The Electric Vehicle Industry Is About to Change Forever -- Here's What Investors Should Keep in Mind

With dozens of companies preparing to roll out new electric vehicles, we're about to see the dynamics of the EV industry change dramatically. In this Fool Live video clip, recorded on Oct. 18, Fool.com contributor and auto industry expert John Rosevear discusses what he thinks investors should keep in mind before adding any automakers to their portfolio. 

John Rosevear: The thing I will always remind people considering investments in any electric vehicle company, including Tesla (TSLA 12.06%), is that in two to three years they're going to be an awful lot of electric vehicles on the market. It's all of the automakers you've ever heard of, and some you haven't heard of are coming to market with electric vehicles, some of which on paper are very good, very promising. I think Ford's (F 0.08%) going to sell every F-150 lightning pickup they can make, for instance. Months before the vehicle ships, they've already doubled their investment in the plan to scale it up faster.

If everybody is driving electric vehicle, the question is not to ask who is going to sell the most electric vehicles over the next couple of years? It's if every new cars and electric vehicle by 2030-2035 in places like China and Europe and developed markets in North America, and so forth, who's going to have what big piece of that? Clearly Tesla's here to stay around. I wouldn't bet against companies like Ford and General Motors (GM -0.04%) holding onto a significant share of the U.S. market. Maybe even gaining some ground as everybody jumps for electric vehicles because they're a little bit further ahead of the Japanese automakers and Stellantis (STLA -0.40%), the company that now owns Chrysler.

You have to remember that those companies aren't going away. This is a thing I've been trying to tell investors for a decade now. Promising new electric vehicle company comes in, begins production, gains some share, gain some steady customers, wins customers, it's a big playing field. Tesla sold what? Half a million cars last year. In a good year there are 90 million cars sold around the world. A lot of those are cheap cars in emerging markets, but companies like Toyota (TM 1.07%) sell a lot of those vehicles. The individual profit per vehicle is fairly small, but when you're selling 10 million over a year, etc. It's a big space to dive into.

I think there is room for Lucid (LCID 1.19%) to establish itself as a significant player in the electric vehicle market for someone who wants something a little different, and interesting, and well executed. Are they going to be America's leading automaker in five years? They're not scaling for that and investors shouldn't bet on that. But then we have to ask in this new world, what are these companies worth? That's a whole other discussion when we start talking about the value of these ancillary services or something. What you could argue that Tesla is expensive, but the legacy companies that will survive and thrive through this transition might be cheap, too.