The electric vehicle (EV) revolution is gaining steam, with companies leaving no stone unturned to establish a strong foothold in this domain. Legacy automakers are stepping up e-mobility investment and setting ambitious targets to electrify their fleet. With batteries serving as the secret sauce for EVs, automakers are rapidly boosting their investments in battery production. Legacy automaker
Volkswagen
VWAGY
is revving its EV game to keep up with the cut-throat competition. To this end, the German auto giant announced last week that it would invest $20.38 billion to manufacture EV batteries.
Meanwhile, China’s EV player
NIO Inc.
NIO
hosted its second annual Power Day event, where it provided a peek into its future development plans for charging and battery technology. EV behemoth
Tesla
TSLA
announced plans to significantly increase production at its Shanghai and Berlin plants. Both factories are expected to complete their expanded production lines by early August.
GreenPower Motor Company Inc.
GP
acquired Lion Truck for sustainable truck solutions.
Rivian Automotive
RIVN
released its production and sales number for the second quarter of 2022.
Recap of Last Week’s Important Stories
1. At its Power Day 2022,
NIO
unveiled the 500 kW ultra-fast charging piles to compete with overseas peers. The ultra-fast-charging pile will be coming to Europe and China by the end of 2022. The company has installed a total of 127,528 home charging piles for its customers. In addition to the new fast-charging piles, NIO unveiled its third-generation battery swap stations, which are nearing completion and awaiting installations in late 2022 or early 2023.
By 2025, NIO will have a battery swap network covering nine vertical highways, nine horizontal highways and 19 urban areas in China. The company plans to have more than 4,000 battery swap stations worldwide by 2025, with 1,000 swap stations overseas. NIO also stated that it has completed more than 10 million battery swaps, with a daily average of above 30,000 swaps per day. The company intends to start manufacturing 800-volt battery packs designed in-house by 2024.
2.
Tesla
is looking to expand production at its gigafactories in Berlin and Shanghai for higher output capacities. Tesla’s Giga Shanghai halted Model Y production on Jul 1 and will take around two weeks to complete. Once done, the Shanghai factory will stop the Model 3 line for about 20 days starting on Jul 18, which will be completed in early August. The Giga Berlin will start a two-week production hiatus on Jul 11, with the company planning to double its production rate in August. Giga Berlin was on a production spree last month, building around 1,000 Model Y units in a single week and producing more vehicles than in any month in its history.
Despite the record production month, Tesla chief, Musk, has put forth financial concerns over the past few months, citing that the automaker did not have a smooth second quarter. Needless to say, Tesla will lose out on revenues during the production halts at Giga Shanghai and Berlin. However, since the output is expected to double in each plant, overall, it is likely to pay off in the near future.
3.
Volkswagen
is set to invest 20 billion euros or $20.38 billion to build EV batteries, in a move that is likely to employ 20,000 people and generate more than $20 billion in annualized sales. To this end, the auto biggie will establish a new company dubbed Power Co, which will be responsible for VWAGY’s global battery business. Power Co will handle VWAGY’s entire battery supply chain, from R&D of new technologies to the mining of the raw materials to end-of-life recycling.
The battery cell business is the crux of the company’s New Auto strategy that seeks to steer Volkswagen as a leading provider of sustainable zero-emissions mobility solutions. Production at the company’s first cell factory at Salzgitter will commence in 2025. The next cell factory is to be established in Valencia. Sites are currently being identified for three other cell factories in Europe. Additionally, PowerCo is contemplating the possibility of further gigafactories in North America. By 2030, Volkswagen intends to operate six cell factories with a total capacity of 240 GWh throughout Europe.
Volkswagen currently carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
4.
GreenPower
announced that it has acquired Lion Truck Body. The two companies entered into an asset purchase agreement under which Greenpower has acquired the business’s assets through a wholly-owned subsidiary. The purchase comprises upfront cash payments of $215,000, and with the assumption of certain liabilities, the total amount is nearly $1.45 million. Other cash payments of roughly $25,000 remain subject to customary adjustments and other post-closing conditions.
The deal seeks to leverage Lion Truck’s long-standing expertise and add to GreenPower’s EV Star truck customer offerings. The demand for energy-efficient solutions that maximize cargo capacity and delivery range will be catered to. The acquisition will provide GreenPower’s EV Star truck customers with a wide range of options for any number of body types required to meet their business needs with greater speed to the market. GreenPower has been working with Lion Truck Body for quite some time to make lightweight and efficient truck bodies for its EV Star and other models of electric trucks.
5.
Rivian
announced production details for the second quarter of 2022. During the April-June period, the EV maker produced 4,401 vehicles at its factory in Normal, IL and delivered 4,467 units during the same time frame. Production and sales surged 72.3% and 264%, respectively, from the first-quarter 2022 levels. For six months ended Jun 30, Rivian produced 6,954 vehicles and sold 5,694 units. The company believes that production and sales volumes are in line with expectations.
Despite more than 90,000 reservations for R1T/R1S in the United States and Canada as of May end, we think, Rivian still has a long way to go, considering its annual production guidance of 25,000 vehicles in 2022 across R1 and RCV platforms. RIVN is currently focused on ramping up production at its plant in Normal, IL. Rivian anticipates capital expenditures for 2022 to be $2,600 million, driven by additional spending at the Normal plant to expand the total capacity to 200,000 units annually.
Price Performance
The following table shows the price movement of some of the major EV players over the last week and a six-month period.
Image Source: Zacks Investment Research
What’s Next in the Space?
Stay tuned for announcements of upcoming EV models and any important updates from the red-hot industry. Investors are also keenly awaiting the quarterly results of Tesla, scheduled to release next week.
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