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Automakers Dash Toward EV Future With Little Clue to Profits
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Many traditional automakers have geared up for electric vehicles (EVs) in their consorted effort to respond to stricter emissions standards and the proposals made by some Asian and European countries to ban internal combustion engines powered with fossil fuels. But the new technology is still clueless about how to generate profits — the key to the survival of any business entity.
Presently, EVs account for less than 1% of U.S. vehicles sales and a tiny part of total vehicles sold across the globe. Moreover, infrastructure challenges such as inadequacy of charging stations are coming in the way of EVs. Moreover, EV pioneer Tesla, Inc. (TSLA - Free Report) is losing money persistently.
Despite all these odds, conventional big automakers are investing a huge amount of money to brace for an all-electric future. These companies are using profits generated from the sale of gasoline-fueled trucks and sport utility vehicles to invest in the expensive EV technology.
Traditional U.S. Automakers’ EV Ride
General Motors Company (GM - Free Report) is ramping up EV production. The auto giant has plans of rolling out two new EVs in the next one and a half years. Also, it plans to add more than 20 electric or hydrogen fuel cell vehicles to its lineup over the next six years. With this, the number one U.S. automaker joins several European and Japanese peers, who have vowed to speed up development of EVs (read more: General Motors to Give Thrust to Electric Vehicles).
Ford Motor Company (F - Free Report) has set up a team to expedite the development of EVs. The mission of the newly formed team i.e. Team Edison will be to think and make faster decisions related to the technology of electric vehicles. The company believes that demand for electric vehicles has the potential to increase on mandates and quotas issued by governments (read more: Ford Sets up Team Edison to Develop Electric Vehicles).
EV Profit: A Long Chase
Automakers are vehemently embracing electric cars. However, when and how this expensive idea will turn into a profit proposition, is not clear to them. According to the company sources, Fiat Chrysler Automobiles N.V. is losing around $20,000 on the electrified Fiat 500.
Tesla, the EV market leader, is losing money on these vehicles because the price of battery is higher than comparable internal combustion engines. In fact, Tesla has used up a huge amount of cash on EVs but has not yet reported full-year profits.
Tesla has an expected long-term earnings growth rate of 30%.
General Motors has an expected long-term earnings growth rate of 9.2%.
Ford has an expected long-term earnings growth rate of 12.3%.
Fiat Chrysler has an expected long-term earnings growth rate of 22.4%.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Image: Bigstock
Automakers Dash Toward EV Future With Little Clue to Profits
Many traditional automakers have geared up for electric vehicles (EVs) in their consorted effort to respond to stricter emissions standards and the proposals made by some Asian and European countries to ban internal combustion engines powered with fossil fuels. But the new technology is still clueless about how to generate profits — the key to the survival of any business entity.
Presently, EVs account for less than 1% of U.S. vehicles sales and a tiny part of total vehicles sold across the globe. Moreover, infrastructure challenges such as inadequacy of charging stations are coming in the way of EVs. Moreover, EV pioneer Tesla, Inc. (TSLA - Free Report) is losing money persistently.
Despite all these odds, conventional big automakers are investing a huge amount of money to brace for an all-electric future. These companies are using profits generated from the sale of gasoline-fueled trucks and sport utility vehicles to invest in the expensive EV technology.
Traditional U.S. Automakers’ EV Ride
General Motors Company (GM - Free Report) is ramping up EV production. The auto giant has plans of rolling out two new EVs in the next one and a half years. Also, it plans to add more than 20 electric or hydrogen fuel cell vehicles to its lineup over the next six years. With this, the number one U.S. automaker joins several European and Japanese peers, who have vowed to speed up development of EVs (read more: General Motors to Give Thrust to Electric Vehicles).
Ford Motor Company (F - Free Report) has set up a team to expedite the development of EVs. The mission of the newly formed team i.e. Team Edison will be to think and make faster decisions related to the technology of electric vehicles. The company believes that demand for electric vehicles has the potential to increase on mandates and quotas issued by governments (read more: Ford Sets up Team Edison to Develop Electric Vehicles).
EV Profit: A Long Chase
Automakers are vehemently embracing electric cars. However, when and how this expensive idea will turn into a profit proposition, is not clear to them. According to the company sources, Fiat Chrysler Automobiles N.V. is losing around $20,000 on the electrified Fiat 500.
Tesla, the EV market leader, is losing money on these vehicles because the price of battery is higher than comparable internal combustion engines. In fact, Tesla has used up a huge amount of cash on EVs but has not yet reported full-year profits.
Currently Tesla, General Motors, Ford and Fiat Chrysler carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tesla has an expected long-term earnings growth rate of 30%.
General Motors has an expected long-term earnings growth rate of 9.2%.
Ford has an expected long-term earnings growth rate of 12.3%.
Fiat Chrysler has an expected long-term earnings growth rate of 22.4%.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>