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How EV Companies Going Public Is a Lot Like the Dot-Com Era

By John Rosevear – Jul 21, 2020 at 10:47AM

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Learn about some electric vehicle specialists looking to go public and how investable they are today.

In this episode of Industry Focus: Energy, Nick Sciple chats with senior auto specialist John Rosevear about the latest developments happening in the industry. They provide a breakdown of the latest Ford Bronco, talk about electric vehicle makers' IPOs and the consolidation in the autonomous vehicle space, and much more.

Also, get a sneak peak of what's coming up over the next three weeks on Industry Focus: Energy.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

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This video was recorded on July 16, 2020.

Nick Sciple: Welcome to Industry Focus. I'm Nick Sciple. Today, we'll be breaking down the latest reincarnation of the Ford Bronco, taking a look at some recent EV IPOs, and looking at some consolidation in the autonomous vehicle industry. Joining me today, to break it all down, is Motley Fool senior auto specialist John Rosevear. John, welcome back on the podcast.

John Rosevear: Thanks very much, Nick.

Sciple: So, right off the bat, I want to talk about this Ford Bronco reveal that came out on Monday. After 25 years away, Ford is bringing back the Bronco. And just judging by the reaction that I've seen on Twitter and some of my friends, it's been an incredibly well-received vehicle rollout. John, what can you tell us about this vehicle and why it's important for Ford?

Rosevear: Well, my two-word take is, it'll sell. They've got this Tesla-inspired (TSLA 1.05%) reservations thing going, and they've been taking reservations. They haven't told us how many yet, but they had one limited edition that they're going to build 3,500 of; the launch edition of it that had all the options and so forth and some special trim. And that was gone by the next morning after they revealed the Bronco on Monday night.

And the interesting thing about this reveal is how well Ford pulled it off, despite the fact that they had to tear up the plan they had a few months ago. I mean, they're going to show this in the New York Auto Show, they're going to show, I think, the Bronco Sport at the New York Auto Show, and then the Bronco itself at the Detroit Auto Show, which was supposed to be in June; both of those were canceled. They had to go to this whole Plan B online through multiple channels and so forth on their YouTube channel, various partners showing it. They did a great job. It was the talk of Twitter for a day, which is not something you see with a traditional automaker that often these days. It is certainly a product that has got a lot of people's attention, certainly a lot of the people I've talked to have either put up the $100 reservation fee or they're seriously thinking about it or they're trying to decide between the two- and the four-door. You know, for something that is obviously a niche product, it really has captured a lot of attention and imagination and generated a lot of excitement.

Sciple: So, as you talk about this being a niche product, I think this very clearly is an attack on Jeep Wrangler and its presence in the market. How big is that market segment, could it actually move the needle for Ford in a meaningful way?

Rosevear: Well, I don't know how big the overall market segment is, because it kind of depends on how you dice and slice it. Jeep sells about 20,000 Wranglers a month, give or take, and then another 5,000 or 6,000 Gladiators, which is the pickup truck variant. I think if Ford could get 10,000 Bronco sales between the two- and the four-door, the full-size Bronco, a month after the first few months after launch, they would be pretty pleased.

What's interesting to note, though, is Ford is setting this up as a sub-brand. There isn't just the Bronco, which is a body-on-frame SUV that shares its underpinnings with the Ranger and will be built in the Ranger's factory on the assembly line in Michigan. They're also debuting the Bronco Sport, which is a very new thing. This is what they call a white space product, they haven't had something like this before. It shares architecture with the Escape, but everyone at Ford insists it's very different to drive and very different inside and out, that it's a true off-roader. This seems aimed more at the Jeep Compass and maybe the Jeep Cherokee as a unibody SUV with still some real serious off-road chops. So, like I said, it's a sub-brand. I mean, they're not just taking on the Wrangler, they're also, to a lesser extent, that could grow over time taking on a couple of other jeeps as well.

