Electric vehicle stocks have proven incredibly lucrative, generating multi-fold returns for investors.
Over the past decade, the shift towards clean energy and sustainable practices led to surging demand for electric vehicles.
Though the sector corrected sharply during the stock market rout last year, there’s no denying the long-term potential of electric vehicle stocks in the sphere.
The valuations of some of the top EV stocks rose to new heights during the pandemic years. Analysts improved their projections amidst a rosy economic period.
However, with the Federal Reserve hell-bent on controlling inflationary pressures, the sector valuations have tanked and are in for more volatility in the interim.
Over the long term, though, with secular and structural tailwinds in place, these electric vehicle stocks are poised for rapid gains ahead.
|Global X Autonomous & Electric Vehicles ETF
Nio (NYSE:NIO) is a premium brand in the Chinese smart EV sphere. It continues to wow investors with record-breaking deliveries each quarter despite the headwinds. China’s stringent Covid policies marred its results, but Nio seems to be firing on all cylinders again. That’s what makes it one of the best electric vehicle stocks to buy now.
Its deliveries report for the first couple of months is astonishing. So far, in the first two months of the year, it delivered 20,663 vehicles, a 31% improvement from last year. If it continues on this trajectory, it could speed past the management guidance of 33,000 EV deliveries in the first quarter.
There are multiple positives for Nio later this year, with plans to open a new EV factory for its European endeavors and the launch of five new models. Hence, with the growth catalysts in play, expect Nio to snap back in the upcoming months.
BYD Company (BYDDF)
BYD Company (OTCMKTS:BYDDF) is arguably the most successful EV company, posting industry-leading delivery numbers over the past few years.
It wrapped up last year with EV and hybrid sales up 184% and 247%, respectively. It sold more vehicles than Tesla from January to November last year; it outpaced Tesla’s delivery numbers by 250,000 to 1.62 million.
Furthermore, BYD operates a sound business that continues to fire for its shareholders. Besides its pricing advantages, its expansion plans will likely pay many dividends.
It started selling its EVs in Japan, one of the largest automotive markets, spreading its tentacles to India, Thailand and China. Also, it plans to increase its presence in the ASEAN Growth Belt to continue racking up even better numbers ahead.
EV pioneer Tesla (NASDAQ:TSLA) shed a ton of value last year and is currently trading 50% lower than its 52-week highs.
The price drop has delighted those looking to open up a position in TSLA stock. It shed more than 30% of its value last year, and with its 3-for-1 stock split, TSLA stock trades more attractively than ever.
Price movements aside, the firm continues to kill it with its quarterly performances. It posted a bombastic sales figure of $24.3 billion during the fourth quarter, a 37% improvement from the prior-year period. The results essentially dispelled concerns over a potential demand deceleration.
CEO Elon Musk said, “Thus far in January, we’ve seen the strongest orders year-to-date than ever in our history.” With new vehicles hitting the market soon and its new pricing strategy working wonders, expect the stock to return to the green in the upcoming months.
ChargePoint (NYSE:CHPT) is the top EV infrastructure provider, having installed 200,000 active charging stations worldwide.
The company remains in hyper-growth mode, generating double-digit sales growth over the past several quarters.
It recently wrapped up its fourth quarter, growing sales by 89% to $152.8 million. Also, its losses narrowed to 13 cents per share, significantly better than the 16 cents per share loss anticipated by analysts.
For the full year, CHPT grew sales by a whopping 94% in 2022, with annual subscriptions blowing past the $100 million mark for the first time. As we advance, the U.S. government plans to have a network of 500,000 EV chargers by 2030, which points to more growth ahead for the company.
Global X Autonomous & Electric Vehicle ETF (DRIV)
With the EV boom anticipated to pick up speed, it would be prudent to invest in the Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV). Investing in DRIV offers exposure to the best pure, secondary and pick-and-shovel plays in the EV space. It also offers exposure to businesses involved in developing autonomous vehicle technology, another massive growth area.
In the past three years, DRIV stock has generated 93% returns for its investors compared to the sector median of 35%. It was a tough outing for the stock last year, but year-to-date gains are at 11%.
Its expense ratio of 0.7% is a tad higher than the sector average, with higher volatility than other ETFs. However, with robust liquidity DRIV stock offers greater flexibility and efficiency in market trades compared to other ETFs.
Once the market picks up and builds a healthy head of steam again, I expect DRIV stock to return to winning ways.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) is arguably the most promising EV pick-and-shovels play.
Its Thacker Pass Project is poised to become a cash cow for the company soon. After an arduous court trial, LAC recently got approval for the project, and development is expected to ramp up soon. The asset boasts a whopping annual EBITDA visibility of $1.18 billion and a total life of 40 years.
Apart from the Thacker Pass project, it has almost a 45% stake in the Cauchari-Olaroz project based in Argentina. Like Thacker Pass, the project has a multi-million dollar EBITDA annual visibility of over $308 million. Also, LAC is looking to separate its international assets into a separate entity to unlock new value for the business.
Li Auto (LI)
Li Auto (NASDAQ:LI) is another leading Chinese EV player that has become a reputable name in the EV SUV market.
With its superior cost management and effective execution, it could become the first among a troika of top Chinese EV companies to break even.
With relatively strong gross margins of 19.4%, Li Auto could break even as early as this year with earnings per share estimate of 37 cents.
Much of its progress toward profitability is because of its solid delivery growth. In the past two months alone, the EV manufacturer’s vehicle growth was at 23.4% and 97.5%, respectively, in January and February.
With disciplined cost management and rapid production ramp-up expected this year, Li Auto will realize robust economies of scale, driving down costs and growing deliveries.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.