In this article, we discuss the 10 fastest growing auto stocks in the world.
The auto industry is made up of companies that manufacture and distribute vehicles and vehicle parts. Public automotive companies are now increasing in number as many electric vehicle (EV) startups and suppliers have gone public through special purpose acquisition companies (SPACs) in the past few years. The electrification of the auto industry is nothing short of a revolution, and some of these start-ups will likely be major players in future. Automotive stocks can be important contributors to an investment portfolio because they rise and fall with consumer confidence, and can be useful indicators for economic trouble or a recovery.
Despite the automotive market suffering from the pandemic crisis, the vehicle sales in the US went down 38% during the 2020 lockdown, the market has now recovered well and continues to grow. The demand for EVs has increased as travel resumes worldwide and virus restrictions become a thing of the past. This increase has led to a dramatic shortage of chips, now essential to the manufacture of vehicles, driving down production but increasing overall prices, with mixed results for the auto industry across the globe.
Some of the top stocks in the auto sector include General Motors Company (NYSE:GM), Tesla, Inc. (NASDAQ:TSLA), and Ford Motor Company (NYSE:F), among others discussed in detail below. In addition to manufacturers in the US, car makers from Europe, Japan, and China are also leading players in the industry. In the first half of 2022, high-margin SUVs, trucks and luxury vehicles gained market share over other cars. In the second quarter of the year, electric vehicle sales rose 66% in the US.
In a macro drop where inflation and rising rates have battered the economy, the automobile sector has managed to resist pressures and post modest gains. Heading to 2023, the automotive industry will remain vulnerable to global headwinds due to the energy crisis, slower global demand and continued supply chain problems. An EIU report on automotive outlook 2023 shows that globally, new vehicle sales will remain flat in 2023 and new car sales will rise by 0.9% and new commercial vehicle sales will fall by 1.3% due to an expected recession.
However, the sales of electric vehicles are expected to be the bright spots, growing by 25% in the period. Analysts are also predicting that new car sales in western Europe will decline by about 3%, while they will fall by 2.4% in North America. EV sales numbers from emerging economies like Brazil, India, and Indonesia remain disappointing, accounting for less than 1% of the total market share and not registering a significant increase in 2022. This could change as more car brands, especially in Japan, transition to fully electric vehicles.
Another important trend that investors should keep in mind is that the emergence of new EV models and the extension in government subsidies for the sector will likely contribute to the EV boom across the world in the coming year. In the US and Europe, electric car sales are rapidly rising. EVs now account for nearly 5% of the car market share in the US. Norway and Germany remain the strongest European EV markets.
It is also noteworthy that the conversations around the automotive sector in the media tend to focus on the electric revolution in the industry and the pivot towards new energy vehicles by big carmakers. However, the used cars market barely gets any attention. This is surprising since used car sales have outstripped the sale of new vehicles in the United States over the past decade. This is another trend to be mindful of when investing in the auto space.
Our Methodology
The companies that have upcoming growth catalysts and operate in the auto sector were selected for the list. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Photo by carlos aranda on Unsplash
Fastest Growing Auto Stocks in the World
10. Tata Motors Limited (NYSE:TTM)
Number of Hedge Fund Holders: 11
Tata Motors Limited (NYSE:TTM) designs, develops, manufactures, and sells various automotive vehicles. On December 1, Tata Motors reported that their passenger vehicle sales registered year-on-year growth of 55% with 46,425 units sold in November 2022 compared to 29,947 units over the same period the previous year. Exports for November 2022 stood at 388 units, registering a year-on-year growth of 130% compared to 169 units over the same period last year.
At the end of the third quarter of 2022, 11 hedge funds in the database of Insider Monkey held stakes worth $63.9 million in Tata Motors Limited (NYSE:TTM), compared to 8 in the previous quarter worth $45.4 million.
Among the hedge funds being tracked by Insider Monkey, San Francisco-based firm Think Investments is a leading shareholder in Tata Motors Limited (NYSE:TTM) with 802,493 shares worth more than $19.5 million.
