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Electric vehicles are top of mind today — and they will be for the long term
Everywhere you look, there’s evidence suggesting that electric vehicle (EV) acceptance is here. Even if you don’t pay much attention to the stock market, you’re likely to encounter the name Tesla (NASDAQ:TSLA) every few days. That company’s meteoric rise over the past few years has been nothing short of phenomenal. In particular, CEO Elon Musk has demonstrated a knack for getting publicity. Now, Tesla’s ubiquity is a great indication of the acceptance of EV stocks.
However, there are so many more ways to understand the potential of EVs. For example, look at the statistics behind the industry. The overall growth rates are very encouraging. Some studies suggest that by the year 2040, “58% of global passenger vehicle sales will come from electric vehicles.” Further, recent data indicated the following:
“Last year, electric vehicles accounted for about 2 percent of all car sales. This summer, that number jumped to nearly 5 percent of light-duty vehicles like SUVs and sedans and more than 20 percent of all passenger vehicles sales.”
Clearly, these figures show that EVs are simply the way of the future. Because of that, investors should strive to understand which EV stocks to buy for the long term. Here are some of the best picks of the group:
First up on this list of EV stocks, Rivian is the hottest name in electric vehicles at present. That’s for good reason: the company just went public, undertaking its initial public offering (IPO) in early November. That IPO was a massive success. RIVN was upsized to 153 million shares and a price of $78 per share after encouraging demand signs emboldened the firm.
Currently, RIVN stock sits at around $120 at the time of this writing. That gives the firm a market capitalization among the top automotive manufacturers before it has even started selling a significant quantity of vehicles. That may be concerning to some, but overall Rivian is in a strong position.
Presently, Amazon (NASDAQ:AMZN) has a 20% stake in this firm. The e-commerce giant has also ordered 100,000 EV delivery vans from the company.
What’s more, the backlog of orders for both the company’s R1T truck and R1S SUV is large. It stands somewhere north of 55,000 units right now. Don’t expect to see Rivian vehicles everywhere soon, however. The company anticipates delivering approximately 1,000 R1Ts vehicles, 25 R1Ss and 10 delivery vans in 2021. Nevertheless, expectations remain extremely high for Rivian to win over the long term after bursting onto the scene.
So, you’re not likely to see a Rivian EV anytime soon. However, you’re more likely to soon see a Rivian rolling down the road before a Fisker EV. That’s because Fisker just unveiled concrete production dates for its inaugural Ocean SUV, set to begin sales in November 2022.
That said, there’s every reason to believe that the Fisker Ocean is going to have a strong launch, bolstering the case for this pick of the EV stocks. This is partly because the company has outsourced production to Magna International (NYSE:MGA), which has handled manufacturing for multiple leading automotive brands before.
As such, expectations are that the Ocean will be a highly polished vehicle when it begins delivery. Plus, we also now know that Fisker is approaching its release in a similar fashion to what Lucid did. How so? Well, it’s releasing a top-of-the-line model first. That vehicle — the Fisker Ocean One — will be priced at $68,999. The first 5,000 Ocean units produced are scheduled to be this particular, deluxe model.
The Ocean will also come in three other trims: the Ocean Extreme (at $68,999), the Ocean Ultra (at $49,999) and the Ocean Sport (at $37,499). All told, FSR stock still has promise given the EV’s potential splash onto the scene
Next up on this list of EV stocks, the only realistic knocks against Nio are short-term and unpredictable. In particular, China is in the midst of a protracted regulatory crackdown which has negatively affected firms across every sector. What’s more, Nio is also at the mercy of supply-chain volatility as a vehicle manufacturer. Semiconductor chips are set to still be difficult to obtain, but there have been signs of improvement. Still, these factors are essentially unpredictable and certainly out of control for the company.
That said, Nio simply continues to chug along and report strong results. Yet, the arguable irony is that — despite continuing to improve and beat expectations — the price of NIO stock remains relatively volatile.
On Nov. 9, the firm reported earnings representing a beat. In the third quarter, Nio recorded $1.52 billion in sales and a loss of 6 cents per share. For the period, Wall Street had anticipated $1.46 billion in sales and a loss of 10 cents per share. As a result, prices temporarily increased until quickly falling again.
Investors should simply ignore the movement here. Why? Because, in the grander scheme of things, it means little to the EV maker. Nio delivered 24,439 vehicles in Q3, more than double what it delivered a year earlier. Remember, analysts are paid to professionally nitpick. They find fault with minor nuances. But those minor nuances mean absolutely nothing to the long-term trajectory of a company like Nio.
