General Motors And Other Car Makers Have Big EV Goals. Why The Numbers Make No Sense.
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General Motors And Other Car Makers Have Big EV Goals. Why The Numbers Make No Sense.

By Al Root
Fri, Feb 5, 2021 5:40amGrey Clock 4 min

General Motors shook up the car industry this past week, saying it is aiming to stop selling gasoline-powered cars by 2035, much sooner than many on Wall Street would have predicted.

It is a sign that analysts and investors should be sharpening their pencils to figure out what is likely—and what is possible—for global electric-vehicle demand. The results of that number crunching will help to show whether the market has valued highflying EV stocks correctly and which, if any, still offer good value.

It isn’t an easy equation to solve. Auto makers express their goals—one indication of what might happen in the market—in different ways.

General Motors (ticker: GM) has its target for 2035. Tesla (TSLA) CEO Elon Musk has talked about selling 20 million EVs by 2030 and plans to increase its production volume at 50% a year for the foreseeable future.

Volkswagen (VOW. Germany) wants up to 25% of vehicle sales to come from battery-powered electric vehicles by 2030. And Toyota (TM) plans to sell 5.5 million electrified vehicles by 2030—a figure that includes hybrid electric cars as well as fuel-cell vehicles.

Barron’s added up the numbers in the publicly announced goals, aligning them by year and filling in some gaps. We calculate that, based on company comments, somewhere between 15 million and 20 million EVs will be sold a year by 2025. That implies an average annual growth rate of about 50% between last year and then. With that growth, EVs would account for roughly 15% to 20% of total light-vehicle sales.

Wedbush analyst Dan Ives qualifies as an electric-vehicle bull, but his estimate of EVs’ share of the market isn’t that high. “I am laser-focused on the skyrocketing EV demand out of China, Biden green initiatives, and [battery innovation] across the EV supply chain,” he tells Barron’s. “It looks like a golden age for EVs.”

Still, he is assuming EVs will win about 10% of the global market by 2025.

Focusing on China is a good idea. It’s the largest new-car market in the world and government incentives make buying an EV a “no brainer” for most consumers, according to Ives. Goldman Sachs analyst Fei Fang has predicted EVs will have 20% of the Chinese market by 2025.

RBC analyst Joseph Spak recently projected battery- and hybrid-electric vehicles could account for roughly 15% of new-car sales by 2025. That call was made back in December, before GM announced its aspiration to be all-electric by 2035.

Now Spak believes his projection could be too low. He did his own math to illustrate why.

“GM historically has had [about] 17% total U.S. market share,” he wrote in a recent research note. In December, he expected EVs to account for 40% of U.S. new-car sales by 2035. But for GM to go all-electric by then, assuming it keeps its historic 17% of the market, it would have to win 43% of U.S. EV sales, he said.

“The other way to interpret this [math] is that there could be upside to our 40% [battery electric] mix assumption,” added the analyst. That would be bullish for EV stocks, but he has a word of caution too. “A massive ramp in battery supply is needed to support this,” he said.

That gets at another important point for investors. There are many tertiary effects from faster EV penetration.

For one, as EVs take a bigger share of the market, they will start to get more of the capital the industry is willing to spend on product development. GM, for instance, is spending about half its capital over the next few years on EV and autonomous-driving technologies. By 2030, cars powered by internal combustion engines—ICE cars, in industry jargon—won’t look as attractive, relatively speaking, as those programs are drained of resources.

Electricity infrastructure is another critical issue. Right now oil and the refining industry essentially power cars. In the future, utilities and the electric grid will bear the burden.

The math needed to predict global electricity demand is harder, but higher EV penetration in 2025 would probably boost growth, now at roughly 3% a year, by a couple of percentage points. That seems manageable, but it means more investment in utilities.

The other side off the electricity equation is oil. Oil demand could fall slightly compared with 2019, a pre-pandemic year, if the world’s pool of EVs grows faster than expected. There are roughly 2 billion light vehicles on the road and nearly all take gasoline.

