In this article, we look at the 11 best EV stocks to buy now. To skip our detailed analysis on the EV industry, its history, current status, and future outlook, please go directly to the 5 Best EV Stocks to Buy Now.
The EV industry has seen an exponential growth over past couple years off the back of strong investment support and favorable government intervention. As per International Energy Agency, governments across the world spent US$14 billion on direct purchase incentives and tax deductions for EVs in 2020, exhibiting 25% year-on-year growth. Over 10 million EVs were seen on the world’s roads in 2020, with expansion being driven by battery electric models. Perhaps this fertile ground was backed by fall in the battery costs.
EVs tend to gain more importance principally because electrification of transport sector has its own benefits and can result in higher energy efficiency and lower local pollution. Data by the US Environmental Protection Agency’s Green Vehicle Guide suggests that 27% of 2020 greenhouse gas emissions was because of transportation sector. More than 90% of the fuel utilized for transportation is petroleum based, mainly gasoline and diesel. CO2 emissions are detrimental to the environment and can cause global warming. Gases trapping heat in the atmosphere are commonly referred to as greenhouse gases. Apart from CO2 emissions, conventional cars also emit methane and nitrous oxide. Emissions of methane and nitrous oxide can cause more harm to the environment than carbon dioxide because these gases have high global warming potential (GWP).
In contrast, EVs provide an opportunity to replace fossil fuels by the electric systems in transport sector. The electric vehicles offer environmental savings as they reduce emissions during their use and over their whole lifecycle. A range of new developments, principally relating to electric cars, represent a positive trend for the EV industry. With some big names joining in, solid growth in production and sales of EVs is expected.
Keeping the present and future context in mind, governments across the globe have made policies in the favour of EV adoption. According to International Energy Agency, significant fiscal incentives stemmed the initial growth in electric light-duty vehicles and supported the rise of EV manufacturing and battery industries. The measures including purchase subsidies, and/or vehicle purchase and registration tax rebates helped in reducing gaps in pricing with conventional vehicles.
As per International Energy Agency, governments in Europe and in the US promoted industrial policies focused on domestic development of EV supply chains. This is because more than half of all lithium, cobalt and graphite processing and refining capacity is in China.
The growth of EV market has made big companies like Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Fisker Inc. (NYSE:FSR) more popular. Today, these companies are leading the EV market.
Our Methodology
To select the 11 best EV stocks to buy now, we went through the various publications by International Energy Agency and then looked for the stocks likely to benefit from the current trends and developments. We also looked at the hedge fund sentiment for each stock using Insider Monkey’s database, which as of the first quarter of 2022, tracks 912 renowned hedge funds.
Best EV Stocks to Buy Now
11. BYD Company Limited (OTCMKTS:BYDDF)
Number of Hedge Fund Holders: 2
BYD Company Limited (OTCMKTS:BYDDF) is a Chinese automobile and electronics manufacturing company. Its automobile business manufactures and sells electric and internal combustion automobiles, principally passenger vehicles and buses. This segment is engaged in providing low-carbon urban rail transportation products.
Apart from expansion into new export markets like Americas, BYD Company Limited (OTCMKTS:BYDDF) has plans to come up with several plants in upcoming months. A range of new models are in the company’s pipeline.
BYD Company Limited (OTCMKTS:BYDDF) continues to work on addressing its supply challenges as it plans to acquire 6 lithium mines in Africa. According to local media reports, new supplies are expected to meet capacity for over 20 million pure EVs. Capitalizing upon strong market in China, its expansion spree is expected to continue in Latin America.
BYD Company Limited (OTCMKTS:BYDDF), which is backed by Warren Buffett, was able to deliver solid preliminary first-quarter earnings. Sales volume of new EVs touched record high and its market share continued to increase.
10. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 29
Rivian Automotive, Inc. (NASDAQ:RIVN) is engaged in designing, developing and manufacturing category-defining EVs and accessories.
The company, which ranks 10th on our list of the 11 best EV stocks to buy now, saw total production of 2,553 vehicles in 1Q22. It delivered 1,227 vehicles, resulting in revenue of $95 million. The company continues to target ramping up of production throughout 2022.
By the end of the first quarter of 2022, 29 hedge funds out of 912 tracked by Insider Monkey held stakes in this company. Their stakes were valued at $3.94 billion.
Baron Funds, an asset management firm, released its first-quarter 2022 investor letter and mentioned Rivian Automotive, Inc. (NASDAQ:RIVN). Here is what the fund said:
“Rivian Automotive, Inc. designs, manufactures, and sells consumer and commercial electric vehicles. Shares of Rivian continued its volatile trading following the stock’s IPO in late 2021, declining 52% in the first quarter as investors rotated out of fast-growing long-duration stocks and as industrywide supply-chain issues delayed Rivian’s production ramp. In addition, even while other automotive companies raised prices due to inflationary pressures, Rivian launched a price increase campaign that was not well communicated and, as a result, was met with dissatisfaction by existing reservation holders. While this was an unforced error, the company quickly corrected course, reversing its decision to raise prices for existing reservations, while maintaining the increase on new buyers (which has not caused a material impact to demand). We retain conviction in the shares given management’s vision, Rivian’s product positioning, the company’s relationship with Amazon.com, and the company’s strong balance sheet, which will help it overcome the current challenges while taking advantage of the long-term opportunity as the market transitions to electric vehicles.”
9. Fisker Inc. (NYSE:FSR)
Number of Hedge Fund Holders: 16
Fisker Inc. (NYSE:FSR) is engaged in building the technology-enabled, asset-light automotive business model. The company believes that the business model will be among first of its kind and it will be aligned with the future state of the automotive industry.
