Morgan Stanley believes that after the share price has risen by more than 400% this year, Tesla, Inc. 's valuation is still reasonable. However, Tesla, Inc. is far from alone in the field of electric vehicles. As battery prices continue to fall, more companies can stand out. Workhorse, NIO Inc. Automobile and XPeng Inc. are also favored by the agency.

Tesla, Inc. 's dizzying valuation has long been questioned by many observers, but Adam Jonas, an analyst at Morgan Stanley, stressed that this was because the company had "industry-leading profit margins".

"in our view, the world's view of electric cars has changed a lot in the past year, and the most important thing is that Tesla, Inc. has proved," he wrote in a research report released last Friday. I have a gross profit margin ahead of the entire auto industry. Moreover, this is still without taking into account the zero emission score.

Jonas explained that General Motors Co's average gross profit margin for automotive products from 2017 to 2019 was 10.7%, of which it was 9.8% in 2019. Meanwhile, BMW's figure for the last three years is 16.7%.

However, such a performance is really pale in front of Tesla, Inc.. Over the same period, even without zero-emission points, Tesla, Inc. 's gross profit margin was 20.8 per cent, he wrote. Looking ahead, Jonas estimates that Tesla, Inc. 's gross profit margin will reach 21.6% in 2020 and 24% in 2021.

"Electric cars are very profitable now and will become more and more profitable in the next few years. We think this is very important. And the future players will be much more than Tesla, Inc., who has completely overturned the number one reason why traditional automakers are unwilling to switch to electric vehicle technology. "

Tesla, Inc. is incomparable.

According to Jonas, Tesla, Inc. has become the dominant player in the field of electric vehicles not only because of their advantages in cost and scale, but also because they face the opportunities of "software as a service" and "car networking".

In terms of cost control, Tesla, Inc., the forerunner, can push other electric vehicle manufacturers to further reduce costs and expand production capacity. As the market expands, they can turn electric car owners into subscribers, providing them with a variety of other features and continuous upgrades.

"their services can be all-inclusive. In addition to traditional software upgrades, they can also provide you with access to all kinds of media content, support for various autopilot technologies, promotion of insurance products, access to charging infrastructure, and provision of various communication services. "

As more and more people accept this service, Tesla, Inc. can continue to increase their "fixed recurrent income" and expand their "high-margin business".

"this will increase users' platform adhesion and provide strong and stable support for the company's revenue and profitability. Further strengthen the company's ability to continuously improve core automotive products (hardware), reduce costs and prices, and expand the user base. "

Ark Invest is the brightest Tesla, Inc. cattle organization on Wall Street, and last week, they specifically talked about the company's cost advantage at a quarterly online meeting.

On a recent battery day, Tesla, Inc. announced plans to reduce battery costs by more than 50 per cent, increase battery life by 50 per cent and cut capital costs by nearly 70 per cent.

Tasha Keeney, an analyst at Ark Invest, said: "this is an extremely significant change that will enable Tesla, Inc. to keep the cost of each car at only $25000 in the next three years." "

She added: "when we look at the electric car market, we find that Tesla, Inc. is already far ahead of other competitors, and now they can further reduce costs. this means that it will be more difficult for other players to come up with products that are comparable to them in terms of price, performance and battery life. "

Tesla, Inc. 's share price has risen more than 400% since the beginning of the year.

Workhorse (WKHS)

The good news is that Tesla, Inc. is far from alone in the field of electric vehicles. As battery prices continue to fall, more companies can stand out.

Workhorse (WKHS), a manufacturer of electric "last mile" delivery trucks, is ready to benefit from lower battery costs and increased economy.

Workhorse shares soared in the third quarter as subsidiary Lordstown Motors landed on the public market.

Kenny said the company still holds a 10 per cent stake in Lordstown Motors, which was spun off from the company last year.

She added: "Workhorse has now received an order for an all-electric delivery truck from the California Air Resources Authority. "

Workhorse shares are up about 567 per cent so far this year.

NIO Inc. Automobile (NIO)

Chinese electric car company NIO Inc. NIO also became the focus of market attention two weeks ago after it was upgraded by JPMorgan Chase & Co to increase its holdings.

In a research report released on Oct. 14, the research team led by JPMorgan Chase & Co analyst Nick Lai admitted that they did not anticipate a major rally in the stock this year, but they had sharply raised NIO Inc. 's target price from $14 to $40.

With Tesla, Inc. 's momentum, NIO Inc. will have a 7 per cent share of the passenger electric car market by 2025 and 30 per cent at the high end of the company's focus, JPMorgan Chase & Co experts write.

However, Ark's Kenny pointed out that there are still significant differences between NIO Inc. and Tesla, Inc., which means that the prospects of the former may not be so easy to judge. She explained that, first of all, NIO Inc. 's manufacturing is outsourced, and secondly, in terms of autopilot, NIO Inc. is developed in cooperation with Israel's Mobileye.

In addition, NIO Inc. also plans to roll out his battery exchange station to complete the charging by replacing the battery. Cathie Wood, CEO of Ark, believes that this approach is indeed in NIO Inc. 's interests, but it also brings some risks.

"what I don't understand is why consumers are willing to accept the change of batteries. If it were me, I would of course prefer to recharge at home rather than change the battery. However, China and the United States are very different, and their residential environment is unlikely to have a large number of charging stations, so maybe consumers will be forced to accept such an arrangement. "

NIO Inc. 's share price has risen about 630% since the beginning of the year.

XPeng Inc. (XPEV)

Although NIO Inc. is still the leader among electric car players in China, Derek Lin, a portfolio manager at Columbia Greater China, prefers to bet on rival XPeng Inc..

"the reason why we prefer XPeng Inc. is that they have their own autopilot technology and software, so they actually have their own complete software and hardware system, and they also have an operating system. "NIO Inc. is different," Lin explained. They cooperate with Mobileye in autopilot, and manufacturing is outsourced. "

His analysis of XPeng Inc. is similar to Jonas's analysis of Tesla, Inc., and he believes it is entirely possible for the company to build a complete subscription service business based on its core electric vehicle products.

Lin explained: "I think in the long run, XPeng Inc. can monetize the software and build a really full subscription business, and their ability in this area is relatively outstanding." What really excites us is that if you just build a car, the profit margin is 5%, but if you have your own software business, your profit margin can double, maybe more. "

XPeng Inc. 's shares jumped 54 per cent on the day of their debut on the New York Stock Exchange in August, but are down about 5.5 per cent so far this year.