10 Electrifying EV Stocks Worth Watching
Like many areas of the market, electric vehicle stocks have had a rough year. But if you're looking to gain exposure to this growing industry, here are 10 to consider.
2022 has been a tough year for growth stocks. The Nasdaq is well into bear-market territory, and many of the tech and growth names of the past several years have been hit particularly hard.
Electric vehicle (EV) stocks have been no exception. The entire industry has lagged as investors have rotated out of growth names and into cheaper value stocks.
So, what's the story here? Is the epic run in EV stocks over, or is it merely taking a well-deserved break?
Part of it comes down to the Federal Reserve. The value of a stock today is determined by its future earnings discounted to today's prices. The higher interest rates go, the lower those future earnings are worth in today's dollars.
As a result, the Fed's aggressive response to inflation tends to hit growth stocks like EVs the hardest. Most are not particularly profitable today, so the price is heavily influenced by those expected future profits, which get less and less valuable the higher interest rates go.
There's also the competition factor. The notion of an "electric vehicle company" may seem antiquated in just a few short years. Virtually every traditional automaker is jumping into the fray, and some, particularly in Europe, have already effectively reinvented themselves. That said, the introduction of new competitors isn't all bad. It normalizes electric vehicles and expands the overall market.
Also helping to expand the market is the recently passed Inflation Reduction Act, which introduced a $7,500 tax credit for new EVs and a $4,000 credit for used ones. There are rules and limitations to the EV tax credit, but it still provides a big incentive to go green, especially when you consider that the total cost of ownership over an EVs lifetime is cheaper than a gasoline-powered vehicle.
The growth is there, with global EV sales up 63% year-over-year in the first half of 2022, according to research firm Canalys. The question for investors is simply how to best play this trend.
Today, we're going to take a look at 10 EV stocks to watch as sales heat up. This isn't necessarily a recommendation list – some of these electric vehicle stocks might indeed not be right for you.
Every stock on this list is highly speculative, so you should only purchase them if you have a high tolerance for risk. And you might want to wait for some indication that the stocks have bottomed out before putting money at risk. But if you're looking to play the trend of rising consumer embrace of electric vehicles, these EV stocks are the ones you'd want to consider.
Data is as of Sept. 15. Analyst opinions from S&P Global Market Intelligence. Stocks are listed in reverse order of analysts' consensus rating.
- Market value: $16.9 billion
- Analysts' ratings: 1 Strong Buy, 0 Buy, 1 Hold, 0 Sell, 1 Strong Sell
- Analysts' consensus recommendation: 3.00 (Hold)
Polestar Automotive (PSNY, $7.99) announced on Aug. 16 that it was launching its sixth vehicle, Polestar 6, for production and delivery in 2026. The electric performance hard-top convertible roadster is based on its Polestar Precept concept car.
"With the overwhelming consumer and press response, we took the decision to put this stunning roadster into production and I am so excited to make it a reality," said Thomas Ingenlath, CEO of Sweden's Polestar, in the company's press release. "Polestar 6 is a perfect combination of powerful electric performance and the thrill of fresh air with the top down."
The company is currently taking reservations for the vehicle, and it is expected to sell for $200,000 when it's ready for production and delivery in 2026. PSNY is currently selling the Polestar 2, and delivered about 21,200 vehicles in the first half of 2022 – roughly 125% more than it in the first half of 2021. It plans to build on this momentum by launching a new model each year between 2023 and 2026.
PSNY is definitely one of the riskier electric vehicle stocks featured here. Just one analyst covers Polestar, and they have it at Hold. However, when Deutsche Bank analyst Emmanuel Rosner initiated coverage in early August, he set a $10 target price on the stock, which is 27% higher than its current share price.
"Unlike many other EV startups, Polestar has already delivered more than 50k vehicles worldwide since its start of production last year and seems on track to deliver 50k units this year alone," Rosner said.
Another reason to watch Polestar: Geely Automobile founder Li Shufu owns 94.7% of Polestar through various affiliates, including Volvo Cars. Shifu founded Geely Automobile, which is China's largest automaker, and one of just a few not controlled by the state.
- Market value: $27.7 billion
- Analysts' ratings: 3 Strong Buy, 1 Buy, 2 Hold, 1 Sell, 1 Strong Sell
- Analysts' consensus recommendation: 2.50 (Buy)
As with most EV stocks in 2022, California-based Lucid Group (LCID, $16.49) is getting hammered on the charts. Shares are down nearly 57% for the year-to-date, and they have a lot of work to do to get back to their 52-week high of $57.75 from last November.
