These electric vehicle stocks could catch up with Tesla.
The electric vehicle market is projected to grow 24.3% annually, from $287.4 billion in 2021 to $1.3 trillion in 2028, according to Fortune Business Insights. Tesla Inc. (ticker: TSLA) is the clear EV market leader, but it has been operating mostly free of competition. EV startups and legacy automakers are now bringing new EV models to market, and Bank of America analyst John Murphy estimates Tesla’s EV market share will fall from 70% to 20% over the next three years. Here are seven of the best EV stocks to buy other than Tesla, according to Bank of America.
Rivian Automotive Inc. (RIVN)
Rivian Automotive is an EV pure-play startup that went public in November 2021 and began delivering its first R1T electric pickup trucks in December. Rivian shares recently bounced off their lows after the company reported a narrower-than-expected first-quarter loss and said it has 90,000 vehicle preorders, including 10,000 new orders since it raised prices in March. Rivian has some high-profile financial backers, including Amazon.com Inc. (AMZN) and Ford. Rivian is expecting to produce just 25,000 vehicles in 2022, but Murphy says the company is still one of the most viable startup EV automakers. Bank of America has a “buy” rating and $100 price target for RIVN stock, which closed at $20.60 on May 11.
Lucid Group Inc. (LCID)
Lucid is an EV pure play that went public via a special purpose acquisition company merger in July 2021. Lucid delivered just 360 vehicles in the first quarter, but the company reported more than 30,000 reservations for its Lucid Air sedan, the 2022 Motor Trend Car of the Year. In February, Lucid cut its full-year 2022 production guidance from 20,000 vehicles to between 12,000 and 14,000 vehicles. Despite production struggles, Murphy says Lucid’s innovative and competitive electric powertrain technology sets it apart from competitors and makes Lucid the Ferrari NV (RACE) of the new EV automakers. Bank of America has a “buy” rating and $50 price target for LCID stock, which closed at $13.86 on May 11.
XPeng Inc. (XPEV)
XPeng is a Chinese EV startup targeting the mid-level and high-end segments of the market. XPeng launched its G3 SUV in 2018 and its P7 sports sedan in 2020. XPeng reported 9,000 vehicle deliveries in April, up 75% from a year ago. Xpeng’s year-to-date deliveries of 43,563 and delivery growth of 136% have both outpaced top Chinese EV rivals Nio and Li Auto. Analyst Ming Hsun Lee says XPeng has generated impressive production numbers as it continues to navigate supply chain disruptions. Bank of America has a “buy” rating and $46 price target for XPEV stock, which closed at $19.82 on May 11.
Li Auto Inc. (LI)
Li Auto is another leading Chinese EV maker and was the first to sell an extended-range EV. The company’s first model, the Li One, is a large SUV. Li reported just 4,200 vehicle deliveries in April, down 25% from a year ago. The company blamed its production drop on COVID-19 outbreaks in the Yangtze Delta region that forced suppliers in Shanghai and Kunshan to suspend production and delivery. Li has delivered 35,883 vehicles year to date, up 98%. Lee projects full-year sales growth of 92.5%. Bank of America has a “buy” rating and $33 price target for LI stock, which closed at $20.13 on May 11.
Proterra Inc. (PTRA)
Proterra produces commercial EVs, EV powertrain solutions and charging infrastructure. In the most recent quarter, Proterra delivered 54 transit buses, 139 battery systems and 1.9 megawatts of charging infrastructure. Despite supply constraints, analyst Sherif El-Sabbahy anticipates revenue growth will ramp from 23.3% in 2021 to 33.8% in 2022 and accelerate to 121.5% in 2023. Rising costs will weigh on margins in 2022, but El-Sabbahy says strong demand, a large backlog and funding from the U.S. infrastructure bill are all Proterra tail winds. Bank of America has a “buy” rating and $12.25 price target for PTRA, which closed at $4.70 on May 11.
Ford Motor Co. (F)
While investors are understandably excited about EV startups, legacy automakers are devoting a tremendous amount of resources to electrifying their models. Bloomberg recently reported Ford is planning to spend an additional $10 billion to $20 billion on top of the $30 billion it has already pledged to spend on EVs by 2030. Ford recently reaffirmed its 2022 guidance, and Murphy says its reorganization into Ford Blue and Ford Model e is an encouraging sign of its commitment to transitioning its legacy internal combustion auto business. Bank of America has a “buy” rating and $32 price target for F stock, which closed at $12.83 on May 11.
General Motors Co. (GM)
General Motors has not been shy about its plan to overtake Tesla as the top U.S. EV seller by the mid-2020s. GM has announced $35 billion in planned EV investments through 2025. GM reported $2.94 billion in net income in the most recent quarter and trades at just 5.8 times forward earnings. Even high-profile Tesla bull and Ark Invest CEO Cathie Wood recently surprised followers by selling $12.7 million of Tesla stock and buying shares of GM for her Ark Autonomous Technology and Robotics ETF (ARKQ) after criticizing the Detroit automaker in the past. Murphy says GM is successfully offsetting headwinds from rising costs via a more favorable product mix and higher prices. Bank of America has a “buy” rating and $95 price target for GM stock, which closed at $37.27 on May 11.
Tesla competitors: 7 rival EV stocks to buy:
— Rivian Automotive Inc. (RIVN)
— Lucid Group Inc. (LCID)
— XPeng Inc. (XPEV)
— Li Auto Inc. (LI)
— Proterra Inc. (PTRA)
— Ford Motor Co. (F)
— General Motors Co. (GM)
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Update 05/12/22: This story was published at an earlier date and has been updated with new information.