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The Main Challenges Faced by the Upcoming EV Era

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EV Stock Market

Even though sales of electric cars are still modest compared to traditional combustion engine cars when looking at numbers, EVs are getting more and more popular, and their popularity will only grow in the decades to come. The German giant alone, the legendary Volkswagen (OTC:VWAGY), is targeting to produce 26 million electric vehicles within nine years, while being ready to spend 35 billion euros to increase its electric vehicle fleet. The EV leader,  Tesla (NASDAQ:TSLA) achieved its best results last year, including the number of sold new vehicles, delivering more EVs than in the previous two years combined.

Is there enough electricity for many more EVs?

The number of electric vehicles is expected to grow dramatically in the decades to come. This means we must secure enough electricity to recharge all those new vehicles. To do this, serious expansion of the electricity generating system is required, and that can be only done with serious investments measured probably in trillions of dollars.

Where will the electricity for EVs come from?

It’s not as simple as if we could just use any source of electricity. This electricity should come from zero-carbon emission sources or renewable sources, preferably solar energy.  Somehow, both the auto industry and electric utility businesses are facing the same problem – how to integrate expensive battery technology without making a serious impact on the environment. For example, a Nissan Motor Co., Ltd. (OTC:NSANY) battery, which costs $12,000 degrades faster than the internal combustion engine it replaces. So, both auto and electro industries are devoting significant amounts of their future capital investments to this segment. Franchise Holdings International (OTC:FNHI) is trying to solve this problem for the electric pickup market through their brand Worksport by developing a solar cover for onboard power and to extend the driving range. Aldo this could bring solutions to the pickup market it doesn’t provide renewable energy for the whole EV market.

Where can we charge our electric car?

Once we ensure enough green energy to charge all EVs, we have to secure enough recharging stations around the world. This also won’t be an easy task. According to the Department of Energy, there are over 30,000 charging stations in the U.S. However, as in traffic, there are peak hours which are the most convenient periods for many drivers to charge their EVs. To do that, the electric grid should have its own relatively high-cost storage system of green electricity. Even with many owners recharging their electric cars at home during the night, the home electrical systems should have their storage, since renewable energy, like solar and wind, also has its “working hours”.

Cash flow issues

It is possible to resolve all the above issues. But to do that, we need many more investments. And to be able to invest, companies need funds. There is more than $1tn in corporate savings sitting in offshore accounts, held mostly by big tech firms. And 10% of those tech companies, the largest and the richest ones like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Cisco (NASDAQ:CSCO), Oracle (NYSE:ORCL) and Alphabet (NASDAQ:GOOG), control 80% of these off-shore funds. So, they surely have “some” free cash flow laying around. With the exception of Toyota Motor Corporation (NYSE:TM), neither car makers nor the electric industry have an even similar free cash flow range.

Conclusion

Today, we are consuming more than 100 million barrels of oil per day (mbd). Even if the predicted number of EVs is reached by 2040 (50 million EVs), that will decrease our oil consumption for 1.45 mbd (or 1.79% of global oil demand).

Also, internal combustion engines are evolving its motor technology, becoming more and more environmentally-friendly, and still offering better performance in range, price, reliability, and efficiency than the EVs. Maybe it’s just because they have been around much longer.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

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BenzingaEditorial

This Week Will Be About More Than Inauguration Day Alone

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Since 2020 March lows, the market saw a nothing short of extraordinary record-shattering rally. But how much higher can it go as COVID continues to rage across the US and Europe? That answer will become a bit clearer as traders have returned from the long holiday weekend and equity markets have reopened. This week will be defined by the first days of the Biden administration and by another batch of corporate earnings reports.

Inauguration in times of COVID-19

On Wednesday, president-elect Joe Biden’s inauguration ceremony will take place as a dialed-down event, due to the ongoing pandemic. Americans have been urged to avoid the city on the day, given the risk of violence surrounding the event. Last Wednesday, Airbnb (NASDAQ: ABNB) announced it would block and cancel reservations in the D.C. metro area this week, refunding guests and reimbursing hosts who already made bookings. Interestingly, the stock rallied nearly 6% upon the announcement. Marriott (NASDAQ: MAR) which has close to 200 hotels in the D.C. area and owns brands including The Ritz-Carlton said it would honor existing reservations, along with IntercontinentalHotelGroup (NYSE: IHG), Hilton (NYSE: HLT), Hyatt (NYSE: H) and Expedia-owned VRBO (NASDAQ: EXPE).

Biden also said he aims to roll out 100 million vaccines in his first 100 days in office, which would significantly accelerate the pace of current efforts to counteract the pandemic. On January 20th, Biden is seeking to sign about a dozen executive actions to address the pandemic, as well as a virus-stricken economy, climate change and racial equity.