The next step in this math class is to value the EV sector. That isn’t easy either.

Given the growth and accelerating penetration, figures for 2025, when EV companies should be making real money, seem like a reasonable place to start. Apple (AAPL), the world’s most valuable company, trades for about 19 times estimated 2025 cash flow of about $120 billion.

Tesla is trading for about 65 times estimated 2025 cash flows. That is triple the figure for Apple, although if Musk’s goals are met, Tesla’s annual sales will go from more than 4 million vehicles to about 20 million over the next five years—between 2025 and 2030.

China’s NIO (NIO) is another highly valued EV stock. Analysts haven’t made public projections for its 2025 financials. But its shares trade for about 30 times estimated 2024 cash flow. According to analysts, NIO vehicle shipments are expected to go from roughly 345,000 to about 800,00 from 2025 to 2030. That is less growth than Tesla is looking to produce, but it still implies sales would more than double.

The 2025 valuation math can’t tell investors to buy or sell the stock, or the sector, but it does offer context about the coming golden age of EVs. Tesla stock is up about 21% year to date. NIO shares are up almost 19%. The S&P 500 is up about 2%.

Investors expect a lot. Morgan Stanley’s Adam Jonas pointed out that January EV sales in the U.S. were still less than 3% of the total, but he isn’t an EV bear. He rates Tesla stock at Buy and has a target of $880 for the stock-price target.

The ICE Age is ending. If the switch to EVs is rapid, valuations for manufacturers might not be unreasonable. The effects on other industries are just starting to be felt.

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For the Best Interior Design Finds, Take a Guided Shopping Tour to Paris, Istanbul and More

Passionate about both decor and travel? Design industry pros are leading global tours to share their secret shopping sources—and help you score one-of-a-kind pieces.

By ANTONIA VAN DER MEER
Mon, Feb 6, 2023 6 min

WHEN MELANIE BURNS of Oklahoma City first entered the Grand Bazaar in Istanbul, she was stunned by its sheer size and the pathways winding through its tented structures like a tangle of yarn. Though well-traveled and an old hand at hunting one-of-a-kind objets, she’d never experienced such an onslaught of potential riches. “The bazaar is intimidating,” she said, “the size of about five football fields.”

She had expert allies, however: Clare Louise Frost and Elizabeth Hewitt of Tamam, a lifestyle brand and Manhattan store specialising in Turkish antiques and their own collections. The duo led Ms. Burns to a shop layered deep behind other shops. “It was no more than about 14 feet square, and stacked high with the most beautiful hand-woven vintage tapestries I’ve ever seen,” Ms. Burns recalled. “I would never have tackled the place without these women. They are walking encyclopedias, they speak the language and when you shop with them, you don’t overpay.”

Ms. Frost, who calls the bazaar “her second home,” lived in Istanbul for nine years, and her business partners, Ms. Hewitt and Hüseyin Kaplan, still live there. Together they host trips to Turkey, capped at 14 participants, all eager to buy décor to take back home. Overseas shopping sprees like this are an increasingly popular new category of travel. Interior-design pros immerse travellers in a country’s culture and guide them to fabulous finds, whether an ornate vintage camel bag from Turkey or a contemporary French sculpture.

Indagare, a travel company in Manhattan, is seeing a growing market for overseas shopping trips. The 30 Insider Journey trips it ran in 2022, including seven design-centred jaunts, drew 540 travellers, twice as many as in 2019. Sicily, Japan and Mallorca are locales Indagare is eyeing for future design trips. Penta, a magazine that, like The Wall Street Journal, is published by Dow Jones & Co., has a partnership with Indagare to organise trips.

“Covid taught us we need to go when we have the opportunity,” said Grant K. Gibson, a San Francisco interior designer who himself has led eight trips to India and two to Morocco and is adding excursions to Egypt, Mexico and Turkey.