Clearly, Ford has seen the sustainability of sales, the constant sales growth that Jeep has had for years, the margins that they're putting out that helped Fiat Chrysler out of a deep hole of debt and into profitability, where they even paid a dividend before the COVID-19 pandemic. I think they want a piece of that. CEO Jim Hackett's mandate is to increase profit margins, and we're going to do that by going big in the segments where we're strong, and SUVs is one of those. I mean, they've got perennially popular, sort of, family-hauler SUVs, the Explorer, the Escape, you know, why not a brawny off-road side to that, too? We have that heritage, if we can get past the O.J. Simpson thing, which is actually something they tested, [laughs] even before they decided to do this, to see if they could get past the O.J. Simpson thing. There's a chance here to win incremental sales, add some margins, and you know, some of these people might be, you know, they were walking in to buy an Escape and they leave with a Bronco Sport instead, but some of these people will be off-roaders who might have had a Jeep last time and maybe there were things about it they didn't love that the Bronco addresses.

Ford has certainly put a lot of effort, a lot of developmental efforts, and a lot of love into this too. And people smirk when you talk about love in an automobile, but that's what makes products that win with enthusiasts, is if they're developed by enthusiasts who get it, I mean, because then the little touches go in. This is a big part of Jeep's success; Ford gets that and they have mirrored that in their own effort with the Bronco.

Sciple: And one of the clever things that I saw when I was reading up on the vehicle design, was they've done something with the mirrors, where on the Jeep, the way the mirrors were installed, when you would take the door off, sometimes the mirror would come off with it, because it was attached to the doorframe, but they set up in such a way that it's now attached to one of the supporting posts on the vehicle, so you can take the doors off of the Bronco while keeping the mirrors intact, which as a driver, hey, I want to see behind me. You can see the appeal of that. You mention, the Jeep has been a significant profit-driver for Fiat Chrysler. Any concern there for that business, that losing market share to the Bronco could impact them in a negative way?

Rosevear: I don't think so. I mean, I don't think they're going to lose, you know, half their sales or anything here. What you might see is the market expanded. That where Jeep was selling 20,000/month, Ford comes in and sells 10,000/month, maybe Jeep still sells 18,000/month. I think there's room here. I think when you come out with an appealing product, you get people who are maybe driving an Explorer right now or a RAV4 or a Camry or who knows what, and they say, "Oh, man, I want one of those." The Wrangler has been around forever, but when something new and fresh comes out, even if it's functionally a similar product, you might say, "Wow! Yeah, I want one of those," as we've talked about, people are saying that right now. And we'll see if that carries through when it's launched, but there's a lot of potential here.

And I don't see it harming Fiat Chrysler drastically. I think it will draw new buyers to the segment. I mean, yeah, they'll beat each other up for a while, but, you know, the Bronco is the fresh face in town, they've got a year or two to run with that before the marketing war starts. [laughs]

Sciple: You talked about earlier that they're viewing the Bronco as, kind of, a badge they can use, a sub-brand they can use to build out additional offerings. And this is another thing that we're seeing with the Mustang. Ford rolled out the Ford Mustang Mach-E earlier this year, which is going to be an electric crossover SUV-style vehicle. And with both these horse badges, you know, the Bronco horse badge and the Mustang horse badge, you're seeing Ford expand its product offering. And to a certain extent, being a fast follower in the case of the Mach-E following Tesla and in the case of the Bronco, perhaps following the Jeep Wrangler.

When you look at these two horse badges for Ford going forward, how important do you think they will be to the continued growth of the brand and success of the company?

Rosevear: Let's step back a little bit, a few years ago, Ford said, you know, we're going to revamp our product line to increase profitability. And they're going to focus on four areas: Trucks, commercial vehicles, SUVs, and what they call performance, as a grab bag. Mustang is clearly the performance sub-brand; does that mean there will be five more Mustang-labeled models? I don't think so. But that's how they're thinking of it, the Mach-E and the Mustang itself are distinct products that share, sort of, an approach. I think that's what they're doing with Bronco, too. I mean, the Bronco Sport is a different product, they haven't talked about it much yet. But I think we're going to be hearing a lot of that because I think it's going to do well in the same way that Jeep's Compass and Cherokee have done well for a long time.

