
|Cost of revenue||$16,072 mln||$12,700 mln||$10,097 mln||$40,217 mln|
|Operating expense||$1,694 mln||$1,628 mln||$1,605 mln||$7,110 mln|
|Net income||$3,292 mln||$2,256 mln||$1,618 mln||$5,519 mln|
|Assets||$74,426 mln||$68,513 mln||$57,834 mln||$62,131 mln|
|Liabilities||$33,302 mln||$30,855 mln||$29,340 mln||$30,548 mln|
|Equity||$41,124 mln||$37,658 mln||$28,494 mln||$31,583 mln|
|Cash & cash equivalents||$21,107 mln||$18,915 mln||$16,095 mln||$17,707 mln|
|Free cash flow||$3,297 mln||$621 mln||$1,322 mln||$3,483 mln|
Some of the highlights of Tesla’s 2022 fiscal year include:
Read more in our guide on buying Tesla stocks.
NIO is a company that is engaged in the design, development, and manufacturing of electric vehicles in China. The company also offers power station and charging solutions, such as Power Home, Power Swap, and Power Charger. Along with this, the company also offers valet services for customers, such as repair, battery replacement, and bodywork.
NIO was founded in 2014 and is based in Shanghai, China. NIO Inc debuted on the New York Stock Exchange on 12 September 2018 via an ADR.
NIO’s unprofitability and ongoing uncertainty surrounding Chinese listings on US stock exchanges have caused the stock to shed nearly 70% of its market value. Slowing global growth has also weighed heavily on NIO, which is a growth stock that requires favorable market conditions to accelerate revenue growth and become profitable.
While the short-term outlook for NIO may not seem too promising, the company is in a considerably better position than competitors, such as Li Auto and Xpeng, who have seen their deliveries decline in the third quarter of 2022.
Many analysts consider NIO to be trading at an attractive discount and are bullish on the stock in the long run.
|Q3 FY 2022||Q2 FY 2022||Q3 FY 2021||Full FY 2021|
|Revenue||CNY 13,002.1 mln||CNY 10,292.4 mln||CNY 9,805.3 mln||CNY 36,136.4 mln|
|Cost of revenue||CNY 11,267 mln||CNY 8,952.1 mln||CNY 7,812.1 mln||CNY 29,315 mln|
|Operating expense||CNY 5,605.4 mln||CNY 4,185.9 mln||CNY 2,985.1 mln||CNY 11,317.7 mln|
|Net income||(CNY 4,142.3 mln)||(CNY 2,745 mln)||(CNY 2,858.9 mln)||(CNY 10,572.3 mln)|
|Assets||CNY 96,877.2 mln||CNY 93,903.5 mln||CNY 69,010.9 mln||CNY 82,883.6 mln|
|Liabilities||CNY 64,012.9 mln||CNY 58,204.3 mln||CNY 44,489.6 mln||CNY 44,820.2 mln|
|Equity||CNY 32,864.3 mln||CNY 35,699.2 mln||CNY 24,521.3 mln||CNY 38,063 .4 mln|
|Cash & cash equivalents||CNY 44,809.7 mln||CNY 50,604.9 mln||CNY 43,301.3 mln||CNY 52,391.3 mln|
|Free cash flow||–||–||–||(CNY 2,112.4 mln)|
As already mentioned above, NIO requires a bullish economy and considerable consumer spending to accelerate revenue growth and reduce losses. QoQ revenue growth has been impressive despite market difficulties and NIO is also well-prepared to finance its growth in the long term.
NIO has managed to improve the number of deliveries to 31,600 - a 29% increase YoY. The company’s plans include entering the markets of Germany, Denmark, Sweden, and the Netherlands. NIO is also planning to develop a low-cost vehicle through a new sub-brand.
Stellantis is a holding company that comprises businesses engaged in the design, development, and manufacture of vehicles, engines, and other related products. The company offers its products through various brand names, such as Maserati, Fiat, Abarth, RAM, Alfa Romeo, Chrysler, Dodge, DS, Vauxhall, Opel, Lancia, Peugeot, Citroën, and Jeep.