Just like General Motors Company (NYSE:GM), Tesla, Inc. (NASDAQ:TSLA), and Ford Motor Company (NYSE:F), Tata Motors Limited (NYSE:TTM) is one of the fastest growing auto companies in the world.
9. Toyota Motor Corporation (NYSE:TM)
Number of Hedge Fund Holders: 12
Toyota Motor Corporation (NYSE:TM) designs, manufactures, assembles, and sells passenger vehicles, minivans and commercial vehicles, and related parts and accessories. The company recently reported that third quarter electrified vehicle sales totaled 111,713 for the firm, representing 21.2 percent of total year-to-date sales.
At the end of the third quarter of 2022, 12 hedge funds in the database of Insider Monkey held stakes worth $741.8 million in Toyota Motor Corporation (NYSE:TM), compared to 12 in the previous quarter worth $849.4 million.
Among the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in Toyota Motor Corporation (NYSE:TM) with 5.4 million shares worth more than $710.6 million.
In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Toyota Motor Corporation (NYSE:TM) was one of them. Here is what the fund said:
“Toyota’s (NYSE:TM) “kaizen” manufacturing philosophy is based on improving manufacturing by using “just in time” processes to eliminate waste and reduce inventory carrying costs. The company does not contemplate disruptive change that will dramatically lower costs and improve quality.”
8. Lucid Group, Inc. (NASDAQ:LCID)
Number of Hedge Fund Holders: 15
Lucid Group, Inc. (NASDAQ:LCID) is a technology and automotive company that develops electric vehicle (EV) technologies. The company said in a statement recently that it produced 2,282 vehicles at its Arizona factory in the third quarter. It delivered 1,398 vehicles to customers during the same period.
On November 10, R.F. Lafferty analyst Jaime Perez maintained a Buy rating on Lucid Group, Inc. (NASDAQ:LCID) stock and lowered the price target to $17 from $19, noting that the company’s two financing agreements and its asset-based loan of $1 billion should provide enough financial flexibility to commence its expansion.
At the end of the third quarter of 2022, 15 hedge funds in the database of Insider Monkey held stakes worth $99.5 million in Lucid Group, Inc. (NASDAQ:LCID), compared to 16 in the preceding quarter worth $173.7 million.
7. Li Auto Inc. (NASDAQ:LI)
Number of Hedge Fund Holders: 20
Li Auto Inc. (NASDAQ:LI) designs, develops, manufactures, and sells new energy vehicles in the People’s Republic of China. On December 1, Li Auto revealed that it delivered 15,034 vehicles in November 2022, achieving record-high monthly deliveries and representing a 11.5% year-over-year increase.
On December 15, CLSA analyst Aaron Li maintained a Buy rating on Li Auto Inc. (NASDAQ:LI) stock and lowered the price target to $31 from $49, noting that the market is focusing more on profitability following the Fed’s rate hikes but there was strong momentum for the company.
At the end of the third quarter of 2022, 20 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Lucid Group, Inc. (NASDAQ:LCID), compared to 28 in the preceding quarter worth $1.4 billion.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Li Auto Inc. (NASDAQ:LI) with 17.2 million shares worth more than $396 million.
6. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 25
Stellantis N.V. (NYSE:STLA) engages in the design, engineering, manufacturing, distribution, and sale of automobiles and parts. On November 3, Stellantis NV reported that its global sales of Stellantis’ battery electric vehicles (BEVs) increased 41% year-on-year to 68 thousand units, and sales of low emission vehicles rose to 21,000 units year over year to 112,000 vehicles in the third quarter of 2022.
On October 14, Berenberg analyst Adrian Yanoshik maintained a Buy rating on Stellantis N.V. (NYSE:STLA) stock and lowered the price target to EUR 19 from EUR 21.
At the end of the third quarter of 2022, 25 hedge funds in the database of Insider Monkey held stakes worth $905.5 million in Stellantis N.V. (NYSE:STLA), compared to 25 in the preceding quarter worth $714.6 million.
