The world is changing, and how much can be seen in the stock market valuations of automotive companies. Today, two Chinese electric car manufacturers, NIO and BYD, overtook Volkswagen in market capitalization. At just under $100 billion, NIO is closely followed by BYD at $98 billion now ahead of Volkswagen at $95 billion valuation. Also note that there is only one German company left among the Top 5 and that 7 of the 25 most valuable manufacturers are now Chinese companies.
Last week, Tesla even briefly exceeded the $800 billion dollar mark. With MW, the first German manufacturer is even threatened with dropping out of the top 10, at the latest when Groupe PSA and FCA officially become Stellantis and together are worth more than BMW.
The importance of share prices and market valuations is not just one detached from the companies. High valuations allow such manufacturers to raise capital comparatively cheaply. Tesla, for example, issued additional shares of just 0.8 percent in December 2020 shortly before it was added to the S&P 500 index, adding $5 billion to its war chest. This allows further expansions to be financed quite cheaply – a luxury that lower-valued manufacturers cannot afford in this way. VW CEO Herbert Diess, for example, has publicly complained that VW has to raise such funds through savings and from current revenues. Daimler, too, is struggling with the cost of the transition to electric mobility and last year cut tens of thousands of jobs and even closed a plant with the prospect of more closures. Such actions don’t come from a position of strength, especially when other manufacturers are building new factories and hiring thousands of new employees on your own doorstep. Tesla has now been joined by NIO and BYD, which are growing at a similarly dynamic pace.
Will electric cars displace internal combustion engines and are the market valuations therefore justified? This future can be forecast relatively reliably on the basis of signals and trends and other indicators. If you want to get your hands on the tools to do this yourself, then I recommend to take a look at my new online course. Based on my book – Foresight Mindset – my AI robot AlphaSophia and I show how to use the Future Mindset to predict the future a bit with methods like Backcasting, 2×2-Matrix, or STEEP. Have a look at the funny preview videos.
This article was also posted in German.