These top electric vehicle stocks offer exposure to a major transportation trend.
When Tesla Inc. (ticker: TSLA) went public in 2010, it was a six-year-old startup that was aiming to deliver a mere 1,500 cars that year. It offered shares at $17 apiece to fuel its growth and sparked no shortage of debate about how realistic it was to sell electric cars to a fossil-fuel-addicted motoring public. But in the age of global warming and chronic energy supply chain disruptions, the idea of a car that doesn’t run on fossil fuels is now more attractive than ever. So if you’re an investor looking to play this long-term transportation trend, where should you turn? The following eight investments all offer different ways to gain exposure to EV stocks, battery makers and related companies.
Tesla Inc. (TSLA)
It’s hard to start any list of EV stocks without putting the aforementioned Tesla first in line. The company built by Big Tech icon Elon Musk is valued at about $690 billion, making it by far the most valuable of any publicly traded firm in the space. The company just reported that last quarter it produced more than 365,000 vehicles for a three-month tally that is well above the annual output of other EV makers. Admittedly, TSLA stock is down sharply by more than 40% this year. However, if you’re looking past the short-term uncertainty to the long-term potential of the EV market, then Tesla could be worth a look now that it has rolled back from prior highs.
Nio Inc. (NIO)
Often called the “Chinese Tesla,” $20 billion EV maker Nio is far less established despite the comparison — and far more volatile, too. The stock has taken investors on a roller coaster ride since its 2018 initial public offering, when it was debuted at $6.26 per share. It then surged 10 times that to a record high of about $63 before crashing to a closing price of $12.23 on Oct. 18. Nio is modest in size, delivering just 31,607 vehicles in the third quarter, but that was a record for the firm and a jump of 29% from the prior year. And with close ties to the Chinese government and local interest in the EV market picking up steam, Nio could be the right stock in the right place at the right time.
Li Auto Inc. (LI)
Another rising Chinese EV maker, Li Auto debuted as a publicly traded stock in 2020 and just posted September figures of 26,500 vehicles delivered. This is, again, a far cry from what Tesla is cranking out. But keep in mind that other major automakers still come up short in comparison. Year over year, Kia Corp. (KIMTF) shipped 4.1% fewer of its EV6 electric cars in September, according to industry publication InsideEVs, and Hyundai sold less than 1,000 of its Genesis GV60 units in the entire third quarter. Given the size of China’s market and the already brisk pace of sales at Li, this may be worth a look in addition to or in place of Nio as a way to play the growing Asian market for EVs.
ChargePoint Holdings Inc. (CHPT)
If you want to play the rise of EVs in a more diversified way than simply picking the car company that is rolling out the best brands, then consider playing a network of charging stations instead. That’s what you get with ChargePoint, which is a $4.5 billion company that operates more than 18,000 charging locations and is growing fast. The company is not yet profitable, as it plows all its cash into its expansion, but that growth plan is clearly paying off. Revenue is expected to double this fiscal year. If you want to play the long-term potential of EVs, then consider carving out a position in infrastructure plays like CHPT instead of the carmakers that may move in and out of favor based on consumer tastes. After all, electrons never go out of style.
NXP Semiconductors NV (NXPI)
Another broad-based play on the EV revolution is NXP, which has a wide portfolio of technology solutions that serve EV manufacturers. This includes battery management and powertrain parts plus advanced driver assist hardware that is increasingly in demand in 21st-century vehicles. Perhaps obviously, supply chain disruptions in the semiconductor industry have weighed on this stock and its ability to deliver materials to EV manufacturers. But NXP is at the heart of the vehicle parts business and projects a 20% increase in revenue this year as its supply chain disruptions begin to normalize.
BYD Co. Ltd. (BYDDY)
Another end-around on EVs is BYD, which is an alternative energy company focused in large part on rechargeable lithium-ion batteries for use in hybrid and battery-powered vehicles. The company is also involved in rail transportation and photovoltaic products, giving you a bit of a diversified play on the future of transportation and energy technologies. Believe it or not, Warren Buffett’s Berkshire Hathaway is a major investor in BYD, with a stake of about 19%. That’s admittedly down from prior years, but still a big sign of institutional interest from the West that will provide support for this Chinese battery play.
Albemarle Corp. (ALB)
The $30 billion Albemarle is the next order removed from major battery makers, as it is a major producer of lithium and other battery metals and chemicals. Given the surge in EV interest, North Carolina-based ALB has seen surging demand for its battery-related goods, too. In its fiscal second-quarter earnings reported in August, Albemarle’s revenue surged 91% year over year to $1.48 billion, and its adjusted diluted earnings per share increased by 288%. With windfall profits like that, it’s small wonder that ALB is one of the few stocks that has been up in an otherwise challenging 2022.
SQM SA (SQM)
The company formally known as Sociedad Química y Minera de Chile, SQM is another lithium producer that has been on a tear this year. In fact, it has blown away even ALB stock with a more than 75% surge since Jan. 1 even as most other stocks have cratered. That’s in part because of a projection of 260% revenue growth this fiscal year. It’s worth noting, however, that SQM is a firm based in South America and has seen a bit more volatility than chemical or mining stocks in developed markets. Still, its tremendous outperformance makes it worth a look if you want to play the potential of electric vehicle stocks.
The 8 top EV stocks and battery companies:
— Tesla Inc. (TSLA)
— Nio Inc. (NIO)
— Li Auto Inc. (LI)
— ChargePoint Holdings Inc. (CHPT)
— NXP Semiconductors NV (NXPI)
— BYD Co. Ltd. (BYDDY)
— Albemarle Corp. (ALB)
— SQM SA (SQM)
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The 8 Top EV Stocks and Battery Companies originally appeared on usnews.com
Update 10/19/22: This story was published at an earlier date and has been updated with new information.