Trips are as cultural as they are commercial. Before Mr. Gibson’s group of 10 globetrotters start looking for linens or bargaining for bowls, they tour Jaipur by electric rickshaw and visit a textile museum. “I want them to understand the history and know where design ideas come from,” he said. Cynthia Smith, a biotech exec from San Francisco who traveled with Mr. Gibson to Morocco, came home with pottery in a vibrant green glaze unique to Tamegroute, a village that edges the Sahara. “Everyone asks me about the vase, and I have a story to tell about Tamegroute pottery,” she said. “It gives character to my house.”

The packages don’t come cheap—from around $4,000 to $18,000 (not including flights) depending on location and length—but offer you insider access. Designer Chloe Mackintosh of Boxwood Avenue Interiors in Reno, Nev., is leading her first trip this year to parts of Italy and France she knows well. One focus will be the weekend antique markets in L’isle-sur-la-Sorgue, in southeast France, but she’ll also introduce guests to local artisans, including a fifth-generation ceramist. Her group will take a pottery-making class to understand the process behind the product.

Known as “the huntress” because of her many years buying and selling vintage furniture, Ariene C. Bethea says people began asking her to lead a trip so they could hunt alongside her. The owner of Dressing Rooms Interiors, a shop and design studio in Charlotte, N.C., teamed with TrovaTrip to create a journey to the Paris flea markets this May. With Ms. Bethea’s input, the Portland, Ore., group-travel managers lined up accommodations, vendors, translators and tickets to museums. “I plan to help my guests shop, give them ideas and help them learn to tell stories in a space,” said Ms. Bethea, known for her playful use of colours, bold patterns and culturally inspired designs.

Lodging on these guided forays offers design cred, too. Ms. Mackintosh has reserved an entire 16-room château in the French countryside for just 12 people. Tamam’s Istanbul guests stay in a marble-floored hotel that was a late 19th-century Ottoman bank—with a vault that doubles as a wine cellar—and for excursions to Cappadocia, a region in central Turkey, they bed down in a traditional cavelike home carved out of soft rock.

On a trip to the South of France with Los Angeles-based designer Kathryn M. Ireland, visitors stay in Ms. Ireland’s farmhouse near Toulouse. Her trademark fabrics and colourful Bohemian and English-country style are on display in every bedroom lamp shade and living room chair. “Guests shop my house, and then I point them in the right direction to buy similar things,” she said. Ms. Ireland has been leading groups (a maximum of 10 people) for over a decade, taking them to neighbours’ villas, antique markets and out-of-the-way bakeries and bee yards.

Abby Landers first visited Ms. Ireland’s home as a high-school senior, traveling with her mother. Now five years out of college and living in Boston, she recently returned. “Kathryn embraced us, and she has been a mentor for me ever since.” Inspired by that first trip, Ms. Landers earned a master’s degree in interior architecture, and her current boss is someone she met on that trip. “You’re there for a week, and it’s a whirlwind of meeting artists and artisans, all friends of Kathryn’s.”

Kirstan Barnett, a tech investor from Palm Beach Gardens, Fla., traveled to Tangier with Melissa Biggs Bradley, founder of Indagare. Ms. Barnett was particularly moved by dinner at the 300-year-old, whitewashed, riad-style residence of Jamie Creel and Marco Scarani, two of the many designers she met at private events. The home was so richly layered and eclectic, she said, it inspired her to approach her own décor more bravely and reject the notion that a room must adhere to one style.

Some pros who organise such tours offer itinerary planning to folks who don’t want to travel with strangers. Mr. Gibson recently created a program for a group of four going to Jaipur. Though he won’t be joining them, he’s chosen the lodging and booked the restaurants and the experiences.

Travelers laser-focused on in-the-know shopping minus the touring can hire Chicago-based Skin Interior Design in cities such as London, Paris and Milan. The company arranges excursions so clients are shown exactly what they want—whether French midcentury chairs or Venetian-glass chandeliers. “We have an education in art history and antiques, and we help find pieces that keep value,” said Lauren Lozano Ziol, one of the founders. A recent two-day antique-furniture and art expedition in London cost $10,000.