Not helping the shares was late-August news that Lucid filed an S-3 universal shelf registration with the Securities and Exchange Commission (SEC) that enables it to raise $8 billion over the next three years through one or more offerings. This raised liquidity and share dilution concerns. However, the filing is not intended to raise capital at this time, it just gives the company more flexibility in the future.
More promising is Lucid's announcement last month that it has 37,000 reservations for its Lucid Air luxury sedan, up from 30,000 reported in the first quarter. The reservations represent $3.5 billion in potential future income. This is especially encouraging considering LCID cut its 2022 production estimate from 13,000 at the midpoint of its guidance to 6,500. The company blamed supply-chain issues for the reduction.
Still, analysts are mostly upbeat toward Lucid. "Our Buy rating on LCID is predicated on our view that the company is one of the most attractive among the universe of start-up EV automakers and also a relative competitive threat to the universe of incumbent automakers," says BofA Securities analyst John Murphy.
He points to the company's "innovative and competitive electric powertrain technology," as well as its "interesting and attractive product" for his bullish outlook. Plus, LCID "currently has more pieces of the puzzle in place and in process than most of its peers, which steered by a management team with impressive experience," Murphy says.
- Market value: $59.9 billion
- Analysts' ratings: 6 Strong Buy, 3 Buy, 12 Hold, 1 Sell, 1 Strong Sell
- Analysts' consensus recommendation: 2.48 (Buy)
While Ford Motor (F, $14.89) has a lot to be excited about on the electric vehicle front, there's still a lot of work to be done by the Detroit automotive giant.
Part of that includes recently announced restructuring efforts, with Ford in late August announcing it will be cutting 3,000 jobs from its operations in the U.S., Canada and India. This is part of the company's plan to cut $3 billion in structural costs by 2026.
"Building this future requires changing and reshaping virtually all aspects of the way we have operated for more than a century. It requires focus, clarity and speed. And, as we have discussed in recent months, it means redeploying resources and addressing our cost structure, which is uncompetitive versus traditional and new competitors," the message read, according to a report from CNBC.
This move comes on the heels of Ford in March splitting its electric and internal combustion engines into two separate units. There could come a time when Ford spins off the legacy business from its growth vehicle.
The steps Ford is taking seem to be working. The company's battery electric vehicle (BEV) sales are very healthy at the moment. In July, total BEV sales across all manufacturers were up 60% year-over-year, and Ford captured the biggest market share among legacy original equipment manufacturers, says Morgan Stanley analyst Adam Jonas. Specifically, he says Ford delivered a combined 7,669 BEVs between the Mach-E, F-150 Lighting and E-Transit.
A continuation of this trend will likely boost Ford's top line, as will price increases. In early August, F announced it is raising prices for its F-150 Lightning by as much as $8,500. Increased costs have made price hikes necessary, although anyone who's awaiting delivery won't have to pay higher prices.
Ford is currently trading at 0.4 times sales. That's very reasonable given the potential over the next decade for one of Wall Street's best EV stocks.
- Market value: $610.7 billion
- Analysts' ratings: 1 Strong Buy, 2 Buy, 2 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 2.20 (Buy)
Berkshire Hathaway (BRK.B, $276.70) typically isn't the first name that comes to mind when thinking of the top electric vehicle stocks. However, Warren Buffett's holding company could offer a less-risky way to play BYD (BYDDY), the Chinese automotive and electronics firm. You see, Buffett, on the recommendation of Berkshire's Vice Chairman Charlie Munger, invested $232 million in BYDDY way back in 2008. A patient investor, Berkshire's stake is now worth around $6 billion.
As for BYD's business, it's doing tremendously well.
On Aug. 29, it reported net income of $521 million for the first half of 2022, triple what it was over the same period last year and at the top end of guidance. Its revenue in the first half was $21.8 billion, 66% higher than a year earlier.
The company's share of new energy vehicles (NEV) in China is 24.7%. Its revenues from automobiles and related products increased 130% in the first half to $15.8 billion, accounting for 72% of its overall revenue. Its electronics business accounted for the rest.
For all of 2022, the company could deliver as many as 2 million vehicles, many of them NEVs. Its automobiles are now available in seven new markets, including Japan and Germany. Analysts expect this scale to deliver even greater profitability for BYD than it's already generating – which could certainly help Berkshire Hathaway in turn.
- Market value: $918.8 billion
- Analysts' ratings: 15 Strong Buy, 7 Buy, 11 Hold, 3 Sell, 1 Strong Sell
- Analysts' consensus recommendation: 2.14 (Buy)
It's hard to have a list of the top EV stocks to watch and not have Tesla (TSLA, $303.75) on it.
