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Dec. 29, 2020, 7:31 a.m. EST

Is The Energy Transition Creating A Major Investment Bubble?

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Dec 29, 2020 (Baystreet.ca via COMTEX) -- Tesla /zigman2/quotes/203558040/composite TSLA -4.84% this month joined the S&P 500 as the fifth-largest company on the index, after its stock skyrocketed this year, driving a lot of appetite for EV investment in general. NextEra, the solar power firm, overtook Exxon /zigman2/quotes/204455864/composite XOM +0.80% as the most valuable energy company in the United States, albeit just briefly. Everyone is talking about hydrogen. The energy transition narrative is hogging energy headlines.

But what if it turns out to be one huge bubble?

Not all EVs are Teslas. At least half a dozen electric car startups got a boost from Tesla's strong delivery results that drove it to its first-ever full year in the black and the accompanying share price jump. Some decided to go public, like Nikola, the startup that promised a hydrogen-electric pickup truck that would change the game for Tesla.

Nikola went public in June to much hype and investor interest, enjoying a more than 100 percent share price gain over the first three days of trading. The hype ended when a short-seller claimed Nikola was "an intricate fraud built on dozens of lies over the course of its Founder and Executive Chairman Trevor Milton's career."

Despite efforts by the startup to salvage the deal that basically legitimized it as a carmaker, GM /zigman2/quotes/205226835/composite GM -2.66% canceled the $2-billion contract, replacing it with a much more modest one, effectively putting an end to the startup's ambitions.

Of course, not all EV startups are like Nikola /zigman2/quotes/208704275/composite NKLA -7.55% . Yet it is hard to ignore the argument that a lot of their newfound attractiveness for investors comes precisely from Tesla's success, at least as much as it comes from the major regulatory push to make EVs more popular, theoretically opening up a big market for the products of these startups. Even with this deliberate effort to make EVs more attractive, not all EVs are Teslas and it is unlikely that there will be "a new Tesla" among the new entrants on the EV market.

COMTEX_376959980/2559/2020-12-29T07:30:34

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 653.20
-33.24 -4.84%
Volume: 30.21M
March 3, 2021 4:00p
P/E Ratio
1,039
Dividend Yield
N/A
Market Cap
$658.88 billion
Rev. per Employee
$445,694
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/zigman2/quotes/204455864/composite
US : U.S.: NYSE
$ 56.52
+0.45 +0.80%
Volume: 35.36M
March 3, 2021 4:02p
P/E Ratio
N/A
Dividend Yield
6.16%
Market Cap
$237.37 billion
Rev. per Employee
$2.47M
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/zigman2/quotes/205226835/composite
US : U.S.: NYSE
$ 52.67
-1.44 -2.66%
Volume: 19.67M
March 3, 2021 4:00p
P/E Ratio
12.19
Dividend Yield
0.00%
Market Cap
$77.97 billion
Rev. per Employee
$790,226
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/zigman2/quotes/208704275/composite
US : U.S.: Nasdaq
$ 16.54
-1.35 -7.55%
Volume: 14.05M
March 3, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$7.00 billion
Rev. per Employee
$211.11
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