But they may come out, at some point, with a Bronco pickup, you know, I'm just hypothesizing, that's sort of like an extra-brawny Ranger or something that has the Bronco styling details. You can see space for other products. You could see a smaller product; you could see a bigger product. And, really, when you look at it, they were already doing this with the Transit family of commercial vans, which come in several different models and sizes, and with the F-Series, which is really three trucks, or really two trucks; the F-150 and then the Super Duties are variations. They're going into these four areas and investing in products they can get good margins on. And I think the Bronco is certainly going to be one of those.

Sciple: Before we move on from Ford, you mentioned the F-Series, I'd be remiss if we didn't at least mention the new F-150 that was revealed on June 25th. What should we know about this new truck; the F-150 or the F-Series is the highest-selling vehicle in North America?

Rosevear: Well, you take your first glance at the new 2021 F-Series, you say, OK, that's a Ford truck, what do they do differently? There are subtle differences in its styling, it has a little different stance. But the devil -- sort of, the big changes -- I don't want to say the devil, because they're good -- the big changes are under the skin. I mean, there's an elaborate new wiring harness that allows them to simply put more computer power into it. There are a lot of little innovations that truck buyers love, different things about, you know, you can use the tailgate as a workbench now, because it has recesses where you can put your clamps. You know, all these little things.

The trick where they did the hybrid truck, but then the hybrid system can be an onboard generator, so you don't have to carry a generator in your bed, if you're going to a job that requires a generator. So, you know, maybe you buy the hybrid not for the improved fuel economy, but because of the convenience of just having that there, if you go to a job every day that you have to bring a generator to, you don't have to haul it in and out of your truck all the time, it's right there, it's part of the truck. Power goes out, you can power all sorts of things from the truck out in the driveway until it comes back on. All these kinds of things, these are classic Ford touches, putting in these little touches.

I mean, just think about the one on the Mach-E that got our attention. Well, the Mach-E has a frunk, a front trunk, like the Teslas do. But the Mach-E's is plastic-lined and it has a drain, you could fill it with ice and put your beer in there. And [laughs] I mean, these little kinds of things, where it probably doesn't cost more than a few bucks to manufacture versus just doing it the way everybody else does. Ford has created those things, especially with their trucks. And we're seeing those come out on the Bronco as well. And those are the things, you know, you go and look at three different trucks on a weekend, and you say, I really like the way I could use the Ford tailgate as a workbench, and that sells the truck; this stuff works. And that's why they spend so much time and money on it, and they're good at it, is the F-150s success over the last, what, five decades, I assume.

Sciple: OK. So, moving on from the F-150, one thing I didn't see on that F-150 reveal that I was hoping for was a new electric truck, hopefully we'll see that in the coming months, but one company that is working on, hopefully, being the first company to commercialize an electric truck is Rivian. Last week Rivian announced news that they had raised a $2.5 billion funding round, led by T. Rowe Price, with Amazon also participating. This marks the biggest funding round for Rivian yet. What do you make of this news?

Rosevear: Rivian has a plan and they're executing on it very nicely as far as I can tell. What I make of it is that Rivian is a serious advanced effort to mass-produce upscale electric vehicles, a truck and an SUV, that will be priced as premium products. I think they're starting right around $70,000, both of them. They have a factory, they have the people you want to have developing the manufacturing process, they have excellent advisors, excellent partners. They have a substantial presence in Michigan, in Plymouth, I think, where they're right in touch with the nuts and bolts of the auto industry.

They are one of several companies that seems to have watched Tesla stumble with manufacturing, while at the same time excelling in software, and said, we're going to do this differently from the start. CEO RJ Scaringe is a young guy, but he's been very astute about how he's gone about this, he's built great relationships. I do not see Rivian heading for an IPO via a SPAC [special-purpose acquisition company] or something like we've seen with some of the other companies. I think they're going to work their plan until they're ready. They were hoping to ship trucks by the end of this year, I don't know if coronavirus has pushed that back, but I bet it hasn't been pushed back by much, if it has.

