In this article, we will discuss 5 EV stocks that will benefit from the Climate Change Bill 2022. If you want to read about the details of the bill, go directly to 10 EV Stocks that Will Benefit from Climate Change Bill 2022.
5. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 29
Rivian Automotive, Inc. (NASDAQ:RIVN) is an Irvine, California-based EV company.
Experts expect certain variants of Rivian R1S SUV and Rivian R1T pickup trucks to be eligible for the extended tax credit proposed by the Climate Change Bill. Although only a few variants meet the eligibility criteria at the moment, Rivian Automotive, Inc. (NASDAQ:RIVN) is working on introducing lower-priced models before 2025 under the R2 range.
Presently, Rivian Automotive, Inc. (NASDAQ:RIVN) has a manufacturing facility in Normal, Illinois. The company intends to open a second manufacturing facility near Atlanta, Georgia by 2025. The new facility will be focused on producing the more affordable R2 range. Like Fisker, Rivian Automotive, Inc. (NASDAQ:RIVN) has shown the willingness to enter into a buyer’s agreement to circumvent the impact of the Climate Bill on higher-priced models. Rivian Automotive, Inc. (NASDAQ:RIVN) is also expected to benefit from the CHIPS bill that will provide incentives worth billions of dollars to semiconductor makers in the US. Shortage of semiconductor chips has caused significant delays for EV companies like Rivian Automotive, Inc. (NASDAQ:RIVN).
Here’s what Baron Funds said about Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q1 2022 investor letter:
“Rivian Automotive, Inc. designs, manufactures, and sells consumer and commercial electric vehicles. Shares of Rivian continued its volatile trading following the stock’s IPO in late 2021, declining 52% in the first quarter as investors rotated out of fast-growing long-duration stocks and as industrywide supply-chain issues delayed Rivian’s production ramp. In addition, even while other automotive companies raised prices due to inflationary pressures, Rivian launched a price increase campaign that was not well communicated and, as a result, was met with dissatisfaction by existing reservation holders. While this was an unforced error, the company quickly corrected course, reversing its decision to raise prices for existing reservations, while maintaining the increase on new buyers (which has not caused a material impact to demand). We retain conviction in the shares given management’s vision, Rivian’s product positioning, the company’s relationship with Amazon.com, and the company’s strong balance sheet, which will help it overcome the current challenges while taking advantage of the long-term opportunity as the market transitions to electric vehicles.”
4. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 29
Stellantis N.V. (NYSE:STLA) is a Dutch automobile company with 14 brands in its portfolio.
By 2030, Stellantis N.V. (NYSE:STLA) intends to reach 100% of its revenue in Europe and 50% of its revenue in the US through EV sales. Furthermore, the company intends to introduce 75 EV models by the start of 2023. Stellantis N.V. (NYSE:STLA) aims to achieve yearly sales of five million units by the end of this decade.
The Climate Bill includes a $2 billion package to aid automakers in converting their existing facilities to produce EVs. Furthermore, the automakers can get a loan of as much as $20 billion to construct new EV manufacturing facilities in the US. Stellantis N.V. (NYSE:STLA) can be expected to benefit from the conversion portion of the bill as the company is heading into a contract renewing year with the United Auto Workers (UAW) union.
Of the 912 hedge funds in Insider Monkey’s database, 29 funds held a stake in Stellantis N.V. (NYSE:STLA) as of Q1 2022.
3. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 46
Ford Motor Company (NYSE:F) is a Dearborn, Michigan-based legacy auto manufacturer that has gained significant market share by converting its legacy models into an EV powerhouse. The company became the best-selling EV brand in the US in July 2022.
The American muscle car, Ford Mustang, has been converted into Ford Mustang Mach E. Following that, Ford Motor Company (NYSE:F) took a step further and introduced the Ford F-150 Lightning. These models are expected to qualify for the tax credit, given their manufacturing status and price. Ford Motor Company (NYSE:F) reached the highest EV market share of 10.9% in the US in July 2022.
Ford Motor Company (NYSE:F) was discussed in the Q1 2022 investor letter of Baron Funds. Here’s what the firm said about the company:
“Ford (NYSE:F) is another example of typical industrial manufacturing business executive mindsets. The April 18, 2022, Bloomberg Businessweek cover story features Ford CEO Jim Farley behind the wheel of an electrified Ford F-150 Lightning. The article is titled, “Hey Elon, THIS is a truck.” I thought the article was terrific. One idea especially stood out to me. Since the F-150 is such a popular vehicle, it “argued for a gradual approach to electrification. Essentially the company retrofitted an existing F-150 with an electric powertrain rather than develop an entirely new truck.” No all-in financial and operation bet by this company on electrification.”
2. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 76
General Motors Company (NYSE:GM) is a Detroit, Michigan-based automobile manufacturer. The company has the distinction of being the biggest automaker in the US.
General Motors Company (NYSE:GM) is on an ambitious target of dethroning Tesla, Inc. (NASDAQ:TSLA) to become the biggest seller of EVs by reaching an annual EV sales target of one million units. The company is pursuing this goal by investing $35 billion in EV product development between 2020 and 2025.
General Motors Company (NYSE:GM) sold 25,000 EVs in 2021 as opposed to an estimated 325,000 units sold by Tesla, Inc. (NASDAQ:TSLA). Meanwhile, during the first half of this year, the company sold 7,674 EVs due to the chip shortage. General Motors Company (NYSE:GM) has numerous affordable EV brands under its holding that will be eligible for the tax credit under the new bill.
Here’s what was said about General Motors Company (NYSE:GM) in the Q1 2022 investor letter of Diamond Hill Capital:
“General Motors—and the auto industry in general—continues to face headwinds related to supply chain disruptions and raw material cost inflation. In addition, uncertainty surrounding global energy markets due to inflation and the conflict in Ukraine has created a greater economic burden on consumers, which tends to slow automotive sales.”
General Motors Company (NYSE:GM) was held by 76 hedge funds at the end of Q1 2022.
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 80
Following the Climate Change Bill, Tesla, Inc. (NASDAQ:TSLA) will again be in a position to offer its buyers tax credit as the US government has removed the limit of granting credit to 200,000 customers. The company had utilized its assigned quota as per the previous law. Certain variants of Tesla Cybertruck, Model 3 are expected to be eligible for the tax credit. However, Tesla Model Y would only qualify if it is classified as an SUV and not a station wagon and if the price of the vehicle is kept under the $80,000 level.
Tesla, Inc. (NASDAQ:TSLA) is facing a significant backlog of orders and committing to delivery by 2023. Experts consider Tesla, Inc. (NASDAQ:TSLA) closest in terms of fulfilling the requirements of the Climate Change Bill related to the procurement of raw materials either from the US or its trading allies.
Fiduciary Management shared its insights on Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter. Here’s what the firm said:
“Remarkably, the Nasdaq-100 and Russell 2000 indices are up 6.25% and 3.90% through 3/31/22, respectively, since the war started. Tesla, Inc. (NASDAQ:TSLA) went up 57% from its low on February 24 ($700) to the close on March 29th ($1099), which equates to an advance of $413 billion. To put that in perspective, the 24-trading day gain in Tesla was greater than the entire market value of Walmart, Inc.! Tesla trades for 120 times estimated 2022 GAAP2 earnings, compared to Walmart’s (NYSE:WMT) 21.8 multiple (1/2023 fiscal year).”
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