2021: the hard, fast(er) and exciting numbers are in for the UK’s electric vehicle (EV) industry
20th January 2022 |
Before we get down to the core of this week’s Frontier Tech Investor report, we provide a reminder of our newest edition to the buy list, MPAC Group (LSE: MPAC).
MPAC Group is a supplier of packaging and automated solutions to consumers in the healthcare, pharmaceutical, and food and beverage industries.
We remain hugely excited by MPAC’s potential. Its ability to harness powerful automation technologies through the use of smart machines and augmented reality (AR) allows for a high level of efficiency amongst supply chains.
At the time of writing, MPAC’s share price is 546.44GBp. This puts it well within our buy limit (610GBp) right now. You can find the original recommendation here.
The accelerating transition to EVs
2021 was a record-breaking year for the UK electric vehicle (EV) market.
Despite headwinds from coronavirus and shortages in semiconductor chips, the transition to EVs has still managed to sustain its momentum.
The hard numbers highlight this:
- The 190,287 battery electric vehicles (BEVs) registered was more than the previous five years combined (186,471).
- Out of the 1,647,181 cars registered in 2021, 452,527 were either BEVs, plug-in-hybrids (PHEVs) and hybrid electric vehicles (HEVs) – the three types of EV. This is a 58.7% increase on 2020’s figure.
- As of 2021, 27.5% of the total vehicles market is now electrified in some form, up from 17.4% in 2020.
The figures point to an unstoppable trend that will soon engulf traditional internal combustion engine vehicles (ICEs), as the UK seeks to ban the sale of new petrol and diesel vehicles by 2030.
We expect that 2022 will be another record-breaking year for the UK’s EV industry.
In part, this is due to the UK government’s commitment to reducing carbon emissions following the COP26 climate summit talks. It has identified the EV industry as one of the key players in this particular campaign.
For example, the UK government has outlined plans to deliver 145,000 new EV charging points each year up until 2030, resulting in a near five-fold increase on the 250,000 charge points currently in operation.
Another factor to consider is rising oil prices.
With the Omicron variant being less disruptive than first feared, confidence amongst supply chains has been boosted, driving increased demand for oil.
However, supply is failing to keep pace with demand.
OPEC Plus, the cartel whose members include many of the largest oil exporting states, is currently failing to meet production targets. This is due to political instability and the diversion of resources towards more sustainable energy resources in countries such as Nigeria and Angola.
OPEC’s oil production deficit (i.e. relative to the target that it has set) is projected to reach one million barrels of oil per day this month.
Collectively, this has driven crude oil to its highest price since October 2014. At the time of writing, the cost per barrel of crude oil is $85.67/ barrel.
Of course, these higher prices are likely to be felt at the petrol pump, deterring motorists from buying internal combustion engine (ICE) vehicles. It could give a greater incentive for motorists to switch to using EVs, which have cheaper running costs.
According to thisismoney.co.uk, on average, an EV costs £1,304 to run per year over a seven-year period, compared to £2,610 for a petrol or diesel model.
We believe the hard numbers and current news flow strengthens the investment case for our EV-centric stocks:
- AMTE Power (LSE: AMTE), a developer of battery technology to the automotive, oil and gas, and energy storage industries
- Ilika (LSE: IKA), a producer of solid-state batteries which targets the industrial internet of things (IoT), medical, consumer electronics and EV industries
- Saietta (LSE: SED), a manufacturer of electric propulsion motors for the light EV market.
AMTE remains an active buy, whilst the recommendation for Ilika and Saietta remains an active hold. Please remember to stick to our buy limits as outlined in the buy list.
Buy list update
Equals Group (LSE: EQLS)
Equals is a provider of international and domestic payment services, travel cash and crypto liquidity.
The company’s latest financial figures point to a hugely successful 2021.
For the year ended 31 December 2021, Equals announced revenues of £44.1 million. This is a 52% increase on the year ended 31 December 2020.
In addition, the company has significant cash reserves, with £13.2 million in cash as of 31 December 2021.
Equals attributes this strong revenue growth to its continued focus on business to business (B2B) payment services, as it moves away from its original business – a travel money exchange.
Doing so is helping the company establish itself as a frontrunner in the international payments industry, making complex and often bureaucratic cross-border transactions easier than ever before.
We remain excited by the potential for Equals. We can see the company building on the foundations laid by its solid financial model, as its business customers look for opportunities in a world where the challenges of the Omicron variant of Covid-19 appear to be diminishing.
We reiterate our HOLD recommendation the stock. You can find the original recommendation here.
The Frontier Tech Investor “Top Three”
Sometimes it’s hard to decide on which stocks to invest in from our buy list.
Below is our Frontier Tech Investor “Top Three” section showing three stocks in open BUY positions. If you’re trying to figure out what to invest in next, these are three that we think are a great place to start.
This doesn’t mean our other stocks are no good: this is just a tool to help you spot the next Frontier Tech Investor stock that could be worthy of your consideration.
HANetf ETC Group Digital Assets and Blockchain Equity UCITS ETF (LSE: KOIP) – the KOIP exchange-traded fund (ETF) is an investment fund which tracks the Solactive ETC Group Digital Assets and Blockchain Index, comprised of 30 blockchain-centric stocks. It even includes crypto exchange giant Coinbase (NASDAQ: COIN). The fund is a convenient route into the crypto market that gives exposure to crypto assets that would otherwise be difficult to access. The fund is ever changing, but it includes numerous companies that are pure plays on the growth of the crypto world. You can find the original recommendation here.
EQTEC (LSE: EQT) – EQTEC is a unique, green energy company that is setting the standard for sustainable energy production. Its innovative gasification technology can convert up to 50 feedstocks into sustainable energy sources. It plays a pivotal role in reducing methane emissions from rotting waste at landfill sites. This matters because methane can be up to 86 times more potent than carbon dioxide at trapping heat in the atmosphere. As a result, we believe that the company has a key role to play in helping policymakers achieve stringent emissions targets in the face of COP26. You can find the original recommendation here.
MPAC Group (LSE: MPAC) – As noted above, MPAC is a leading provider of packaging solutions. The company is helping to deliver efficiency gains to customers through its automated processes that harness some of the most powerful technologies of the modern day. This includes augmented reality (AR) and the use of “smart” machinery. With MPAC, it’s the machines telling the human what to do, rather than the other way round, meaning human error is eradicated and that manufacturing lines are smoother than ever before. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
