With electric vehicle (EV) sales expected to explode over the next few years, many investors are looking at companies such as Tesla as being where opportunities lie. However, the surge in EV sales will have a knock-on effect on peripheral industries.
Several industries are likely to benefit from this once-in-a-generation change. Millions of EV vehicle chargers will be required, raw material demand will increase, as will electricity consumption.
These peripheral industries are seen by analysts as appealing because EV stocks are trading for extremely high price-to-sales multiples, and some companies have multi-billion dollar pre-revenue valuations.
This article looks at 3 companies that are well-placed to take advantage of this switch in consumer spending.
ChargePoint Holdings
Amongst the growing numbers of EV vehicle manufacturers will be winners and losers. Regardless of which EV manufacturers benefit from the boom, one thing is certain, a radical change of infrastructure will be required to keep the vehicles moving.
ChargePoint is already the market leader in the U.S., with 70% of the market share. The company supplies charging ports for home and commercial use and already has a network of 2,000 publicly available fast-charging stations across North America.
The company expects sales of its charging ports to grow by seven times by the end of 2026. It reported sales of $146 million for the year ending 31st January 2021 and expects this to increase by 37% by the midpoint of the current fiscal year.
Growth in this sector looks to be imminent and with a growing suite of products aimed at the sector, ChargePoint’s growth is likely to accelerate for the foreseeable future.
It doesn’t take a crystal ball to see that EV charging infrastructure is set for massive expansion, and ChargePoint is in a prime position to capitalize on it.
SunPower
There is no direct relationship between the rooftop solar power industry and the EV industry. However, the current customer base between the industries does have a direct correlation. It is well reported that consumers that own electric vehicles are far more likely to have solar panels installed than the population as a whole.
SunPower is amongst the industry leaders in this field, but the real game-changer is the advent of energy storage in these systems. Storage systems will allow SunPower users to control when a home, or EV, is pulling energy from the grid. This allows homeowners to decide whether to charge their vehicle from their “homemade” solar energy. It even allows for EV vehicles to act as a backup power supply for the home.
If historical trends continue then we can expect to see a sharp rise in solar panel installations as the EV market grows.
NextEra Energy
NextEra Energy is perhaps the most aggressive utility company when it comes to investing in the renewable energy sector. Currently, it is the largest supplier of wind and solar power in North America. As the world switches to EVs, electricity demand will grow. Generating this energy from fossil fuel sources will negate much of the point of switching from gasoline-powered to electric vehicles.
NextEra Energy wants to support the EV boom by supplying the grid with renewable energy. The company finished 2020 with a generation capacity of 24 gigawatts and has new projects in the works that are expected to bring another 15 gigawatts online in the very near future.
Whilst the companies growth rate is to be admired, it has come at a hefty cost. The past few years have seen stagnated revenue figures and net income. However, investors are comfortable that this long-term strategy will pay off, and NextEra Energy has positioned itself at the forefront of the green energy revolution.