Market cap: EV companies getting bigger as competition increases

Lucid, the PIF-backed EV maker, is also expected to expand its retail and service network into different regions to pursue a more globalized demand. Shutterstock
Lucid, the PIF-backed EV maker, is also expected to expand its retail and service network into different regions to pursue a more globalized demand. Shutterstock
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Updated 20 November 2021

Market cap: EV companies getting bigger as competition increases

Market cap: EV companies getting bigger as competition increases

CAIRO/MOSCOW: The valuation of the Saudi PIF-backed US electric vehicle company, Lucid, increased to over $91 billion last week, surpassing Ford and General Motors.

A recent stock market rally added over $17 billion to its valuation, up 24 percent, Bloomberg reported.

The increase in shares comes after Lucid’s announcement to produce 20,000 vehicles in 2022.

This happened amid the growing demand for EVs, as more consumers consider adopting the technology.

Earlier, the stocks of the US automaker company, Rivian, jumped 15 percent, surpassing Volkswagen’s market value, while Tesla gained 4.1 percent.

Rivian has become the third-largest car company in terms of market capitalization, according to Bloomberg. Its value reached $150 billion. These two companies, along with Tesla, are among the top 10 largest automakers by market capitalization.

As of last Wednesday, Tesla, which is almost in a league of its own, took the lead with a market valuation of $1.06 trillion, significantly higher than the second-placed Toyota, which had a market cap of 29.66 trillion yen ($260 billion), according to data obtained from the Wall Street Journal.

Looking at their growth year-to-date, Tesla’s share price went up by 49 percent to close at $1,089 on Nov. 17, 2021, data from the New York Stock Exchange website showed.

Meanwhile, Lucid’s share skyrocketed by over 400 percent year-to-date to reach $52.55.

Rivian, which was recently listed in Nasdaq, saw its share price rise from $100.7 on Nov. 10 to $146 a week later, according to NYSE.

In another notable development for these companies, sales of EVs will almost double next year to 5.6 million, according to calculations made by BloombergNEF in collaboration with the COP26 conference.

Observing debt-equity ratios, Tesla and Lucid had much lower ratios when compared to their traditional counterparts, as they stood at 0.3 and almost zero in the case of Lucid respectively as of Sept. 30, 2021. Toyota and Volkswagen were more leveraged as their indicators were 0.97 and 1.45 respectively.

Meanwhile, American carmakers, General Motors, and Ford had even higher values as they reached 1.81 and 3.94 respectively.

The debt-equity ratio was calculated as total interest-bearing liabilities divided by total equity.

Hence, these two EV manufacturers did not rely as much on debt to obtain their assets. Concerning production levels, EV companies are also seeing some significant improvements in their operations and deliveries. Tesla’s total production for the nine months of 2021 rose year-on-year by 89 percent to reach 624,582 vehicles, the company’s latest quarterly report showed. This was more than double the comparable output level in 2019.

In addition, the number of deliveries experienced a stronger trend, going up by a yearly rate of 97 percent in the first three quarters of 2021 to stand at 627,572 automobiles.

Tesla’s market share was also nearing 2 percent by the third quarter of 2021 in the US and Canada following a market share of around 1 percent in the period between 3Q 2019 and 1Q 2020, a graph in the company’s latest quarterly earnings report showed.

Lucid is similarly experiencing an upturn in its operations. Reservations were greater than 13,000 by the end of this year’s third quarter but went up even further to be greater than 17,000 by Nov. 15, 2021. The company also had estimated bookings that exceeded $1.3 billion in value by the end of 3Q, Lucid said in a recent report.

The PIF-backed EV maker is also expected to expand its retail and service network into different regions to pursue a more globalized demand. The company wants to enter the Canadian market in the fourth quarter of this year, the European, Middle Eastern, and African market in 2022, and the Chinese market by 2023, the company added in its report.

However, in terms of profitability, EV companies still have some catching up to do with the other traditional automakers.

While Tesla’s net income surged six-fold to $3.2 billion for nine months of 2021 compared to the same period last year, this was still a lower profit when compared to other market leaders.

Volkswagen’s earnings after taxes for this period reached a much higher €11.4 billion ($12.9 billion). Moreover, General Motors’ net income attributable to stockholders was $8.28 billion while Ford’s net income was $5.7 billion.

Toyota, in a shorter period, made a higher net income when compared to Tesla as its net income reached 1,565 billion yen ($13.7 billion) in the six months ending on Sept. 30.

On the other hand, Lucid made a net loss of $1.53 billion for the nine months ending on Sept. 30, as it continued to grow its core operations.

Moreover, Tesla had a very high estimate for its price-earnings ratio, PER, for 2021, valued at 265.61 which might mean that either the company is overvalued or that investors are predicting high growth for the company. Due to its losses, Lucid had a negative PER ratio of -30.03.

Traditional automobile manufacturers that Arab News examined had much lower PERs. General Motors and Ford’s estimated values for 2021 were 9.89 and 10.85 respectively while Toyota's actual PER for 2021 was a higher 12.42.

Data concerning PERs were obtained from Nasdaq’s website.

Therefore, it seems that EV companies are becoming more attractive for stock market investors, evident through their skyrocketing share prices, but they are still relatively young companies that need some time to achieve their counterparts’ profitability positions.


Dubai real estate sales in 2021 record highest value since 2009

Dubai real estate sales in 2021 record highest value since 2009
Dubai skyline
Updated 16 January 2022

Dubai real estate sales in 2021 record highest value since 2009

Dubai real estate sales in 2021 record highest value since 2009

Dubai real estate deals were worth approximately 151 billion dirhams ($41.1 billion) in 2021, their highest value since 2009.