Their innovation is, they have developed what they call a skateboard, which is a flat, low-slung single integrated architecture that includes their suspension, which is off-road -- the motors, and the battery pack. And what they've done is, they're putting a pickup truck on top of it, and then they're putting an SUV on top of it. And the products are a few thousand dollars different, they have similar capabilities, similar range options. Their off-road system is very advanced; I think they're using four motors, really optimized for that kind of thing. And it's going to be at an upscale price point, and there's a lot of excitement around the product. The styling is somewhat unusual, but, I mean, they're still functional, working as trucks and SUVs. And I think they're in a position to do very well and I think they have the money to get into production now.

Sciple: Yeah, I mean, $2.5 billion funding round, really, it's going to do a lot to get them into production. You mentioned Rivian's focus on staying private, that is in contrast to this big trend we've seen over the past several months of a number of EV companies looking to come public, whether it's via a SPAC or otherwise. Nikola (NKLA -0.76%) Motor is one a lot of people are familiar with, but there's some other smaller companies, like, Hyliion, Fisker Automotive, Xpeng Motors has been rumored to be looking to go public. Li Auto is another one that's been rumored to be coming public.

Again, what do you make of this huge, huge influx of new EV companies coming public?

Rosevear: Well, you and I talked privately about this the other day, it reminds me a lot of 1999, when everybody, who had any connection to internet infrastructure, internet powering websites, powering e-commerce, was rushing to go public. There's a certain amount of that right now. You know, a couple of big companies do well. Tesla's monstrous success, the way their stock has just gone right up has gotten a lot of people off the bench. The fact that NIO, the Chinese automaker, its stock has also really taken off in the last couple of months. They came into 2020 with some serious questions, their sales were clobbered when the coronavirus outbreak hit in China, which was, of course, earlier than it hit here, it was early in the year, and they were running out of cash. They did a deal, they now have plenty of cash, their sales have more than recovered. One of the reasons they were running out of cash was they had spent big to expand their sales network last year in a move that a lot of analysts said, you're doing too much too soon. Well, now that buyers have rushed back after the coronavirus, that sales network is working in their favor. So, their stock has zoomed.

And I think, you know, you see Nikola on the sidelines watching that, maybe they haven't been able to raise the kind of money that they wanted earlier in the year. Well, you know, they get approached by a SPAC and maybe we can do it this way. And Nikola has more success with the SPAC than these other SPACs, which seem to be mostly run by private equity guys; private equity people, although, they are mostly men. They're like, OK, who can we get? Who's left, who's left? And you see investors swarming to these names; you know, Nikola, Hyliion.

Hyliion's thing is they make a hybrid drivetrain they can be retrofitted or installed in a truck made by somebody else. This is kind of like what Nikola is doing, but different. Hyliion doesn't have a factory, they don't intend to have one. They have partnered with a couple of big auto industry suppliers to manufacture their products and ship them directly to people who retrofit trucks and to truck manufacturers who are used to installing outside power trains from companies like Cummins diesels and things like that; they're in that niche. That's a really interesting business, I'm not yet sure what it's worth, but I've talked to a couple of the people behind it, including the founder, and they have a real plan that is not shooting for the moon, that seems achievable.

And then we talk about Fisker. You know, Henrik Fisker is an auto designer. He worked for Aston Martin as their chief designer for a while. He set out, started a company to develop this hybrid, the Fisker Karma; it crashed and burned, the company that is, although some of the Karmas burned too, which was a problem. Went into bankruptcy, got sold.

He's trying again with this new company; they have developed an SUV they're hoping to build on Volkswagen's MEB [Modular Electric-drive Matrix], what Volkswagen calls a toolkit. Basically, it's a highly flexible platform for electric vehicles. VW has said they would love to license it to other people or build the platform for other automakers large and small to use, Ford has already agreed to build some vehicles for Europe on it. But you know, when VW showed their electric Dune Buggy earlier this year, that was kind of an invitation to the boutique auto community to say, hey, you know, if somebody wants to step up and use our architecture, we can provide it and you can build whatever kind of vehicle you want. Fisker is aiming to do that. I don't know, I mean, much remains murky right now including the details of their plan for execution and so forth. They are hoping to have it on the market in a couple of years.