How to get all the booty home? Mr. Gibson advises guests to travel with at least one empty suitcase. Bulky items can be packed and airfreighted home using DHL or FedEx. (Most carriers will pick up at the hotel.) Some vendors ship direct to the States from their stores at reasonable rates. For those who travel with Tamam to Turkey, easy shipping—including having your purchases collected from the vendors—is one of the perks. Ms. Burns, who bought ceramics, four suzani bedspreads and six rugs, said Tamam handled shipping for about $400. “Some of my things arrived before I even got home,” she said.

International Harvest / Souvenirs that guests collected on their design-focused journeys abroad
DESIGN JAUNTS ON THE HORIZON

Five 2023 trips abroad devised and helmed by interiors experts imparting their insider info

Ready to shop your way around the world? Here are just some of the available packages that focus on home design. Prices are per person and generally include accommodations, meals and beverages, guided touring, activities and local transportation.

Flea Market Foraging | May 4-10, 2023

The owner of Dressing Rooms Interiors, a vintage-home-furnishings boutique and design studio in Charlotte, N.C., Ariene C. Bethea takes travellers shopping the Paris vintage markets and art galleries and on visits to lesser-known museums such as the Museum Nationale Gustave Moreau. Also on the agenda: a foray to Versailles and its gardens, a tour of Montmartre street art and a tasting at the Museum of Wine. From $3,649, Trips.TrovaTrip.com

Ciao, Italia | May 15-19, 2023 (wait list only)

Chloe Mackintosh, owner of Boxwood Avenue Interiors, a Reno, Nev., studio and shop, leads a 4-night trip in Florence, Italy. Travelers stay at the five-star Il Salviatino, a restored 15th-century villa that mixes Renaissance and contemporary décor. Along with shopping excursions, antiquing and a workshop at a local artisan’s studio, the trip includes wine tasting and cooking lessons. Florence, from $5,500, Learn.BoxwoodAvenue.com

Turkey Club | May 17-26, 2023

Designer Clare Louise Frost, Tulu Textiles owner Elizabeth Hewitt and carpet dealer Hüseyin Kaplan teamed up to create Tamam, located in Manhattan and Istanbul and specialising in antique and vintage Turkish textiles, rugs and ceramics. Travelers tour Istanbul, Konya and Cappadocia, shopping the Grand Bazaar and the Spice Bazaar and visiting textiles and antique dealers. Plus: a hot-air-balloon ride and cooking class. Tamam in Turkey, from $3,600, Shop-Tamam.com

English Town and Country | June 11-17, 2023

In London, South African interior designer Serena Crawford guides travellers through Kensington Palace’s Sunken Garden (Diana’s favourite) as well as shops such as heritage brand Fortnum & Mason. In the university town of Oxford, architectural highlights range from medieval to modern, and in the bucolic Cotswolds, guests visit private homes and gardens of renowned interior designers. London & the Cotswolds with Serena Crawford, from $15,350, Indagare.com

Joie de Vivre in France | Sept. 9-16, 2023

Los Angeles-based designer Kathryn M. Ireland takes you on private museum tours, flea market hunts and a trend-spotting tour of design fair Maison et Objet in Paris (ticket not included), followed by leisurely days in the French countryside at her farmhouse outside Toulouse. Paris & La Castellane, from $7,900, Paris hotel not included, KathrynIreland.com

India, Indeed | Dec. 11-18, 2023

San Francisco interior designer Grant K. Gibson shares his passion for India with a guided tour of Jaipur and Taj Mahal. Participants stay in a guesthouse once part of a maharajah’s gardens; enjoy traditional Indian feasts; learn the history of block printing; rendezvous with rescue elephants; and conquer the chaotic bazaar, comprising flower and spice markets and rug and textiles vendors. Travel with Grant from $9,500, GrantKGibson.com

The Wall Street Journal is not compensated by retailers listed in its articles as outlets for products. Listed retailers frequently are not the sole retail outlets.

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