Two new competitors have entered Tesla’s space of late. Is TSLA still the best electric vehicle stock among them?
Not long ago, Tesla (TSLA) was the only hot electric vehicle stock.
Now there are two more!
First is Nikola (NKLA), also named for the brilliant Serbian-American inventor Nikola Tesla, and now valued at an amazing $25 billion.
How’s this for a hot chart?
And second is Workhorse (WKHS), which is valued at “only” $1 billion today but is catching up fast as investors discover the company.
So let’s take a look at both and see how they stack up compared to Tesla.
The Story Behind Nikola
Nikola, headquartered in Phoenix, Arizona, has no manufacturing plant and no prototypes of its vehicles, but it does have a good story—as Tesla did 10 years ago—so it’s possible that the company will be a big success.
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Nikola’s key idea is using hydrogen fuel cells in semi trucks to generate electricity to power motors.
Semi trucks are the most logical first users of a hydrogen-fuel network, as they adhere to regular highway routes. And battery-hydrogen semis promise great torque and acceleration, regenerative braking, and greater efficiency than today’s diesel engines.
The range of the Nikola semi would be 500-750 miles and the vehicle could be refueled in 10-15 minutes—assuming those hydrogen refueling stations get built. It’s a bit of a chicken-and-egg problem.
But what’s got investors—and some potential customers—excited today is the prospect of the Nikola Badger, a pickup truck that would run on batteries—delivering 906 horsepower and a 0-60 mph time of 2.9 seconds.
Such a package would deliver a range of 300 miles—not bad.
But Badger owners would have the option of adding a hydrogen fuel cell to the system, which would add another 300 miles of range—and that’s impressive.
Today it’s difficult for drivers to find hydrogen outside of southern California, but if Nikola achieves its goal, users would eventually (perhaps by 2028) be able to access a “massive” network of 700 hydrogen refueling stations across the U.S.
(For comparison, Tesla, globally, has 1,870 Supercharger stations with 16,685 Superchargers—with more being added all the time.)
Right now, Nikola doesn’t even have a prototype (it’s looking for manufacturing partners), so success is far from assured. But the stock saw a huge wave of buying three weeks ago when the company announced it would begin taking pre-orders for the Badger pickup truck on June 29—and since then the stock has built a nice base centered on 70. Technically, that’s positive, though fundamentally, it’s hard to accept the idea that this company has a market capitalization roughly equivalent to Ford’s.
The Story Behind Workhorse (WKHS)
Based in Cincinnati, Workhorse is focused on developing sustainable and cost-effective electric vehicles for the last mile delivery sector.
And Workhorse already has two vehicles in development, one with 650 cu. ft. of cargo volume and one with 1,000 cu. ft. Both have a range of 100 miles (enough for a day’s deliveries) and last month the company announced that both vehicles had completed Federal Motor Vehicle Safety Standards (FMVSS) testing. So this is definitely happening.
Also, Workhorse has licensed technology to Lordstown Motors (still private), which is also developing electric pickup trucks and other work vehicles.
Thus, it’s very clear that in the years ahead, Amazon, UPS, FedEx and others will have a range of great zero-pollution vehicles to choose from.
Trouble is, all these companies (Nikola, Workhorse and Lordstown Motors) are going down the same well-paved road Detroit has used for years, outsourcing various segments of the vehicle as well as operations. Tesla, meanwhile, got where it is by trying to control as many aspects of its vehicles as possible, and doing as much in house as possible—with the result that Tesla’s profit margins, if it ever stops its rapid pace of expansion, could dwarf those of its competitors.
And Tesla has trucks coming too!
The Tesla Semi (all battery power, no hydrogen) was announced back in 2017 and it’s already real. Several have been in use by the company on the route between its Nevada and California factories for over a year. But it’s not in production yet.
The Tesla Cybertruck is also not in production yet, though management is aiming to start in late 2021, using a factory that will be built somewhere in the middle of the country. But Tesla does have 650,000 deposits from people who want to own one, and relish the idea of a driving a truck that looks futuristic.
TSLA is the Best Electric Vehicle Stock
I’m a big fan of competition, because I think it makes everyone involved work harder, so I’m thrilled to see increasing numbers of entrants in the race to develop and manufacture a battery-powered pickup truck.
And I’m a big fan of strong stocks, too. It was TSLA’s chart strength that led me to recommend the stock to my readers way back in 2011, when the Model S was still on the drawing board, so I’m keeping a close watch on NKLA and WKHS today, looking for an attractive entry point.
As for TSLA, I continue to expect great progress on many fronts as the company leads the world’s transition to sustainable energy.
Admittedly, it’s no longer early for the company (everyone knows its name), but the chart is still strong, hitting new highs this week as the company finished the second quarter with a burst of productivity, so you can’t say this run is over. Of the three, it’s still clearly the best electric vehicle stock to buy today.
Timothy Lutts heads one of America’s most respected independent investment advisory services. Each week, Tim personally picks the single best stock in his exclusive Cabot Stock of the Week advisory. Build your wealth and reduce your risk with the top stock each week for current market conditionsLearn More