The company was founded in 1899 and is based in Hoofddorp, the Netherlands.
Stellantis’ stock has shown mixed performance throughout 2022. Some operational issues, coupled with the overall bearish trend on global markets have placed downward pressure on the auto giant, dropping the stock price by over 15% since the start of the year.
The joint venture between Stellantis and GAC, aimed at producing Jeeps in China, has filed for bankruptcy.
Despite the supply chain issues brought about by the war between russia and Ukraine, Stellantis has seen a surge in demand and increased revenues have propelled the stock higher from the lows of EUR 11 in July to over EUR 14 in November.
Declining consumer sentiment caused by inflation and higher interest rates could quell demand in the short term, which might not be too big of an issue for Stellantis.
|Full FY 2021||Full FY 2020|
|Revenue||EUR 149,419 mln||EUR 86,676 mln|
|Cost of revenue||EUR 119,943 mln||EUR 75,962 mln|
|Operating expense||EUR 13,617 mln||EUR 13,617 mln|
|Net income||EUR 14,200 mln||EUR 29 mln|
|Assets||EUR 171,766 mln||EUR 99,730 mln|
|Liabilities||EUR 115,459 mln||EUR 73,869 mln|
|Equity||EUR 56,307 mln||EUR 25,861 mln|
|Cash & cash equivalents||EUR 51,412 mln||EUR 24,196 mln|
|Free cash flow||EUR 8,533 mln||EUR 583 mln|
Stellantis reports its financial results on a biannual basis. The company, through its vast web of subsidiaries, maintains an impressive balance sheet with assets exceeding $170 billion. The full fiscal 2022 results are likely to show an increased cost of revenue and operating expenses, due to the ongoing supply chain issues affecting the auto industry.
Stellantis achieved some important milestones in 2022:
Rivian Automotive is a company that is engaged in the design, development, and manufacturing of electric vehicles and related accessories. Rivian’s flagship vehicles include the R1S and R1T 5-passenger cars. The company offers pickup trucks and develops delivery vans for Amazon.com.
The company was founded in 2009 and is based in San Jose, California, United States.
Rivian’s stock has endured a tough 2022 and has lost over 70% of market value since the start of the year. The late acceleration of sales and an overly optimistic valuation meant the stock was sold off massively in the 2022 bear market.
One of the early investors, George Soros, has also been bearish on the stock recently. However, Rivian managed to generate considerable amounts of revenue this year, while supply chain issues and material costs have raised some doubts about the timely fulfillment of sales contracts.
Accelerating sales in 2023 could help Rivian offset some of the losses and help the stock rebound if macroeconomic conditions allow for market optimism.
|Q3 FY 2022||Q2 FY 2022||Q3 FY2021||Full FY 2021|
|Revenue||$536 mln||$364 mln||$1 mln||$55 mln|
|Cost of revenue||$1,453 mln||$1,068 mln||$83 mln||$520 mln|
|Operating expense||$857 mln||$1,004 mln||$694 mln||$3,755 mln|
|Net income||($1,724 mln)||($1,712 mln)||($1,233 mln)||($4,688 mln)|
|Assets||$19,023 mln||$20,171 mln||$8,488 mln||$22,294 mln|
|Liabilities||$3,686 mln||$3,303 mln||$12,095 mln||$2,780 mln|
|Equity||$15,337 mln||$16,868 mln||($3,607 mln)||$19,514 mln|
|Cash & cash equivalents||$13,272 mln||$14,923 mln||$5,156 mln||$18,133 mln|
|Free cash flow||($1,666 mln)||($1,563 mln)||($1,154 mln)||($4,416 mln)|
Rivian’s financial reports show the company’s gradual increase in sales, which is expected to accelerate further in the coming years. Sufficient revenue growth can help the company reduce losses and eventually become profitable.