The company's CEO Elon Musk recently said at an energy conference in Europe that he wants to get self-driving Tesla cars into the hands of Americans by the end of 2022. In addition, it will likely do the same in Europe, if regulators there give the company the green light.
"One of the biggest challenges the world has ever faced is the transition to sustainable energy and to a sustainable economy," Musk said at the conference. "That will take some decades to complete."
While energy companies continue to straddle the line between fossil fuels and renewable energy sources, Tesla is firmly looking to a world where EVs are the preferred mode of transportation.
And one of the catalysts to keep TSLA on lists of the best electric vehicle stocks is its Berlin gigafactory. Following a recent tour of the facility, UBS analysts came away impressed by what it could mean for Tesla's profits.
"Tesla highlighted that Berlin could become the most profitable gigafactory as cost of goods sold will get close to Shanghai levels, while European product mix will be the highest in the world, much higher than China," the analysts wrote in a note to clients. "We agree with this assessment, which is why we expect auto gross margin to exceed 30% from the second half of 2022 onwards."
Based on their most recent observations, UBS has a Buy rating on Tesla stock, saying it remains an "industry top pick." The team also has a $367 target price after accounting for the three-for-one stock split on Aug. 25, representing implied upside of more than 20% to current levels.
- Market value: $35.1 billion
- Analysts' ratings: 8 Strong Buy, 4 Buy, 5 Hold, 1 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.94 (Buy)
As recently as November 2021, Rivian Automotive (RIVN, $39.69) traded as high as $179.47. From its 52-week high, shares have lost nearly 80% of their value. Despite the massive drop in its share price over the last 10 months or so, analysts are still very upbeat about the future of this electric vehicle stock.
In mid-August, Wedbush analysts Dan Ives and John Katsingris produced a report for clients in reaction to Rivian's second-quarter earnings report.
"After a horror show coming out of the gates with its initial public offering, RJ & the team have finally gotten this potential EV stalwart back on track with clear momentum into 2023 and more production on the way with the Georgia factory blueprints setting the path for the coming years," the analysts, who have an Outperform (Buy) rating on RIVN, stated.
As part of the move to head into 2023 on solid footing, the company is simplifying its production and supply chain, including scrapping the entry-level versions of both its electric R1T truck and R1S SUV. By eliminating the Explore package, which had a starting price of $67,500, in favor of the more expensive ($73,000) Adventure package, it feels it can deliver more vehicles. Rivian's current goal is to produce 25,000 vehicles in 2022.
While some customers weren't happy about the news, it's a sound business decision that will ultimately generate more revenue for the company.
As the Wedbush analysts pointed out in their note to clients, Rivian has an opportunity to capture a significant piece of the current and future EV market. Its previous production woes appear to be lessening. The company's $5 billion plant to be built in Georgia over the next few years should help remedy any investor concerns about future production snafus.
- Market value: $13.3 billion
- Analysts' ratings: 13 Strong Buy, 6 Buy, 4 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.61 (Buy)
Xpeng (XPEV, $15.51) stock took it on the chin in late August after the company reported second-quarter results that were worse than analysts expected. Its shares fell 12% on the news, and now they're down about 69% year-to-date.
The Chinese EV maker reported a $403.2 million loss in the second quarter – due mostly to forex-related headwinds. The problem, according to Barclays analyst Jiong Shao, wasn't that it lost money during the quarter, but rather the company's weak outlook for Q3 deliveries. XPEV is expecting to deliver 30,000 vehicles at the midpoint of its guidance, well below the 45,865 analysts are expecting.
The company believes the lull in deliveries will be short-lived due to the October launch of its new G9 SUV. Xpeng management believes the G9 will outsell its flagship P7 sedan, which sold more than 6,000 vehicles in July alone. In addition, Xpeng is launching two new vehicles in 2023 that will help contribute to its deliveries next year.
"XPeng has certainly faced a rough few months," says Deutsche Bank analyst Edison Yu. While Yu admits that XPEV "deserves to be down," he also expects at least a "temporary bounce back" after the launch of the G9 – making the stock a "buy idea" for investors. "Management already disclosed nearly 23k pre-orders in the first 24 hours and a positive update to this number should give reason for investors to be less bearish on the stock," Yu says.
The majority of the 23 Wall Street pros following the stock seem to agree. Currently, 13 have the stock at Strong Buy, six say it's a Buy and four believe it's a Hold.