But, you know, it's a small vehicle, it's aimed at roughly $40,000 price point. So, you know, Model Y, Ford Mustang Mach-E, various other entries coming in in that neighborhood. We'll see.

I'm not sure that's going to disrupt the industry and change the world, but they might make a sustainable business out of it. What's it worth? Probably not tons and tons, but we'll see what happens as this deal goes down and they tell us more about their investors and their business plan.

Sciple: So, John, in your opinion, are these newly public companies investable today?

Rosevear: The emerging Wall Street consensus on Nikola is, OK, it's a great business plan, they seem to have the pieces in place at somewhere between $45 and $55 a share, it's probably a hold over the mid term, because let's face it, they don't have any revenue yet and we haven't yet seen that they can execute on the plan. Although, I mean, they have a strong foundation, but they don't have the factory built yet and so on and so forth.

Hyliion, it's an interesting business, I'm not sure how huge it gets over time; I still need to look at that somewhat more. In terms of Fisker, I would not rush to buy that right now until we have a clear view of what their plan is. You know, that's not going to be a $1 trillion company based on the plan they've shown so far. To be fair, neither are Hyliion or Nikola, although Nikola could get quite big. And Hyliion has staked out an interesting niche that will likely grow significantly over the next 10 years. So, I mean, there's potential there for both of those companies to do well, even though they kind of view each other as competitors. Fisker, I wouldn't rush to buy Fisker quite yet, like I said, I think we need to know more about where they're going, and they won't tell us that until they're closer to this deal with Spartan Energy.

Sciple: OK. And then moving on, one last topic I wanted to cover, before we went away today, is this continued consolidation, partnering up we're seeing in the autonomous vehicle space. So, on consecutive days, June 25th, and June 26th, we got major announcements from both Amazon and Alphabet through their Waymo subsidiary in the autonomous vehicle space. On June 25, Waymo and Volvo issued a joint press release that Waymo will become the exclusive global Level 4 partner for the Volvo car group. And then on June 26th, the next day, Amazon announced it was acquiring autonomous vehicle start-up Zoox in a deal worth roughly $1.2 billion.

Before we dive into these specific deals themselves, just from a high level, John, this year we've seen this continued consolidation between autonomous vehicle companies and automotive OEMs and large companies like Amazon. What do you make of this continued trend?

Rosevear: We've seen this with other technologies, right? Promising, groundbreaking, transformative new technology seems within reach, companies large and small rush after it, turns out to be harder than they thought to get there, and then there's consolidation as maybe people aren't interested in funding 15 new self-driving start-ups run out of people's garages. And especially right now, I think we are in, sort of, a trough of disillusionment with self-driving right now. It looks so promising, it looked like it was going to transform everything by the early 2020s, and right now we have, you know, Waymo hasn't really deployed a whole lot yet, GM had talked for a long time about deploying by the end of 2019 and then they came out and said, no, we're not ready, there are still big challenges here.

I think everybody is realizing this is a harder problem than maybe they thought even a year or two ago. And that means some of the funding for the companies like Zoox, which was a small company with very ambitious plans to build its own vehicle, maybe was not coming in, you know, maybe they tried to do a round and it fell short. And Amazon walked in, and said, we would like to acqui-hire all of you and your technology, and they said, OK.

We talked about this before the broadcast, there are a lot of ways Amazon could put this to use. You know, they've contracted with Rivian to build them a fleet of electric delivery vans, they could autonomize those in time or experiment with that. Zoox had planned to build a self-driving taxi fleet, basically, a ride-hailing service. You know, Amazon could tinker with that, they could think about that idea, they could maybe roll that out as a defensive play of Google and Cruze and somebody else, get into space that they want to be in. It's a good thing for them to have in their pocket. And with Amazon's bank account and cash flow, they can afford a flyer on this.

