By 2030, the automobile market will look quite different than it looks today. Electric vehicles (EVs) will likely have become the best sellers, solely because many auto manufacturers will be phasing out internal combustion engine (ICE) vehicles around that timeframe.
With as massive a shift as this is, investors are probably wondering who will sit atop the EV throne by 2030. So let's look at some candidates and see if they are worth investing in.
The EV leader may not be who you think
It's impossible to have a meaningful conversation without bringing up current EV leaders like BYD (BYDDY 0.49%), Tesla (TSLA -3.40%), Volkswagen (VWAGY -0.47%), and SAIC Motor (owned by China). In 2022, these four led the way but raked in different positions depending on whether you counted plug-in hybrids (PHEV) or battery-only EVs (BEV).
| Rank | Plug-In Leaders (PHEV & BEV) | 2022 Vehicles Sold | Market Share |
|---|---|---|---|
| 1 | BYD | 1.86 Million | 18.4% |
| 2 | Tesla | 1.31 Million | 13% |
| 3 | Volkswagen | 0.83 Million | 8.2% |
Data source: InsideEVs.
| Rank | Battery Only Leaders (BEV) | 2022 Vehicles Sold | Market Share |
|---|---|---|---|
| 1 | Tesla | 1.31 Million | 18.2% |
| 2 | BYD | 0.91 Million | 12.6% |
| 3 | SAIC | 0.67 Million | 9.3% |
Data source: InsideEVs.
For the sake of this article, I'll define the EV leader by 2030 as battery-only vehicles, because some manufacturers are focusing on only partial electrification rather than a complete design overhaul.
With Tesla having a solid foothold, it immediately emerges as a strong candidate to maintain its EV leadership status. However, other American automakers like Ford (F 6.10%) and General Motors (GM 1.98%) are still switching their production to EVs. Ford plans to produce 2 million EVs annually by 2026, while GM aims for 1 million units of capacity by 2025.
Tesla's current installed annual vehicle production capacity is at least 1.9 million vehicles and growing, which is still ahead of where Ford and GM are planning to be. Plus there are plans to expand production as well as add new vehicles like the cybertruck, so its capacity will likely go up.
Volkswagen came in fourth and plans to have half of its vehicle sales be electric by 2030. This would include PHEVs, but with Volkswagen producing over 8 million vehicles in 2022, that would indicate 4 million EVs by 2030 -- an impressive number.
BYD, the state-owned Chinese vehicle giant, will likely be at the top of production by 2030. In China, BYD is holding its own against Tesla, and the company is also beginning to expand sales into Europe. While BYD doesn't currently sell its EV automobiles to the U.S. (it produces EV buses in the U.S.), it wouldn't be far-fetched for them to develop a factory to sell its vehicles here.
With BYD goals reportedly set at 4 million vehicles for 2023, it will likely overtake Tesla in BEV sales and maintain its PHEV leadership. BYD will likely be the largest by 2030, but does that make it the best investment?
EV stocks aren't the most attractive currently
As BYD is based in China, immediate investment concerns arise. Not only are there different accounting standards, but the Chinese government could step in and do as it pleases without any care for shareholders. Additionally, sorting through financial information isn't as convenient as it is for U.S.-based companies. Because of this, I'll pass on BYD's stock.
Moving to Tesla, the age-old argument exists: Is Tesla a car company or a technology company? With its current valuation, the technology argument seems to be winning out.
TSLA PE Ratio data by YCharts
Tesla's profit margins are substantially better than the other three's, but is that advantage enough to justify its higher valuation? I'd say it warrants a higher valuation, but not a price-earnings multiple of 50.
So what about Ford, GM, or Volkswagen? All these companies are spending large sums of money to retool their factories. Plus, these companies still have pension payouts they are dealing with, giving them more liabilities than a newer company like Tesla. While their transition to EVs should help by increasing their margins, that is far from a certain outcome.
As an investment, I think Tesla reigns supreme, but after rising 46% to start the year, now isn't the right time to establish a position in the stock. Fortunately, there are other companies out there that make for more attractive buys than these EV makers.