Earnings

One of this week’s key earnings reports will come from Netflix (NASDAQ: NFLX) on Tuesday after market close. Last quarter’s results showed disappointing signs that the skyrocketing user growth that Netflix enjoyed during pandemic was slowing down. The streaming giant missed even its own conservative third-quarter new subscriber guidance for the summer, adding just 2.2 million new members as opposed the 2.5 million the company had expected. For the fourth quarter, Netflix expects 6 million net paid additions to its streaming platform, representing another YoY decline after adding 8.8 million in the fourth quarter of 2019.

Netflix, while still the leader among U.S. streaming platforms when it comes to total users, has also faced increasing competition over the past year, especially from relative newcomer Disney+ (NYSE: DIS). Disney’s streaming service had 86.8 million paying subscribers as of December 2nd, compared to the more than 195 million Netflix reported at the end of September. Disney also revealed it would be raising the monthly price of its streaming subscription starting in March, suggesting the entertainment giant believes it has the user demand and pricing power to command higher fees. Netflix needs to prove it can maintain its status as the king of streaming among this intense competition.

Wall Street expects earnings $1.38 per share on revenue of $6.61 billion, compared to the year-ago quarter when earnings were $1.30 per share on $5.47 billion in revenue.

Also, on Tuesday, Tuesday: Halliburton (NYSE: HAL), Charles Schwab (NYSE: SCHW), Bank of America (NYSE: BAC) and Goldman Sachs (NYSE: GS) will report their earnings before market open.

Wednesday

Morgan Stanley (NYSE: MS), US Bancorp (NYSE: USB), Citizens Financial Group (NYSE: CFG), Bank of New York Mellon Co. (NYSE: BK), Procter & Gamble (NYSE: PG), UnitedHealth Group (NYSE: UNH) will report before market open whereas Alcoa (NYSE: AA) and United Airlines (NASDAQ: UAL) will report after market close. Wall Street expects United Airlines to lose $6.58 per share on revenue of $3.46 billion. This compares to the year-ago quarter when earnings came to $2.67 per share on revenue of $10.89 billion. United had some $24 billion of capital expenditure commitments as of Q3 so amid the decline in travel demand, its aim is to reduce that spending as much as possible. Investors will be looking at such economic improvements to justify the argument that UAL is better positioned than other airlines to survive this downturn.

Thursday will feature IBM and Intel

Wall Street expects International Business Machines Corporation (NYSE: IBM) to earn $1.79 per share on revenue of $20.63 billion but what investors are really wondering is when will the real turnaround begin? Its cloud ambitions have promised to return value to shareholders, but shares still haven’t regained even their pre-COVID levels while the rest of the market has seen record highs. Cloud leaders such as Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG)(NASDAQ: GOOGL) are seemingly too far ahead for IBM to catch up. The new CEO Arvind Krishna is tasked with elevating Big Blue into a leading cloud and AI position, while distancing the company from the legacy business. Investors want to hear progress on these fronts.

Truist Financial (NYSE: TFC), Baker Hughes (NYSE: BKR), Union Pacific (NYSE: UNP) will also report on the same day before market open and Intel (NASDAQ: INTC) will make its appearance after market close.  Wall Street expects Intel to earn $1.10 per share on revenue of $17.48 billion, whereas the same quarter last year saw earnings of $1.52 per share on revenue of $20.21 billion. Intel shares have soared more than 10% Wednesday after the company confirmed that CEO Bob Swan will step down on February 15 and be replaced by Pat Gelsinger, the current CEO of VMWare (NYSE: VMW). On several important chip development fronts, Intel has lost ground to rivals AMD (NASDAQ: AMD) and Nvidia (NASDAQ: NVDA). On Thursday, it must show the right things to support the confidence that Gelsinger can turn things around and quickly.

The week will be closed on Friday with earnings from Kansas City Southern (NYSE: KSU), Schlumberger (NYSE: SLB) and Ally Invest (NYSE: ALLY) who will all report before the stock market opens.

The inauguration may signal a dramatic shift and increase in government spending, but it remains to be seen whether hopes of a transformation can survive the reality of a narrowly divided Congress.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

This Week’s IPOs

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This week brings us four IPOs which are aiming to raise $1.8 billion. These four companies operate in different markets and they come from different countries, but they share at least one thing, they all want to go public.

RLX Technology

RLX Technology (NYSE: RLX) is a leading e-cigarette brand in China. The company announced its terms for its IPO on Friday, and it plans to $1.0 billion through offering 116.5 million units at a price between $8 and $10. That means RLX Technology would have a market cap of $14.0 billion. This company is profitable and fast-growing. In 2019, it was holding around 63% of the e-vapor market share in China. RLX believes in the strength of the retails sales, therefore it has more than 110 authorized distributors, so their products are present in more than 250 cities in China, through 5,000 branded stores and over 100,000 other retail outlets. As of the end of September 2020, the revenues have doubled compared to 2019. This is all very promising having in mind that the company was founded in 2018.