Rivian has a healthy amount of cash at its disposal, as well as a limited burden from liabilities, which allows the company to gain additional financing when needed.
However, RIvian’s growth is highly dependent on macroeconomic factors and bullish market sentiment is required for it to capitalize on these opportunities.
2022 marked an important year for Rivian. The company drastically increased sales, as well as shared some important news with the public, such as:
The Ford Motor Company is engaged in the development, design, and manufacturing of utility, sport, and electric vehicles, as well as the Lincoln brand of luxury vehicles worldwide.
The company operates through three distinct business units:
The Ford Motor Company was founded in 1903 and is headquartered in Dearborn, Michigan.
2022 has been a rough year for Ford stock. The company has lost over 35% in value since the start of the year. While the bear market undoubtedly had its toll on the stock, internal issues have compounded the problems facing Ford. Unexpected supplier costs and technical difficulties with the company’s electric vehicles have caused investors to raise some doubts about the company’s ability to properly handle the transition to electric vehicles in the long run.
The company also posted a loss in the third quarter of 2022, which sounded alarm bells for some investors - further intensifying the sell-off.
Ongoing supply chain issues are straining the company’s bottom line and Ford will need to act quickly to turn things around, which will require additional investments through debt or cash financing. However, despite the short-term difficulties, Ford is trading at a significant discount and could be a bargain if the economy mounts a turnaround in 2023.
|Q3 FY2022||Q2 FY2022||Q3 FY2021||Full FY 2021|
|Revenue||$39,392 mln||$40,190 mln||$35,683 mln||$136,341 mln|
|Cost of revenue||$34,354 mln||$33,191 mln||$30,057 mln||$114,651 mln|
|Operating expense||$2,847 mln||$2,759 mln||$2,947 mln||$11,915 mln|
|Net income||($827 mln)||$667 mln||$1,832 mln||$17,937 mln|
|Assets||$246,919 mln||$245,755 mln||$252,677 mln||$257,035 mln|
|Liabilities||$204,830 mln||$201,518 mln||$215,973 mln||$208,413 mln|
|Equity||$42,089 mln||$44,237 mln||$36,704 mln||$48,622 mln|
|Cash & cash equivalents||$40,173 mln||$36,700 mln||$46,426 mln||$49,593 mln|
|Free cash flow||$9,007 mln||$1,248 mln||$5,434 mln||$9,560 mln|
Ford’s balance sheet shows stability, which is in contrast to the company’s income statement. Supply chain issues and increased expenses, coupled with declining quarterly revenues have caused Ford to end Q3 with a loss. However, the company has vast cash reserves to tap into and increase production capacity, while overhauling portions of its complex supply chain.
Ford has been making strides in the development of its electric fleet and manufacturing capacity in 2022. Some of the important developments include:
Car manufacturers have had a difficult year in 2022. Increasing inflation and the rapid response to interest rate hikes have placed an additional burden on many automakers.
Much of the potential growth in 2023 depends on the government's ability to withstand high inflation without entering a global recession. Tackling inflation in 2023 could mark the beginning of a bull run on the market and car stocks are some of the forerunners to take advantage of new growth opportunities.
The 2022 bear market has been a rough time for car stocks. EV startups, in particular, have been beaten down by recession fears and low revenues. However, an economic turnaround could very well mark the beginning of another boom for car stocks.
Tesla, the largest EV maker, is usually seen as the primary driver of the industry but should be watched with caution as there are a lot of negative news reports and concerning events currently circling the company. Older heavy hitters, such as Ford, are actively working on developing their electric fleet which might be something to keep in mind. Then there are a few promising startups, such as Rivian and NIO, which are betting on massive growth in the coming years.
Car companies that are actively making investments in developing efficient electric vehicles are well-positioned to take advantage of the rapidly growing EV market. The stock of companies that can accelerate sales growth will be the ultimate winners of the EV race in the long run.
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