The analyst noted that the white knuckles across the sector had been focused on Chinese EV players like Xpeng Inc (NYSE: XPEV), Nio, and Li Auto, Inc (NASDAQ: LI) along with battery plays such as QuantumScape Corp (NYSE: QS).
The Party’s On: Ives said in a note on Friday that the “EV party is just beginning” in a response to a question from investors who want to know if the rally in EV stocks is over.
“Our answer is emphatically that the EV party and transformation is just beginning as this industry is on the cusp of a $5 trillion market opportunity over the next decade.”
Ives pointed out that EV penetration is only 3% today on a worldwide basis and he believes it is going to reach 10% by 2025 with “a green tidal wave on the horizon.”
Massive Buying Opportunity: The recent sell-off in EV stocks is a “massive buying opportunity” to own both Chinese EV players as well as pack leader Tesla, as per Ives.
“While the stocks and the EV space is clearly going through a digestion period, we view this as a short-term pullback in a multi-year upward rally.”
A Bigger Landscape: The analyst said that the EV landscape is bigger than just automakers. Over the next years, Wall Street can expect an “enormous ecosystem” of EV battery players, green-driven EV recycle pure plays, and supercharger infrastructure vendors.
Biden-driven Green Wave: Ives said that there are many pure-play and innovative EV players on both the commercial and consumer front ready to take advantage of the domestic wave in EVs driven by the Biden administration’s policies. He expects tax credits and incentives surrounding EVs to ramp up significantly in the coming months.
Big Players Diving Deep: General Motors Company (NYSE: GM), Volkswagen AG (OTC: VWAGY), and Ford Motor Company (NYSE: F) are all “jumping into the deep end of the pool on EVs,” as per Ives. This is a testament to the pent-up demand globally around EV technology. Ives specifically pointed out to Volkswagen which said on Friday that 70% of its European sales will be EVs by 2030, which is double its previous target of 35%.
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