Electric vehicle stocks are struggling overall due to the continued global semiconductor shortages and supply chain barriers.
However, Real Money's Jim Collins says there's more than one way to play the burgeoning market than just Tesla. Investors can capitalize on success by investing in the companies that will underpin the entire sector.
Companies that build products and technology for the EV market without actually manufacturing the cars themselves may offer investors opportunities they haven't considered.
Collins writes: "In the interest of presenting some compelling emerging growth ideas in this mega-cap-dominated market, I decided to run with the ball myself." All of the companies that Collins mentions build products and technology for the EV market without actually manufacturing the cars themselves.
Collins says that in an emerging space, the best thing you can do is pick the right winners. Investors who can successfully pick the car companies that will dominate electric vehicles, they’ll do very well.
But when there’s no good way to know who will win or lose in advance, the next best thing is to invest in the industry at large. Buy stock in the companies that build things every electric vehicle will need. It doesn’t matter whether Tesla (TSLA) - Get Tesla Inc Report, Ford (F) - Get Ford Motor Company Report or General Motors (GM) - Get General Motors Company (GM) Report crushes this market, you’ll be sitting on a stock with value to any (or every) winner.
Amazon-backed (AMZN) - Get Amazon.com, Inc. Report electric vehicle company Rivian Automotive confirmed Friday that it had filed a draft registration with the Securities and Exchange Commission for an IPO.
The company is seeking a roughly $80 billion valuation and hopes to execute the IPO around the Nov. 25 Thanksgiving holiday, Bloomberg reported, citing people who asked not to be identified. If the company were to go public at an $80 billion market capitalization, it would be one of the biggest debuts on that basis of the year.
In July, Rivian said it had closed a $2.5 billion funding round led by existing investors Amazon, Ford and T. Rowe Price. The company has raised about $10.5 billion to date.
The Covid-19 pandemic has resulted in supply-chain disruptions and parts shortages that have forced Chief Executive Officer R.J. Scaringe to postpone its model launches several times. Last month, Rivian announced that it would delay the deliveries of its debut R1T pickup to September after originally planning to debut this month.
The company also moved the production debut of its R1S electric SUV, the startup's second planned model, to sometime in the fall after originally slating an August debut for the vehicle. But, the company has not yet delivered any models to retail customers.
In February, Amazon began testing a fleet of Rivian electric-powered vans in Los Angeles, about a year after the company ordered 100,000 of the custom delivery vehicles.