Sciple: Yeah, you look at this Amazon-Zoox deal and it looks to me like Amazon got a bargain price. I think the most recent private valuations Zoox had, it had been valued somewhere above $3 billion, Amazon got them for about $1.2 billion, which I think was just a little bit over the total amount the company had raised throughout its history. You do mention Zoox had some pretty high aspirations when it comes to their vehicle development. A lot of companies are just developing the software stack, but Zoox has aspirations to build their own vehicle, which certainly adds to the cost. They've been looking to raise funds for a while, and finally landed with Amazon. John mentioned, a lot of the speculation has been about how Amazon is going to use that in their logistics fleet, but when you look at the press release, they sure are mentioning ride-hailing a whole bunch in that press release. So, we'll just have to see how they use this technology. Moving on to Waymo or --

Rosevear: I just want to say one last thing about them saying ride-hailing in the press release. That has certainly been Zoox's focus for a long time. Just because Amazon pays lip service to it in the press release, doesn't mean that's what they're actually going to do, right? I mean, we'll see two years from now, three years from now what their plans are with this.

Sciple: Yeah. And I think, you know, for me, you've seen Zoox, in the past year so, as they've been seeking funding, have been a little bit more open about sharing some videos about the capability of their technology. And when you see some of the things that they've released, it appears pretty impressive. We'll have to see how Amazon puts that to work.

Moving forward to this Waymo-Volvo deal, Volvo, I think in the past had been developing some of its own autonomous technology, now partnering up with Waymo, what does that mean for the company?

Rosevear: Volvo had a joint venture with a Swedish supplier, whose name escapes me right now, to develop advanced driver assist and eventually autonomous technology. They disbanded that last year. And I think this is them going to Plan B, look, we're Volvo, we're going to need to be out in the forefront of this, our brand is safety, our brand is technology integrated in a certain flavor of way, we need to have a self-driving car and certainly more advanced driver assist stuff at the point where other people are rolling that out in upscale vehicles. Waymo is probably a slam-dunk way to get that. I don't know exactly what they had to give up to get there. You know, the devil is in the details of that contract, which must be mighty interesting.

I'm sure Waymo was delighted -- you know, it's not an exclusive deal for them by any measure or anything like that over time, but you know, it gives. OK, Volvo can now sit back and say, OK, we have an answer, when self-driving is a thing, we have an answer. And they can, sort of, check that off. They're a small company backed by a fairly big one, Geely, which is in some ways the most successful of the big Chinese automakers, owns them. And they have fairly deep pockets.

But, you know, Volvo is a profitable prize for them, and they want to make sure that that continues to be a successful business over the long term. And you know, this is insurance, if nothing else. You know, when they need self-driving, they got it. [laughs]

Sciple: Right. And Volvo and Google have really partnered relatively closely, correct. Wasn't the Polestar Electric Vehicle that Volvo is rolling out is using Android's software, is that correct?

Rosevear: Yeah, I mean, these discussions have obviously been going on for a while, there's a relationship there. At the same time, Volvo, for a while, had a relationship with Uber's self-driving program back when that was a thing. So, they've been looking, obviously, at outside potential providers of this technology for a while. A couple of years ago, Volvo provided a bunch of vehicles to Uber's self-driving unit, which was in Pittsburgh at the time, to use as, sort of, prototypes for a potential robot-taxi, and Uber has backed away from that effort considerably over the last year or two. And, you know, going with the company perceived to be the leader right now is an astute move for them, if they don't think they have the resources to get there on their own in time.

Sciple: All right. Kind of wrapping everything up, John, obviously, lots of change going on right now in autonomous vehicles and electric vehicles, new companies coming into the market, consolidation. When I think about the EV market, and autonomy maybe even as well, it reminds me somewhat of, if you think back 15 years ago, when you watched the golf, there was always this conversation of every tournament was Tiger Woods versus the field, and I think when you look at EVs and autonomy right now, that conversation comes around to Tesla versus the field. And I'd be remiss if we didn't at least mention Tesla before the end of the show. So, John, as we look out 10 years from now, if you had to pick or bet on a company to be the No. 1 company in the world when it comes to revenue derived from electric vehicle sales by 2030, would you take Tesla or the field, and why?