The stock ranks 9th on our list of the 11 best EV stocks to buy now. As of the first quarter of 2022, 16 hedge funds out of the 912 funds tracked by Insider Monkey held stakes in the company. In the preceding quarter, 21 hedge funds out of the 924 funds tracked by Insider Monkey held stakes in the company.
The performance of the company depends on its products and production timeline. Fisker Inc. (NYSE:FSR) has plans to triple its production of Ocean SUV model from 2024 with contract manufacturer Magna. It is only fair to increase production when the demand increases. Production at the Magna plant should commence in November 2022. For the company, 2023 will be 1st year of production and it plans to manufacture 50,000 cars.
Fisker Inc. (NYSE:FSR) has over 40,000 reservations in its hand for the Ocean, signifying higher potential for revenues. Credit Suisse has a positive view on this sector and has an “Outperform” rating on Fisker Inc. (NYSE:FSR). Analyst Dan Levy gave a price target of $20 as he views that the company is ready to capitalize on increasing EV inflection.
8. Nikola Corporation (NASDAQ:NKLA)
Number of Hedge Fund Holders: 16
Nikola Corporation (NASDAQ:NKLA) is a designer and manufacturer of battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, and hydrogen fueling station infrastructure.
There were several notable achievements in the first quarter. The final 10 of a total fleet of 40 pre-series Tre BEVs came off the production line. These trucks find usage in customer pilots, dealer demos, and internal R&D testing. Nikola Corporation (NASDAQ:NKLA) commenced shipping saleable Tre BEVs to dealers in April. The company received POs, LOIs, and MOUs for total of 510 Nikola Tre BEVs.
In 1Q22, 16 hedge funds out of the 912 funds tracked by Insider Monkey reported owning stakes in the company. In the preceding quarter, 13 hedge funds out of the 924 funds tracked by Insider Monkey held stakes in the company.
7. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 26
NIO Inc. (NYSE:NIO) carries out operations in China’s premium EV market. The company is engaged in designing and jointly manufacturing, and selling smart and connected premium EVs, driving innovations in next-gen technologies in connectivity, autonomous driving, and AI. The stock ranks 7th on our list of the 11 best EV stocks to buy now.
NIO Inc. (NYSE:NIO) delivered 5,074 vehicles in April 2022. In April 2022, the company joined hands with the World Wide Fund for Nature in Clean Parks, an ecosystem co-construction initiative which was launched by NIO Inc. (NYSE:NIO) in 2021.
Bank of America analyst Ming-Hsun Lee upgraded the stock’s rating to “Buy”, with a price target of $26 per share. The analyst is optimistic on the company and anticipates improvement in sales and margins in the second half of the year. According to the analyst, NIO’s ET7 model EV has started shipping in March, and ET7 should commence delivery as soon as August, which is slightly ahead of expectations. NIO Inc. (NYSE:NIO) plans a secondary listing of ADRs in Singapore. The company seems to be on growth track given its premium EV leadership and global expansion in EU.
By the end of the first quarter of 2022, 26 hedge funds out of the 912 tracked by Insider Monkey held stakes in this company. The total value of their stakes was $716.09 million.
6. Lucid Group, Inc. (NASDAQ:LCID)
Number of Hedge Fund Holders: 16
Lucid Group, Inc. (NASDAQ:LCID) is the technology and automotive company, engaged in developing next generation EV technologies. It is a vertically integrated company which designs, engineers, and builds EVs, EV powertrains, and battery systems in-house by using its own equipment and factory.
In the 1Q of fiscal 2022, it reported revenue of $57.7 million on deliveries of 360 vehicles to customers. The company has reiterated its 2022 production volume outlook of 12,000-14,000 vehicles. It ended 1Q22 with ~$5.4 billion cash on hand, and this should fund it well into fiscal year 2023.
By the end of the first quarter of 2022, 16 hedge funds out of the 912 tracked by Insider Monkey held stakes in Lucid Group, Inc. (NASDAQ:LCID). The total value of their stakes was $159.1 million. Lucid Group, Inc. (NASDAQ:LCID) ranks 6th on our list of 11 best EV stocks to buy now. This EV maker has signed a massive agreement with Saudi Arabian government. The agreement is for purchase of up to 100,000 Lucid vehicles over 10 years. Saudi Arabia plans to purchase 50,000 vehicles, with an option to buy additional 50,000 vehicles anytime during 10 years. Lucid Group, Inc. (NASDAQ:LCID) manufactures vehicles in Arizona. Plans are there to expand production into Saudi Arabia later in the year, where it should manufacture up to 150,000 vehicles per year.
Citigroup initiated coverage on Lucid Group, Inc. (NASDAQ:LCID) and reduced its price objective from $45.00 to $36.00. They gave a “Buy” rating on the stock. The company has over 30,000 reservations for Air sedan, and plans to raise pricing on various Air models by ~10% to 12% from June 1. The company clarified that 30,000 reservations do not include any vehicles from order by Saudi Arabian government. Lucid Group, Inc. (NASDAQ:LCID) has confirmed that its next vehicle, a luxury SUV called Gravity, is expected in 1H24.
Just like Tesla, Inc. (NASDAQ:TSLA), NIO Inc. (NYSE:NIO) and Ford Motor Company (NYSE:F), Lucid Group, Inc. (NASDAQ:LCID) is one of the 11 best EV stocks to buy now.
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Disclosure: None. 11 Best EV Stocks to Buy Now is originally published on Insider Monkey.
