Although EV volumes are surprising on the upside and EV penetration looks set to deepen further, rising bond yields have resulted in a rotation out of growth stocks, including pure-play EV companies that derive significant value from far-year cash flows.
In a Research Alert published a year ago (01/02/2021), “Electric vehicles on the fast track,” we had asserted that the difference between pure-play EV OEMs (original equipment manufacturers) and the incumbent auto OEMs exists not so much in their product launches or R&D capabilities, but rather in access to capital. With access to cheap capital likely unwinding, we analyze the key developments shaping the EV industry, offer a broad perspective on the ongoing debate between pure-play EV and auto incumbent valuations, and provide our preferred stock picks on the EV theme.