Patria Investments

One of the leading private markets investment firms in Brazil and Latin America, Patria Investments Limited (NASDQAQ: PAX), announced that it has launched its IPO. The company offers 26,650,000 Class A common shares in total. The estimated price range of the offered units is between $14 and $16, so the plan is to raise $400 million at a $2.0 billion market cap. The net proceeds from the offering are planned to be used for general corporate purposes, expansion of the company’s operations (through new distribution channels, acquisitions of asset managers and portfolios), and to fund capital commitments to its existing and new contracts. As one of the leading PE firms in Brazil, the company’s investment portfolio includes over 55 companies and it has raised more than $8.7 billion since 2015.

MYT Netherlands

MYT Netherlands (NYSE: MYTE), a Germany-based luxury fashion site, which operates under the brand name Mytheresa, likes to say it offers the Finest Edit in Luxury Fashion. As in the company’s store with the same name (The Mytheresa store in Munich), fashion “doyens” can find some of the renowned brands like Balmain, Gucci, Prada, Saint Laurent, and Fendi, and their latest collections. As the pandemic has ravaged the luxury goods sector, the salvation might be in the online sales of luxury goods, which rose between 12% and 23%. Therefore, Mytheresa decided to go public, planning to raise $266 million at a $1.5 billion market cap and to focus on offering clothing, shoes, and accessories from many luxury brands through its e-commerce platform.

Dream Finders Homes 

After successful completion of several acquisitions and expanding nationally, the Florida-based homebuilder Dream Finders Homes (NASDAQ: DFH) decided to launch its IPO and to raise $130 million at a $1.2 billion market cap. For the first nine months of 2020, the company announced an increase of 29% of pro forma revenues (pro forma – a method of calculating financial results using certain projections or presumptions) and an increased EBITDA margin of 9%.

These companies and their IPOs are offering a lot of variety and potential. So far, 2021 looks promising.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

The EV Industry Is Worth More Than The Traditional Automakers

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Many things that were considered to be impossible actually happened in 2020. One of them is that electric vehicle makers became more valuable than traditional automakers and by about by about $100 billion, according to Barrons. EV makers are now worth about $1.3 trillion whereas traditional car makers combined have a market capitalization of about $1.2 trillion. This figure includes 100 auto makers around the globe with market caps ranging from $10 million all the way to Tesla’s (NASDAQ: TSLA). Based on its fully diluted share count, Tesla is worth about $1 trillion.

This feat is even more impressive if you consider that this is a much smaller industry based on actual number of cars. The last year taught us that the connection between the stock market and the economy is imprecise at best. However, the fact that technology enabled batteries to overpass ICEs is the kind of disruption that investors look for. Even though Tesla is the main contributor to the value of the EV market, the overall image is just as impressive as three of the top five most valuable are EV makers, with Tesla being followed by NIO (NYSE: NIO) and BYD (OTC: BYDDF). As for traditional automakers, Volkswagen (OTC: VWAGY) and Toyota (NYSE: TM) are the most valuable ones with both undergoing serious investments into electrification.

Traditional automakers are going electric

On Friday, BMW said it aims to double its sales of fully-electric vehicles this year. Including plug-in hybrids, it aims for a 50 percent increase in sales of electrified vehicles versus 2020. It did not give sales volumes for its fully electric vehicles but in data released on Tuesday, BMW said it sold close to 193,000 electrified vehicles, including fully electric and plug-in hybris in 2020. As a reminder, Tesla delivered almost half a million all-electric models last year, which is 75% of General Motor’s (NYSE: GM) third-quarter deliveries.

The automotive industry is at an inflection point

BEVs take approximately 1% of the total market for light vehicles, but the figure rises to about 3% if we include hybrid and plug-in hybrids. Why exactly it takes a relatively small market share to disrupt an industry is a bit of a mystery, but one reason is that more investment capital tends to flow in when market share come is within the 3% to 5% range. As more capital drives more innovation and improvement, investors are lured by high growth rates, bringing in even more capital and this is how success is made. Over the past year, EV makers have raised more than $20 billion in fresh capital, which is a fraction of what traditional auto companies spend on plants and equipment. However, on a per car basis, the EV industry is investing at roughly 10 times the rate of the traditional industry. Add to this President Joe Biden’s aim of a carbon-free future by 2035 and the drive toward adoption of EVs which is already seeing impressive results in Europe, the all-electric future is around the corner.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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