[Editor’s note: “Buy Smart to Win Big in ‘The Great EV Consolidation’” was previously published in August 2022. It has since been updated to include the most relevant information available.]
A few months ago, electric truck maker Nikola (NKLA) acquired beaten-up electric battery maker Romeo Power (RMO) for $144 million.
Ostensibly, that headline seems somewhat meaningless. Nikola isn’t a very serious player in the electric trucking industry. Romeo is a fallen angel in the battery world. Not to mention, the $144 million price tag is a rounding error for an industry titan like Tesla (TSLA).
Yet, the acquisition was significant because it kickstarts The Great EV Consolidation.
In it, the number of companies in the electric vehicle industry will dramatically shrink over the next few years. We’re going from hundreds of small EV companies today to likely a handful of EV giants by 2025.
And the investment implications are enormous.
To paraphrase Charles Dickens, it will be the best and the worst of times. There will be lots of bankruptcies and lots of acquisitions. There will be loss and growth. Some investors will lose everything. Others will make fortunes.
On which side of this EV Consolidation will you fall?
To get on the right side – and give yourself the chance to make enormous gains – you need to buy the right EV stocks today. And critically, ditch poor-performing, hopeless electric car stocks.
An Automotive History Lesson
Our Great Consolidation thesis is rooted in historical precedent. So, for a moment, let’s rewind back to the dawn of the gas-powered car.
In 1893, bicycle mechanics (and brothers) J. Frank and Charles Duryea of Springfield, Massachusetts, designed the first successful American gasoline automobile. An automotive gold rush ensued.
A decade later, some 485 companies entered the automobile manufacturing business. All were hoping to strike it rich as the gas-powered car redefined the world of transportation.
It was a “gas-powered car boom” — much like the “electric vehicle boom” of today.
What happened next?
Well, the gas-powered car did go on to redefine the world. Today, around 70 million new passenger cars are sold every single year.
But almost none of those 485 companies that popped up back in the early 1900s became a success story.
Less than 50 were still in operation by 1930. And just three accounted for 80% of the market.
Though gas-powered cars did redefine the world, 9 of every 10 gas-powered companies that emerged didn’t survive to see it. Indeed, less than 1 in 100 turned into auto industry titans.
The EV Revolution will play out similarly.
EV Stocks: the Industry Is Too Crowded
Today, there are hundreds of EV makers in the world, all hoping to strike it rich as EVs redefine transportation.
They are all making the right bet. EVs will take over the world over the next 20 years, just as gas-powered cars did in the early 1900s.
And similar to the gas-powered boom, the EV boom of the 2020s and ‘30s will comprise a few top players. They’ll differentiate themselves from the pack in terms of some major value-add, whether it be cost, design, performance, or branding. Those titans will attract all the consumer demand and reap all the rewards of the EV Revolution. And they’ll squeeze out the other 90% of companies in the industry.
So, when I look at the EV landscape today, I see a graveyard with a few shining stars.
The key to striking gold in the EV Revolution, then, is to find those shining stars. And avoid the companies doomed for what will soon be a crowded EV graveyard.
How to Find Shining Stars of EV Stocks
We believe there are two ways to strike it rich in the Great EV Consolidation.
First, you can buy leading EV stocks that project as the future titans of the electric vehicle industry. Over the next few years, these stocks will consume the competition, which is why they are fantastic long-term bets.
Second, you can buy small, beaten-up, yet high-quality EV stocks primed to be bought out by future titans of industry. These are fantastic short-term bets. Just look at what happened to Romeo Power stock after that acquisition. It popped 27%.
In other words, there are fantastic long-term investments and short-term trades to play the Great EV Consolidation. That’s why we love this market phenomenon.
Want to make 40% or 50% in a week? You can do that.
Want to make 5X in five years? You can do that, too.
You can make short- and long-term money in any market. But you have to buy the right EV stocks.
The Final Word on the EV Consolidation
Nikola’s acquisition of Romeo Power yesterday is just the beginning. Looking back, folks will remember it as the buyout that kickstarted the Great EV Consolidation. Savvy investors who play their cards right can make fortunes in a hurry.
Fortunately, we have the top EV stock to buy to play this consolidation megatrend.
In fact, the world’s largest company — Apple (AAPL) — is getting into the EV game. It’s building an Apple Car, which many expect to be announced within the next year.
This car will be a huge success, just like its iPhone before it, and Macintosh before that. As Apple has done many times, it could use some of its massive cash hoard to buy its way to success. That’s why, due to its market-leading tech and Apple “DNA,” this EV stock could wind up on an underwriter’s desk in Apple Park.
Think about this. Little Nikola paid a 30% premium to buy out Romeo. If the giant Apple decides to take out this tiny EV stock, the premium could be much, much bigger.
I can’t wait to tell you the name of this potential Apple buyout stock!
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.