Toyota is a quiet company, certainly not noted for grabbing headlines or trying to catch your attention. The vehicles it builds are pretty much the same. Because of that, it’s easy to forget about TM stock, even as other traditional vehicle manufacturers dive headlong into their respective EV pivots.
Here, I’m referring to Ford’s (NYSE:F) September announcement of its $11.4 billion EV investment. However, investors should not discount Toyota when it comes to the EV-dominated future.
For example, back in October, Toyota announced a planned $3.4 billion investment in battery development and production in the United States. Part of that investment will be dedicated to a $1.3 billion EV battery plant to come online in 2025.
On top of this, Toyota has a larger plan to “invest $13.5 billion globally” into EVs and EV technology as well. Plus, the other important thing to note is that TM remains central to the solid-state battery conversation. So, when you look closer, this name can certainly be counted among the EV stocks.
Back in July, Toyota management quietly reiterated that the company remains on track to begin production of solid-state batteries by 2025. That puts it in the conversation surrounding companies like QuantumScape (NYSE:QS) as the evolution of EV battery tech continues.
I’ll admit, Arrival is a contentious pick for this list of long-term EV stocks worth investing in at the moment. This company certainly still has an expansive road ahead of it. Production at its microfactories is scheduled for Q2 and Q3 of 2022.
However, at around $10 per share today, ARVL stock is inexpensive. Moreover, the company’s plan for building buses, vans and cars differentiates it from other EV manufacturers in the consumer vehicle sector. If nothing else, that uniqueness makes it worth a look. CEO Denis Sverdlov keenly noted as much in the recent Q3 earnings report:
“Arrival is unique. We are transforming the industry through our new method at a time the world needs it most. We invest in enabling platforms – Vehicle Creation, Device Plug and Play, Microfactory, Supply Chain, Service, Mobility, Sales, Customer Care and Fintech – and enabling technologies – components, materials, robotics and Microfactories – allowing us to own the end-to-end ecosystem.”
Arrival continued to post losses in Q3. Those losses increased to 26 million euros ($29.3 million), up from 22 million euros ($24.8 million) a year earlier. So, yes, there’s plenty to dislike about Arrival from a fundamental perspective.
Still, the company does boast 64,000 non-binding orders and letters of intent (LOIs) to purchase its future vehicles. Sure, Rivian is getting a lot of attention for its Amazon connection and EV right now. But Arrival could be a major player in the long term as well.
Next up on this list of EV stocks, Lucid is essentially in the driver’s seat currently. The company just recently began delivering vehicles on Oct. 30. What’s more, the electric vehicle firm has a 17,000 vehicle backlog at present.
In the Q3 report, this company stated that its previous 13,000 vehicle backlog was worth $1.3 billion. That means the 17,000 vehicle backlog theoretically represents $1.7 billion in future revenues. The ultimate figures depend on models and pricing, but Lucid is in a strong position in any case.
Lucid also ended Q3 with $4.8 billion in cash on its balance sheet. That of course means it will be able to produce vehicles with few capital issues for the foreseeable future.
So, expectations are that Lucid will see $1.7 billion in 2022 revenues. LCID stock is getting a lot of attention at present, bumping it above consensus target prices. That said, the future is bright and it is very logical to believe these shares will continue to rise as the company pecks away at Tesla’s dominance in the EV luxury sedan niche.
Last up on this list, Xpeng is another leading Chinese EV manufacturer with both a bright present and future. The firm just reported Q3 earnings on Nov. 23 with strong results. But that could have been expected if the October delivery figures were any indication.
Specifically, Xpeng delivered 10,138 vehicles last month. That represented a 233% increase year-over-year (YOY). What’s more, deliveries for Q3 increased more than 199% YOY to 25,666 units.
Investors should note that the longer-term narrative around Xpeng trumps its short-term risks. Like Nio, this company suffers from the broader regulatory crackdown happening across China.
However, also like Nio, Xpeng represents a burgeoning EV brand established in the world’s largest EV market. To that end, the company announced it will be producing its fourth vehicle model — an SUV called the G9 — with shipments beginning in Q3 2023. That should entice some investments.
And regardless, the longer-term narrative remains. That makes XPEV stock a sensible pick of the EV stocks moving forward.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
Article printed from InvestorPlace Media, https://investorplace.com/2021/11/7-winning-ev-stocks-to-buy-for-the-long-haul-as-electric-gets-hot-again/.
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