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 bringing new EV models to the market, and Bank of America analyst John Murphy estimates Tesla’s EV market share will fall from 70% in 2021 to just 11% by 2025. Here are seven of the best EV stocks to buy other than Tesla, according to Bank of America.
Nio Inc. (NIO)
Shares of Chinese EV maker Nio have been under pressure in the past year thanks to broad-based weakness in U.S.-listed Chinese stocks. Chinese regulators are cracking down on tech companies, while U.S. regulators are threatening to delist Chinese stocks that do not comply with rigorous new accounting standards. Nio recently reported 10,052 vehicle deliveries in July, up 27% from a year earlier. Analyst Ming Hsun Lee says Nio is on track to launch new versions of its ES8, ES6 and EC6 models in 2023. Bank of America has a “buy” rating and $31 target for NIO stock, which closed at $20.82 on Aug. 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 10,422 deliveries of the SUV in July, up 21% from a year ago. Li said a total of 200,000 Li ONEs have rolled off its assembly lines as of Aug. 1. Lee says the company has a solid new vehicle pipeline and should benefit from robust demand for high-end EVs in China. Lee projects full-year sales growth of 109.2% in 2022. Bank of America has a “buy” rating and $46 price target for LI stock, which closed at $32.71 on Aug. 11.
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 has some high-profile financial backers, including Amazon.com Inc. (AMZN) and Ford Motor Co. (F), although Ford sold about 15 million Rivian shares in May. Rivian recently confirmed it is expecting to produce just 25,000 vehicles in 2022. Murphy is projecting a per-share adjusted loss of $6.15 in 2022 but says Rivian is still one of the most viable startup EV automakers. Bank of America has a “buy” rating and $70 price target for RIVN stock, which closed at $38.95 on Aug. 11.
Lucid Group Inc. (LCID)
Lucid is an EV pure play that went public via a special-purpose acquisition company, or SPAC, merger in July 2021. Lucid delivered just 679 vehicles in the second quarter, but the company reported more than 37,000 reservations for its Lucid Air sedan, the 2022 Motor Trend Car of the Year. Lucid initially guided for full-year 2022 production of 20,000 vehicles but it recently cut that production guidance down to between 6,000 and 7,000 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 $30 price target for LCID stock, which closed at $18.09 on Aug. 11.
XPeng Inc. (XPEV)
XPeng is another Chinese EV startup targeting the middle and high-end segments of the market. XPeng launched its G3 SUV in 2018 and its P7 sports sedan in 2020. XPeng reported 11,524 vehicle deliveries in July, up 40% from a year earlier. XPeng has reported 80,507 deliveries through the first seven months of 2022, up 108% compared to 2021. Lee says XPeng expects to begin delivering its new G9 model in October, and profit margins should improve in the second half of the year. Bank of America has a “buy” rating and $41 price target for XPEV stock, which closed at $24.61 on Aug. 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. Ford is planning to spend $50 billion on EV models through 2026 and is hoping to produce 2 million EVs annually by that time. Ford’s EV sales grew 169% in July, triple the growth rate of the overall EV market. Murphy says Ford’s push into electrification, its redesign and restructuring efforts, and its favorable product cadence make the stock an attractive investment. Bank of America has a “buy” rating and $32 price target for Ford stock, which closed at $15.83 on Aug. 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. While most EV startups are unprofitable and trade at steep valuations, GM reported $1.69 billion in net income in the most recent quarter and trades at just 5.8 times forward earnings. Murphy says GM is leveraging cash flow and earnings power from its legacy business to invest in its next-generation products. Bank of America has a “buy” rating and $95 price target for GM stock, which closed at $38.46 on Aug. 11.
7 EV stocks to buy not named Tesla:
— Nio Inc. (NIO)
— Li Auto Inc. (LI)
— Rivian Automotive Inc. (RIVN)
— Lucid Group Inc. (LCID)
— XPeng Inc. (XPEV)
— Ford Motor Co. (F)
— General Motors Co. (GM)
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Update 08/12/22: This story was published at an earlier date and has been updated with new information.