- Market value: $35.9 billion
- Analysts' ratings: 14 Strong Buy, 10 Buy, 3 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.59 (Buy)
Hyundai Motor (HYMTF, $35.00) has a couple of EV hits on its hands with the Hyundai Ioniq 5 and Kia EV6. In June, Bloomberg reported on the parent company's domination of the EV market, pointing out that the two vehicles accounted for 21,467 in sales in 2022 through the end of May, 37% higher than the Ford Mustang Mach-E.
The article quotes Edmunds analyst Joseph Yoon as saying Hyundai is "really just kind of cleaning the floor" from an EV perspective.
Hyundai's vehicles are popular because they're a reasonable size while being relatively affordable on a budget.
In July, Hyundai Motor reported that its Hyundai and Genesis brands sold more than 16,000 BEVs globally in the month, with the Ioniq 5 accounting for half the sales. And wholesale shipments of BEVs were up 28% year-over-year to 14,207.
As is the case with many South Korean companies, Hyundai Motor Company is part of a larger web of holdings that form a family controlled conglomerate. According to S&P Global Market Intelligence, Hyundai Mobis is the largest shareholder, with a 20.7% stake. Mong-Koo Chung, the former CEO of Hyundai Motor Group, and his son Eui-Sun Chung, the current chairman of the company, own another 7.7% directly.
In 2021, Hyundai sold 3.91 million vehicles worldwide, generating revenue of 117.6 trillion South Korean won ($87.4 billion) and 6.7 trillion South Korean won ($5.0 billion) in operating income.
- Market value: $24.8 billion
- Analysts' ratings: 14 Strong Buy, 8 Buy, 3 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.56 (Buy)
Li Auto (LI, $25.81) reported its second-quarter results about a week before Xpeng. Like its fellow Chinese EV maker, LI is projecting fewer deliveries than expected in the third quarter. Analysts were expecting 39,000 vehicles to be delivered in the third quarter. Specifically, LI anticipates it will deliver roughly 28,000 vehicles over the three-month period compared to the 39,000 expected by analysts. Morgan Stanley analyst Tim Hsiao believes that the difference between company and analyst expectations has to do with model transitions. The L9 came out at the end of June. Foot traffic and order intake in July quadrupled as a result. The analyst sees the L9's monthly deliveries hitting 15,000 in the fourth quarter.
There is some concern by investors that the new L8 launching in Q4 will take away sales from the L9. However, this isn't warranted because the value proposition for the two vehicles is entirely different. The L8 is a scaled-down, smaller and less expensive version of the L9 SUV.
While much of the focus from LI's Q2 results was on Q3 deliveries and a net loss that was much wider than the year prior, total revenue jumped 73.3% to $1.3 billion. Li also ended the quarter with $7 billion in cash on its balance sheet, while its vehicle margin rose to 21.2% from 18.7% in Q2 2021.
Like many other EV stocks featured here, LI shares are down nearly 20% since the Q2 results were released. Still, analysts are upbeat. In addition to a consensus Buy rating, the average price target of $44.44 represent expected upside of nearly 67% over the next 12 months or so.
- Market value: $36.1 billion
- Analysts' ratings: 15 Strong Buy, 10 Buy, 2 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.52 (Buy)
Nio (NIO, $21.51) stock appears to have stabilized around $20 after falling below $12 in May. It has a long way to go to get back to its 52-week high of $44.27 from last November, but the recent rebound shows strength from the most highly rated of the EV stocks on this list.
One of the headwinds that held back the Chinese EV maker recently were allegations of improper accounting made by Grizzly Research, a short seller of NIO stock. Grizzly Research in June claimed Nio misrepresented earnings and earnings margins from its battery-swapping business.
The company took the allegations very seriously, setting up an independent internal review to establish the merits of Grizzly Research's arguments. On Aug. 26, it announced that the review found no evidence of improper accounting or tactics associated with the battery swapping.
This was by no means the only thing holding back Nio's share price, but it's never good when a business is accused of such tactics – and it almost always has a negative effect on the stock. And shares have been gaining ground since Nio effectively resolved the issue.
Also helping boost shares recently is NIO's second-quarter earnings report, which showed deliveries were up 14.4% year-over-year during the three-month period. Vehicle sales jumped 21% in Q2.
Mizuho Securities analyst Vijay Rakesh is upbeat about Nio's position within the EV marketplace. "Despite near-term headwinds, we see NIO as well-positioned for long-term growth with secular growth and leadership in China with global expansion underway," Rakesh says.
Rakesh is hardly alone in his bullish outlook. Of the 27 analysts following NIO that are tracked by S&P Global Market Intelligence, 15 say it's a Strong Buy, 10 call it a Buy and two have it at Hold.