Among the hedge funds being tracked by Insider Monkey, Boston-based firm Arrowstreet Capital is a leading shareholder in Stellantis N.V. (NYSE:STLA) with 29 million shares worth more than $349.4 million.
In addition to General Motors Company (NYSE:GM), Tesla, Inc. (NASDAQ:TSLA), and Ford Motor Company (NYSE:F), Stellantis N.V. (NYSE:STLA) is one of the fastest growing auto companies in the world.
5. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 26
NIO Inc. (NYSE:NIO) designs, develops, manufactures, and sells smart electric vehicles in China. On September 1, NIO reported that its overall electric vehicle deliveries in August increased by 82% year-over-year to 10,677, which is also a slight improvement over July. Cumulatively, NIO has sold 238,626 electric cars, including over 107,000, in the most recent 12 months.
On December 20, Mizuho analyst Vijay Rakesh maintained a Buy rating on NIO Inc. (NYSE:NIO) stock and lowered the price target to $28 from $34, noting that a challenging auto-end market is expected globally into 2023, driven by high-interest rates, energy prices and financing rates affecting the affordability.
At the end of the third quarter of 2022, 26 hedge funds in the database of Insider Monkey held stakes worth $518.9 million in NIO Inc. (NYSE:NIO), compared to 25 in the preceding quarter worth $873.9 million.
In its Q1 2022 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and NIO Inc. (NYSE:NIO) was one of them. Here is what the fund said:
“At the beginning of April, the CSRC (China Securities Regulatory Commission) announced possible changes in its regulation that would allow this inspection by foreign auditors, provided that the companies previously communicate to this body the state secrets that would be exposed, as well as the sensitive information that they might have to hand over, and the subsequent audit is carried out in a framework of collaboration with the CSRC. In short, a move in the direction desired by the SEC, although still far from the optimal result, that is, unrestricted access to information. While these negotiations between the two regulatory bodies are progressing, Chinese companies have to decide how best to preserve their interests. Other entities, such as the electric vehicle manufacturer Nio, have just started trading on this stock market.”
4. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 30
Rivian Automotive, Inc. (NASDAQ:RIVN) designs, develops, manufactures, and sells electric vehicles and accessories. On October 4, Rivian announced its electric vehicle production and delivery numbers for the third quarter of 2022. During the period, the company produced at its manufacturing facility in Normal, Illinois, 7,363 BEVs, which is 67% more than in the second quarter. Deliveries amounted to 6,584, up 47% compared to the second quarter.
On December 20, Cantor Fitzgerald analyst Andres Sheppard initiated coverage of Rivian Automotive (NASDAQ:RIVN) stock with an Overweight rating and $22 price target, noting that the company gains from a unique product lineup, significant support from Amazon, and a private charging network.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Coatue Management is a leading shareholder in Rivian Automotive, Inc. (NASDAQ:RIVN) with 19.6 million shares worth more than $645 million.
In its Q3 2022 investor letter, Meridian Funds, an asset management firm, highlighted a few stocks and Rivian Automotive, Inc. (NASDAQ:RIVN) was one of them. Here is what the fund said:
“Rivian Automotive, Inc. (NASDAQ:RIVN) manufactures electric vehicles (EVs) for the consumer and commercial markets. We initially invested in the company when it was privately owned. Among the many things that differentiate this startup is its substantial cash balance and relationship with Amazon, which is both an investor in the company and the first customer for Rivian’s commercial van. Several positive developments contributed to share strength in the quarter, including the company’s announcement that production of its R1 pickup trucks and EV delivery vans increased nearly 70% over the previous quarter. Management also reaffirmed its production target of 25,000 vehicles for 2022. Despite raising the price of its R1 truck earlier this year, Rivian continued to see strong demand for its vehicles, demonstrated by 98,000 pre-orders for its R1 truck and SUV. Although we are pleased with the company’s progress, we liquidated our position as Rivian approached the high end of our market cap threshold and its relative valuation became less attractive.”