Rosevear: I would specifically take Volkswagen. [laughs] Because Volkswagen is going into this in a very big way. They want to sell a few million a year within five years or so. They can throw tens of billions at this very quickly. They're ramping a whole supply chain to do this, and that's one side of it. Also, I mean, you know, Volkswagen sells 10 million cars a year. As more and more of those become electric, they will be capturing quite a few sales, especially since they're out in front of most of their large rivals right now a little bit, or at least more visibly out in front. I think GM could be a contender there too, although, perhaps not on the scale of Volvo.

In terms of Tesla, I think there is a good, successful, sustainable business for Tesla around 3 million vehicles a year; that's roughly BMW sized, with BMW profitability, maybe somewhat better operating margins, if they manage it well, because of their technology. I do not see Tesla being the giant automaker that puts Toyota and Volkswagen and General Motors and Ford and everybody else out of business. For starters, they can't build factories fast enough to do that. And second of all, I think there's a ceiling to demand for quirky but whiz-bang $50,000 cars. You know, Elon Musk or not, the market for those, it isn't infinite, Volkswagen sells a lot of $15,000 cars around the world. Toyota sells a lot of $15,000, $20,000 Corollas all over the world, Hilux pickups which are, you know, very inexpensive transportation.

Those are where the green gains will be made, when you have products like that. Tesla has moved somewhat down market, but at least right now, I don't see them with a plan to build a $20,000 car. I think they're comfortable where they are, I think they've certainly captured an emphatic, enthusiast following.

As we've talked about before, auto brands with enthusiast followings tend to be niche players. Jeep has an enthusiast following. Dodge has an enthusiast following. BMW had an enthusiast following for a long time and has, sort of, broadened itself. Tesla could do that over time, too. But even then, BMW is something like 2 million vehicles a year, it is not the 10 million that Volkswagen or Toyota sell.

And people need to remember that most of the people in the world are not buying Teslas, and most of the people in the world who buy cars have no interest in a Tesla, Tesla does not meet their needs, it does not meet their budget, it's not what they want to do. You know, they find Elon Musk annoying, whatever, you know, they're not going to buy a Tesla.

It has terrific owner loyalty and satisfaction within its niche, but it's not going to get Volkswagen size. Meanwhile, Volkswagen is already Volkswagen-sized. And as it shifts more and more of its portfolio to electric, they're going to get more and more of their revenue from electric vehicles.

Sciple: All right. So, John has taken the field here. If folks have their opinion and want to let us know, you can tweet us @IndustryFocus on Twitter, or you can email us at [email protected].

One programming note for everybody, I'm going to be traveling and staying with family over the next three weeks, so the next three Energy episodes will be pre-recorded. I've got, what I think, is a great slate of programming lined up. Next week, we've got an interview with Will Thompson of Massif Capital, focused around investing amid a transition on our global energy grid. And we have an "Intro to Options" episode, with Foolish options gurus Jim Gillies and Jim Mueller. And finally, Jason Hall and I will be talking a little bit about what college football taught us about investing. So, for any college football fans, or investing fans or just mindset fans, maybe can come check that episode out.

John, thanks once again for joining me on the podcast, as always.

Rosevear: Thank you for having me, Nick, as always.

Sciple: And as always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against the stocks discussed, so don't buy or sell anything based solely on what you hear.

Thanks to Tim Sparks for his work behind the glass. For John Rosevear, I'm Nick Sciple, thanks for listening and Fool on!

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Rosevear owns shares of Ford and General Motors. Nick Sciple owns shares of Alphabet (C shares) and has the following options: long January 2021 $100 puts on Tesla and long January 2021 $50 puts on Tesla. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Tesla, and Twitter. The Motley Fool recommends Cummins and Uber Technologies. The Motley Fool has a disclosure policy.

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