Whenever we talk about electric vehicles (EVs) and their place in the auto market, it’s easy to focus on their flaws and why the internal combustion engine will never go away. If we could remember that the same thing was said about the horse and carriage more than a century ago, then we’d be better off.
Electric cars aren’t new. EVs can now compete with gasoline-powered cars in terms of performance, and there is more political will to push electric cars over other types of cars than there used to be. We’re going into 2022 with the help of these simple facts.
EV market expert Daniel Ives at Wedbush has done a lot of research into it, with a lot of focus on how it’s going to do in the long run. We think that with big car companies like GM, Ford, and VW focused on the electric car revolution, we’ll see a huge shift to electric cars because more people will be attracted to the new designs, better batteries, lower prices, and environmental benefits of buying an electric car. To this point, electric cars make up only 3% of all vehicles on the planet. We think that by the end of 2022, more than 5% of cars will be electric, and 10% by 2025.
A big change in a market can’t just be filled by the big old companies. They are being followed by a lot of companies that are coming up with new designs and new ideas for electric cars. In order to find out more about two of these stocks, we’ve used the TipRanks database. Analysts give both a Moderate or Strong Buy rating, and both have double-digit upside. There is a lot to see.
We’ll start with Canoo, a company that makes electric cars in California. Canoo is working on an EV design that doesn’t follow the rules. They’re making a multi-purpose EV platform that can be used to build a wide range of finished vehicles. Designs include a pickup truck and a delivery van, as well as the main “lifestyle” car.
Canoo’s vehicle chassis, which is the base for all of its models, has electric motors on each wheel and a “drive-by-wire” steering system that is powered by electricity. In this car, the dashboard is made to give the driver a better view of the road ahead. The steering column can move between the car’s left and right sides. All models of the car will be able to communicate wirelessly and work with smartphone apps, so the driver can check the car’s systems from most smartphones and tablets.
The Canoo car has prototypes on the road, but it hasn’t yet been put into regular use. Before 4Q22, the company wants to start making these things in the US. There is a new headquarters for Canoo in Fayetteville, Arkansas. The company is also building manufacturing and R&D facilities in Arkansas and Oklahoma, where they will make and test their products. On March 31, 2021, the company said that it had $414.9 million in liquid assets. In the first nine months of 2021, the company spent $280.7 million on operating and investment activities. The company doesn’t yet make money.
Researcher Craig Irwin, who works for Roth Capital, says that the gamma vehicles being used for testing will be the key to Canoo’s success next year. “We expect evidence of the success with gamma vehicle testing to yield important trading catalysts, and these units should start rolling early in 2022.” A lot of people are going to be interested in the gamma units that are sent to ADAS partners. These can show how the Canoo technology architecture that was built for the future can be used now.
He gives the stock a Buy rating, and his $14 price target means the stock could rise 73% over the next year. It says that Irwin’s forecast is based on “rapidly improving visibility, where the early customer response to the Canoo Lifestyle Vehicle suggests that management could still be a little more cautious in its 2022 forecast.” In order to see Irwin’s track record, click this link.
A Strong Buy consensus rating means that even though there have been only three recent analyst reviews for Canoo, all of them say this stock is one to buy, which is why there are only three recent analyst reviews. GOEV shares are trading at $8.10, and their average price target is $16.67, which means they could grow by about 106% by the end of next year.
Sono Group (SEV)
The second stock we’ll look at, like Canoo above, is an EV designer and manufacturer who is still in the early stages of making cars. Sono, which is based in Germany, is working on a solar-powered electric car for the general public to use. The name of the car is the Sion, and it tries to ease people’s fears about how far it can go. A gas-powered car usually has a range of about 400 miles. Most electric cars need to be recharged after about 250 miles, which is a lot less than that range. In order to solve this problem, Sono is working on the Sion. It will run on a mix of solar and battery power.
The company has put together a solar panel system that can be used in a car. Flexible photovoltaic panels are made up of 248 separate cells that are put together into one big one In theory, the panel can add 70 miles to the battery each week, which would make the car run for longer. People should keep in mind that this will still make a car that can’t go far. Between the battery and solar panels, the Sion won’t be able to go more than 300 miles before it runs out of battery power.
The solar panel is a unique technology that Sono wants to use more than just as a backup source of power for electric cars. There are plans for Sono to sell the panel system to other electric car companies, which will help them make more money.
Sono’s design has gained a following even though it hasn’t been put into use yet. The company says it has more than 16,000 preorders for the car, which isn’t due to go into production until 2023. An IPO was held by Sono earlier this year in order to raise money as it moves forward and prepares to start making things on a regular basis. There were 10 million shares of the SEV ticker for sale on the NASDAQ on November 17. On its first day, the stock rose above $38 on the stock market. It was sold at $15 per share. Over $172 million was raised in the IPO.
Since then, Sono’s stock has dropped 71%. Yet, at least one analyst thinks that the low share price is a good time to buy.
Mike Filatov, a Berenberg analyst, gave SEV shares a Buy rating and set a price target of $21, which means there’s room for a 109 percent rise in the stock price. If you want to see Filatov’s track record, click here.
We think Sono Solar is the most exciting part. It will sell and licence a solar solution to other OEMs and fleet owners across different industries, which could lower total cost of ownership and improve ESG credentials. We think Sono has a lot of room for growth. At 0.7x 2024E sales vs. about 2.0x its peers, we think Sono has a lot of room for growth.
As for Sono’s car, Filatov is happy about the future. Sion: “We think its low costs and ESG-friendly mission will help it sell about 43,000 cars a year.” If sales are this big, the company should make about 1.2 billion euros in profit.
In the past, Sono hasn’t been on the radar of most analysts. The stock’s moderate buy rating, which is based on just two recent ratings, comes from just two recent analysts. Shares are trading at $10.05, and the average price target is $22. This means there is room for about 119 percent growth.