The Top 10 Electric Car Manufacturers in the World

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Electric cars are increasingly becoming popular among consumers especially among the environmentally conscious. Though Europe leads in adoption of electric autos consumers in the US are also slowly changing their vehicle preferences. China is the world’s top market for electric autos and other green vehicles including buses.

US-based auto industry disruptor Tesla(TSLA) is leading the electric vehicle revolution not only in the US but also around the world. With that said, recently I read an interesting piece on the impact of Tesla and Chinese electric auto makers on the German auto industry. The article listed the top auto makers in this evolving industry.

The Top 10 Electric Car Manufacturers in the World are shown in the chart below:

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Source: The End of an EraWill Tesla and Google Kill the German Car? , Der Spiegel

After Tesla, China’s 3 auto makers – BYD, BAIC and SAIC leads the ranking. Among US giants, Ford(F) is missing in this list.

An excerpt from the above article:

Late To The Game

But it was only very recently that the German automobile industry finally came to the realization that it is going to need to radically adapt. The industry, led by Volkswagen, believed it could solve its problem in two ways: first by creating better, less-polluting and more efficient (diesel) cars and secondly, when the first approach failed, by cheating or denying reality.

As paradoxical as it may sound, VW’s diesel scandal ultimately triggered the modernization push the entire industry needed. Confidence in the industry had been shaken so badly that management and supervisory boards at German car companies were forced to recognize the inevitability of radical change.

But they didn’t reach that realization until very late. Now, companies that were industry leaders in the last century face the real risk of straggling behind in the new era, a development that would have serious consequences for the German economy and the country’s future prosperity. It would be the beginning of a new and uncomfortable era. Because as German companies were busy manipulating their diesel engines and placing their bets on ever bigger SUVs, as they half-heartedly studied and tested alternative drive systems, and as they collected arguments against self-driving cars instead of testing them, a whole new paradigm was unfolding elsewhere in the world. In California and China, private and state-owned companies emerged that are now surpassing Germany’s former technological leaders. They have entirely different views of the car and how it is used.

The entire article is a fascinating read.

Disclosure: No Positions

S&P 500 Annual Total Returns From 1928 To 2019: Chart

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The S&P had one of the spectacular returns in 2019. The index shot by nearly 31% on price only basis. With dividends reinvested, the total return was 33%.  This return was the best return in the 30 to 40% range since 1928.

The following chart shows the annual total return of the S&P since 1928:

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Source: “Buy-and-Hold” Has Historically Been a Winning Investment Strategy by U.S. Global Investors

The S&P has positive returns in nearly three-fourths of the time period.

Related ETFs:

  •  SPDR S&P 500 ETF Trust (SPY)

Disclosure: No Positions

The Top 10 Growing Domestic Brands in China: Chart

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The economy of China is increasingly becoming a domestic consumption oriented economy form an export-driven economy. As a result, consumption is booming and Chinese firms are focusing more on the local market than the overseas markets. By producing goods that most people can afford they are also taking market share from foreign multi-national firms. Hence Western companies are losing their market share and are no longer the preferred brand of Chinese consumers.

The following chart shows the change in the top 10 brands in China in 2018 relative to 2017:

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Source: China’s dominance is about more than demographics, Money Observer

The implication of this shift among Chinese consumers is huge for foreign firms with substantial investments in the country. They can longer take Chinese consumers fro granted and have to work harder to compete and gain their businesses.

How Much Dividends Contribute to S&P 500’s Total Return

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The importance of dividends to a well-diversified portfolio cannot be understated. In fact, dividends account for a significant portion of the overall total return of the S&P over the long term. Though the current yield on the S&P is around 2%, the power of compounding and divided growth over time leads to a higher contribution to the total return.

According to an article at S&P by Kieran Kirwan dividends accounted for 33% of the total return of S&P 500 since 1960 as shown in the chart below:

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Source: The Rising Importance of Dividends When Earnings Slow, S&P

The contribution of dividends to total return varies over different periods. For instance, during the 1970s dividends amounted to nearly 73% of the total return but during the dot com era of the 1990s it declined to 16%.

Key Takeaway:

Investors should not ignore dividends even if they are low such as the current 2% or so. Unlike price appreciation, dividends are usually stable and predictable for well established firms and many of them also increase dividend payments year after year. So investors can identify and own some of these dividend paying and dividend growing leaders.

Related ETF:

  • SPDR S&P 500 ETF Trust (SPY)
  •  iShares Select Dividend ETF (DVY)
  • Vanguard High Dividend Yield ETF (VYM)
  • Vanguard Dividend Appreciation ETF (VIG)

Disclosure: No Positions