2022 eletric vehicle predictions: Betting on the suppliers - The Average Joe

    2022 eletric vehicle predictions: Betting on the suppliers

    Victor Lei β€” Head of Research

    January 4, 2022


    January 4, 2022

    Tesla set the 2022 tone for electric vehicles (EV) β€” soaring 13% after reporting record deliveries.

    What’s the big deal? Last year, the biggest auto narrative was a supply chain crisis preventing carmakers from sourcing materials and achieving full production capacity β€” leading to higher costs and lower earnings.

    Despite these challenges, Tesla managed to pull off record vehicle deliveries in the last quarter of 2021 β€” 28% higher than the previous quarter.

    After a difficult year for car makers, what comes next in 2022? Recapping the past two years:

    • In 2020, EV stocks soared to record highs β€” but performed poorly in 2021 β€” with Tesla being one of the few EV stocks pulling off a gain.
    • In 2021, legacy car makers took the spotlight with β€” General Motors (NYSE:GM) and Ford (NYSE:F) rising 40% and 136%.

    In 2022, the best news for both automakers will be supply chains easing and finally being able to source computer chips β€” an important car component.

    Instead of predicting which car maker will overcome their supply issues or be favored by consumers β€” investors can bet on the suppliers.

    Prediction time: Chip suppliers will outperform car makers. The average EV has double the number of computer chips than a non-EV and the continued shift towards EVs will benefit specialized auto chip makers.

    • Suppliers include: NXP Semiconductors (NASDAQ:NXP) and Ambarella (NASDAQ:AMBA).

    Electronic leaders and analysts expect supply chains to last well into 2023, but if we get any signs of improvements in 2022 β€” both chipmakers and auto makers could rise on the news.

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