The market’s recent turn higher offers a good entry point into EV stocks.
One of the hottest industries to invest in over the last decade has been electric vehicles. A flurry of competition from domestic startups, overseas rivals and established traditional automakers led to strong market activity and investment, with numerous companies soaring to large and even megacap valuations. According to a PwC report, electric vehicle sales rose in the first half of 2022 by 81% compared to the year prior, despite rising interest rates, soaring inflation and ongoing supply chain issues. Despite the stocks of many EV companies falling from all-time highs due to the current macroeconomic conditions, opportunities for bullish growth investors remain. As EV adoption increases due to consumer demand and government regulations, the stocks of major players may resurge again once capital becomes cheaper. Here are the seven best EV stocks to buy in 2022.
Tesla Inc. (ticker: TSLA)
Tesla is the poster child for the U.S. EV industry, with sales of its Model 3, Model Y, Model S, Model X and Roadster automobiles surpassing all other competitors. Founded in 2003, Tesla is currently run by eccentric billionaire Elon Musk and is now worth some $930 billion, landing it a spot in the upper ranks of the S&P 500 index. The stock remains one of the most traded and highly shorted on U.S. exchanges, experiencing high volatility and wide intraday movements. Tesla shareholders approved a 3-for-1 forward stock split at their Aug. 4 annual meeting. Tesla also posted a strong second-quarter performance, with revenues surging 41.6% year over year to $16.9 billion and earnings per share soaring 56.6% to $2.27.
Rivian Automotive Inc. (RIVN)
Tesla competitor Rivian was founded in 2009 and went public in November 2021 via an initial public offering that saw its share price soar. At its height, Rivian commanded a market value of nearly $100 billion, surpassing established traditional car manufacturers like Ford Motor Co. (F) and General Motors Co. (GM). During this time, Amazon.com Inc. (AMZN) also purchased a 22% stake in the company. However, the stock has fallen significantly since. It’s down 65.4% this year through Aug. 18. Despite successful initial launches of the R1T pickup truck and R1S SUV, momentum has faltered, with Rivian posting a loss from its automotive business of $1.7 billion in the second quarter. That being said, the company expects to meet its production forecast of 25,000 vehicles in 2022.
Lucid Group Inc. (LCID)
Lucid initially started out as a battery technology company, but pivoted to development of its first car, the Lucid Air, in 2014. Compared with fellow Tesla competitor Rivian, Lucid’s lineup targets the luxury EV niche, with a refined exterior and high horsepower. However, the company’s second-quarter earnings report was a big miss, with revenue of $93 million versus analyst expectations of $147 million. Lucid also cut its production forecast for 2022, and is now predicting 6,000 to 7,000 vehicles this year versus initial guidance of 12,000 to 14,000. Management blamed the continued supply chain issues for the decline, citing “bottlenecks” in its manufacturing operations despite having nearly 37,000 customer reservations. LCID is down 52% this year.
Nio Inc. (NIO)
Shanghai-based EV manufacturer Nio saw its shares rocket to an all-time high of $61 in January 2021. As Tesla’s strongest overseas competitor, Nio has a well-developed and well-supported lineup of vehicles, including the EP9 coupe, EC6, ES6 and ES8 SUVs, and the ET7 full-size sedan. The company has also announced numerous upcoming models, including the EF9 minivan and ET5 midsize sedan. A notable feature that distinguishes Nio from Tesla is its network of battery-swap stations that replace a traditional charging network. Nio recently announced that it delivered 10,052 vehicles in July, representing a 26% year-over-year increase, and has deployed more than 1,000 battery-swap stations in China. The stock is down 37.2% this year.
Xpeng Inc. (XPEV)
Xpeng is another Tesla competitor from China. The company was founded in 2014 and went public on Aug. 27, 2020, via an IPO on the New York Stock Exchange. Currently, Xpeng offers three cars: the G3i SUV and the P5 and P7 sedans. Thanks to the Chinese government’s generous subsidies for new EVs between 2009 and 2016, Xpeng has seen strong growth, reaching a market cap of $20 billion this year. The company recorded monthly deliveries of 11,524 EVs in July, a 43% year-on-year increase. Chinese consumers are looking forward to the official launch of the company’s new G9 luxury SUV, which is expected in September.
General Motors Co. (GM)
Having recovered from the largest industrial bankruptcy in 2009, with $82 billion in assets against $173 billion in liabilities, General Motors is now pivoting strongly into the EV space. The company is committed to an “all-electric future” via its Ultium EV battery platform, which will be used in the EV versions of its existing Chevy Blazer crossover, Hummer (SUV and pickup models), Cadillac Lyriq SUV, Chevy Silverado truck, Chevy Equinox SUV and Chevy Bolt subcompact models. The company is also making significant investments into commercial delivery vehicles in the form of BrightDrop and a nationwide charging network via Ultium Charge 360. GM is partnering with LG Energy Solutions to build a plant the size of 30 football fields for mass-producing Ultium battery cells.
Ford Motor Co. (F)
GM isn’t the only U.S. legacy automaker seeking an EV pivot. Its largest competitor, crosstown rival Ford, has also made big strides in recent years, especially with the launch of the Mustang Mach-E crossover, the E-Transit van and the acclaimed F-150 Lightning truck. Like GM, Ford is going “all in” on EVs, with the company announcing an $11 billion investment into electrification in 2020. The company has also quietly developed North America’s largest charging network, with over 63,000 plugs. Notably, Ford also has a 12% stake in Rivian after a $500 million investment during Rivian’s IPO. For the recent second quarter, Ford recorded strong year-over-year revenue growth of 57% in its automotive business, which accounts for 94% of total revenues.
7 best EV stocks to buy:
— Tesla Inc. (TSLA)
— Rivian Automotive Inc. (RIVN)
— Lucid Group Inc. (LCID)
— Nio Inc. (NIO)
— Xpeng Inc. (XPEV)
— General Motors Co. (GM)
— Ford Motor Co. (F)
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Update 08/19/22: This story was published at an earlier date and has been updated with new information.