Shares of electric car makers have largely sold off this year, following the trend of tech stocks. The Global X Autonomous & Electric Vehicles ETF is down about 27% year-to-date, while losses at leading electric car maker Tesla outpaced the broader market, down about 32%. Rivian is down even more, about 67% year-to-date. Still, one analyst is optimistic about the planned energy transition — and that includes electric cars — calling it one of the “greatest” investment opportunities since the Internet revolution. Here’s what George Giannarikos, senior analyst at Canaccord Genuity, has to say about buying electric car market leader Tesla and junior upstart Rivian. Tesla — ‘Apple on steroids’ Tesla is the “clear leader” in electric vehicles, Giannarikos told CNBC’s “Squawk Box Asia” last week. He also sees the company as “bigger than” Apple. “We see striking similarities between Apple and Tesla, except that Tesla is Apple on steroids. Both have industry-leading profitability and profit share due to product focus and vertical integration; except that we see Tesla’s manufacturing chops as key a differentiating factor,” he said separately. in the report. Tesla differs from Apple in its “maniacal focus” on manufacturing, while Apple sticks to outsourcing, Giannarikos said. That could help Tesla maintain its competitive edge, as the manufacturing prowess will help it cut costs — even amid rising costs, he told CNBC. He noted that Tesla has been directly mining minerals from mining partners for some time. “Tesla’s manufacturing gambits have cost them almost everything … but their relentless manufacturing focus has yielded tangible improvements in profitability,” he said. Giannarikos said Tesla is becoming “more than an electric car company.” The company is also involved in solar energy, energy storage and robotics, which he said will add to the “duration and longevity of Tesla’s growth story.” Giannarikos gave Tesla a buy rating and a price target of $801 — upside potential of about 190%. That would be a much higher target than other analysts covering the stock. According to FactSet, 64% of analysts have a buy rating on the stock and an average price target of $307.27 — or 12% upside potential. Rivian – potential ‘leader’ Rivian, an electric vehicle startup, has struggled with supply chain issues that have affected its production. But a recent partnership with Amazon has given it a much-needed boost. Amazon is set to purchase 100,000 custom-built electric vans from Rivian as part of its move to electrify its last-mile fleet by 2040. This follows a $700 million investment in the EV startup in 2019. “Not only did the relationship with Amazon provide Rivian with the capital and the initial order, but strategically it allowed Rivian immediate scale through which it could gain multiple advantages in cost, manufacturing and design,” Giannarikos said. “What’s more, with autonomous features, Rivian can enhance its autonomous offering by getting data/miles with Amazon trucks on the road,” he added. Although Rivian faces stiff competition from other upstarts and established automakers, Rivian stands out, Giannarikos said. While traditional automakers use “disparate” technologies from different sources, Rivian developed most of the hardware and software, he said. “This full-scale approach should drive product differentiation, improved customer service and high margins,” he said. “Rivian has the necessary ingredients to become a market leader in electric vehicles and mobility.” He gave Rivian a price target of $61, implying upside of about 83%. Of analysts covering the stock, 61% have a buy rating with an average price target of $56.80 — or 71% upside, according to FactSet.