The total number of deals last year reached 61,241, the largest number since 2013, according to Al Arabiya.

This value jumped by 110 percent compared to 2020, while the total number of deals increased over the course of 2021 by 74 percent compared to 2020.

Of these deals, ready made properties accounted for 60 percent of total real estate transactions in Dubai in 2021, while the rest was made up of off-plan properties.


Egypt sees first private issuance of green bonds 

Egypt sees first private issuance of green bonds 
Updated 16 January 2022

Egypt sees first private issuance of green bonds 

Egypt sees first private issuance of green bonds 

A Norwegian clean energy company Is working on what wiuld be the first private issuance of green bonds in Egypt. 

Norway's Scatec plans to issue around $340 million in green bonds, secured by its six solar energy plants in Benban complex that has a production capacity of 390 megawatts, Alarabiya reported citing banking sources. 

This comes amid Egypt’s boom in clean infrastructure projects during the last decade.  

 


China plans to increase consumption during the holiday season: Macro snapshot 

China plans to increase consumption during the holiday season: Macro snapshot 
Getty Images
Updated 16 January 2022

China plans to increase consumption during the holiday season: Macro snapshot 

China plans to increase consumption during the holiday season: Macro snapshot 
  • German gross domestic product rose by 2.7 percent in 2021 compared to 2020

Despite a rise in COVID-19 cases, China is planning to uplift consumption during the holiday season, the country’s National Development and Reform Commission said.

China will still maintain pandemic control, yet its effect would be mitigated through the fine-tuning of those regulations to each area, Bloomberg reported.

The commission also called on e-commerce vendors and online entertainment channels to introduce more sales promotions during the season.

South Korea Interest Rates

In a bid to combat inflation, the Bank of Korea decided to raise its interest by 0.25 percent to the pre-pandemic level of 1.25 percent.

The bank also signaled that further hikes would take place in the remainder of the year, according to The Wall Street Journal. The country’s annual inflation rate reached 3.7 percent in December, noticeably above the central bank’s target of 2 percent.

Inflation is set to remain above the 3 percent mark for a while and would average more than 2.5 percent for the full year, the bank’s governor, Lee Ju-yeol, said.

German GDP growth

German gross domestic product rose by 2.7 percent in 2021 compared to 2020, according to first calculations by the Federal Statistical Office (Destatis).


“Economic development has been largely dependent on the infection rates of Covid-19 and associated preventive measures also in 2021,” said Dr. Georg Thiel, head of the Federal Statistical Office, at the press conference on the 2021 GDP in Wiesbaden. 

“Despite the continuing pandemic situation, more delivery bottlenecks and material shortages, the German economy has managed to recover from the sharp decline last year, even though the economic performance has not yet reached the pre-crisis level agai,” Thiel continued.

Moreover, GDP in 2021 was still 2.0 percent lower than it was in 2019 the year before COVID-19 started.

UK economy

Britain's economy grew 0.9 percent faster than expected in November, before the latest wave of coronavirus infections and restrictions on many businesses, and was 0.7 percent larger than it was in February 2020, according to the Office for National Statistics.


“It's amazing to see the size of the economy back to pre-pandemic levels in November – a testament to the grit and determination of the British people,” finance minister Rishi Sunak said.


Government deposits with SAMA in biggest monthly drop since 2016  

Government deposits with SAMA in biggest monthly drop since 2016  
Updated 16 January 2022

Government deposits with SAMA in biggest monthly drop since 2016  

Government deposits with SAMA in biggest monthly drop since 2016  
  • Compared to December 2020, SAMA's net foreign assets fell 2.4 percent

The government’s deposits with the Saudi Central Bank fell by SR74.7 billion ($19.9 billion) during December to reach SR538, preliminary data posted by SAMA revealed.

This change represents the biggest monthly drawdown of government deposits with SAMA since November 2016 when they fell by SR90.3 billion.

At the same time during December 2021, net foreign assets held by the Saudi Central Bank dropped by 2 percent from November to SR1.64 trillion, according to preliminary data.

Compared to December 2020, SAMA's net foreign assets fell 2.4 percent.

In addition, the Kingdom’s monetary base – which is the sum of currency outside banks, cash in vaults and bank deposits with SAMA – edged up by 0.5 percent in December on a month-on-month basis to reach SR356 billion.


Sixth Street Partners in final talks to buy stake in Eni's power unit: sources

Sixth Street Partners in final talks to buy stake in Eni's power unit: sources
Updated 16 January 2022

Sixth Street Partners in final talks to buy stake in Eni's power unit: sources

Sixth Street Partners in final talks to buy stake in Eni's power unit: sources
  • The companies all declined to comment

US investment firm Sixth Street Partners has emerged as the leading bidder for the power generation unit of Italian energy group Eni and is in advanced talks to buy a minority stake in the business, three sources told Reuters on Friday.

Eni, advised by JPMorgan, is looking to sell a stake of up to 49 percent in Enipower in a deal that could value the business at up to 1.2 billion euros ($1.4 billion), one of the sources familiar with the matter said.

The sale is expected to be wrapped up by the end of the first quarter, the source said.

BlackRock also studied a bid for the asset but a source close to the discussions said the fund's interest had cooled.

The companies all declined to comment.

Enipower, one of Italy's biggest power producers, runs five gas-fired plants and one co-generation plant in Italy with an overall capacity of more than 5 gigawatts.

As concerns about climate change push economies toward a lower carbon future, investing in fossil fuel assets is seen by some as a riskier bet than it used to be.

Eni, which has pledged to be carbon neutral by 2050, is selling the stake to help fund its shift away from oil and gas into cleaner businesses.

The group has merged its retail and renewable businesses and is planning to list part of the unit this year in what could be one of Italy's biggest IPOs of the year.