3. Ferrari N.V. (NYSE:RACE)
Number of Hedge Fund Holders: 31
Ferrari N.V. (NYSE:RACE) designs, engineers, produces and sells luxury performance sports cars. On November 2, Ferrari N.V. reported total shipments of 3,188 units, up 15.9% versus the third quarter of 2021. Net revenues were 1,250 million euros, up 18.7% versus the prior year. The product portfolio in the quarter included seven internal combustion engine models and three hybrid engine models, which represented 81% and 19% of total shipments, respectively.
On December 9, RBC Capital analyst Tom Narayan maintained an Outperform rating on Ferrari N.V. (NYSE:RACE) stock and raised the price target to EUR 265 from EUR 261.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Darsana Capital Partners is a leading shareholder in Ferrari N.V. (NYSE:RACE) with 1.3 million shares worth more than $231 million.
In its Q1 2022 investor letter, Ensemble Capital, an asset management firm, highlighted a few stocks and Ferrari N.V. (NYSE:RACE) was one of them. Here is what the fund said:
“Ferrari N.V. (NYSE:RACE) (7.3% weight in the Fund): As WE DESCRIBED a year ago in this letter, Ferrari’s chief marketing officer’s hardest job is not getting people to buy a Ferrari, but to tell some of them no. The company is in the business of selling rare, luxury products and so by design they greatly limited the number of vehicles they sell. This extreme constraint has led to a waitlist of well over a year with a customer base so devoted to the company that even amid the Financial Crisis of 2008-09, the number of vehicles they sold only declined by 4%. Their customers are so price insensitive, that the company often sells out of their limited-edition supercars that sell for millions of dollars before they even announce the price. For a Ferrari collector, the high prices are a feature, not a bug, as it is the price that makes Ferrari ownership so exclusive.”
2. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 47
Ford Motor Company (NYSE:F) designs, manufactures, markets, and services a range of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide. On October 3, Ford Motors announced the sales of its cars in the United States, reporting it sold 12,258 units of the Ford Mustang, a decrease of 16% compared to 14,676 units sold in the second quarter of 2021 and 22 units of the GT, an increase of 27% compared to 30 units sold in the second quarter of 2021.
On November 30, Citi analyst Itay Michaeli maintained a Neutral rating on Ford Motor Company (NYSE:F) stock and raised the price target to $14 from $13, noting that the new target represents modestly higher multiples reflecting Ford’s improved auto free cash flow conversion this year.
At the end of the third quarter of 2022, 47 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Ford Motor Company (NYSE:F), compared to 46 in the preceding quarter worth $608.8 million.
In its Q3 2022 investor letter, Leaven Partners, an asset management firm, highlighted a few stocks and Ford Motor Company (NYSE:F) was one of them. Here is what the fund said:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Ford (NYSE:F), have recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6% [2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 88
Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems. In late August, the firm revealed that it had produced more than 3 million units on a global scale, 1 million of which were manufactured in China. The company has found that production, delivery and acquisition of parts is a lot simpler with three Gigafactories on three different continents making their own lithium-ion batteries.
On December 20, Evercore ISI analyst Chris McNally maintained an In-Line rating on Tesla, Inc. (NASDAQ:TSLA) stock and lowered the price target to $200 from $300, noting that Tesla has a leading EV gross margin advantage but it is impossible to ignore that the investors are already well aware of EV benefits but now must also battle test demand assumptions for ’23-25.
At the end of the third quarter of 2022, 88 hedge funds in the database of Insider Monkey held stakes worth $7.4 billion in Tesla, Inc. (NASDAQ:TSLA), compared to 73 in the preceding quarter worth $7.2 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Tesla, Inc. (NASDAQ:TSLA) was one of them. Here is what the fund said:
“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:
First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic; second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.
Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE, not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful. (click here to read more…)
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Disclosure. None. 10 Fastest Growing Auto Stocks in the World is originally published on Insider Monkey.
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