We recently published a list of 11 Best EV Charging Stocks To Invest In. In this article, we are going to take a look at where Li Auto (NASDAQ:LI) stands against other best EV charging stocks.

Over the last few years, the electric vehicle (EV) market has experienced significant growth, due to consumer demand, automaker investments, and substantial government support. In the US,  the $7.5 billion from the 2021 Infrastructure Investment and Jobs Act and tax credits from the Inflation Reduction Act have also fueled EV growth.

According to the International Energy Agency (IEA), global public charging points are expected to exceed 15 million by 2030 and will increase to nearly 25 million by 2035. In the U.S., the government aims to install 500,000 public charging ports by 2030, with the total number of chargers expected to reach 900,000 in 2030 and 1.7 million by 2035.

Globally, home charging is expected to grow to over 270 million units by 2035, with more than 45% of electricity coming from public or private non-home chargers. Charging infrastructure for heavy-duty vehicles (HDVs) is also expected to grow significantly. By 2035, installed HDV charging capacity is projected to reach 2,000 GW. Policies like the EU’s Alternative Fuels Infrastructure Regulation and U.S. strategies are driving this expansion, alongside private investments.

The Road Ahead for EV Charging: Industry Growth and Challenges

According to PwC’s analysis, the number of charge points in the U.S. must grow from around 4 million today to 35 million by 2030 to meet demand. The PwC report has projected that the number of EVs could reach 27 million by 2030 and 92 million by 2040.

The EV supply equipment (EVSE) market is expected to expand from $7 billion to $100 billion by 2040, at a 15% compound annual growth rate. The market’s primary value pools are hardware, software, installation services, and charge point operators (CPOs). CPOs, which build, operate, and maintain charging stations, are expected to dominate and capture 65% of market revenue by 2040. On the other hand, hardware providers’ share will shrink from 46% today to 20% by 2040.

Despite the clear market opportunities, challenges remain, including educating consumers, financing infrastructure, and ensuring cost-effective solutions across different charging segments. Companies looking to enter or expand in the EVSE market will need to understand evolving customer needs, adopt appropriate business models, and prepare for long-term investments with a focus on strategic partnerships and potential acquisitions.

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Li Auto Inc. (NASDAQ:LI)

Number of Hedge Fund Holders: 17

One of the best EV charging stocks to invest in, Li Auto Inc. (NASDAQ:LI) is immensely focused on expanding its charging infrastructure. As of August 31, the company has already established 748 supercharging stations, equipped with 3,506 charging stalls, covering more than 70% of China’s major economic hubs and key national highways. The network supports the company’s current fleet and sets the stage for future growth.

Its collaboration with China National Petroleum Corporation (CNPC), China’s largest oil company, marks a major advancement in its charging capabilities. The partnership will see the installation of over 2,000 charging stations and 10,000 charging columns at CNPC service stations.

By the end of 2024, the expansion is expected to increase the company’s charging network coverage to over 90% in tier-one and tier-two city centers and more than 70% along national highways.

At a stake value of $258.398 million, 17 hedge funds held positions in Li Auto (NASDAQ:LI) in the second quarter. As of June 30, Renaissance Technologies is the biggest shareholder in the company and has a position worth $129.69 million.

The company has ambitious plans to further enhance its charging infrastructure. By 2025, it aims to build more than 3,000 supercharging stations. The extensive network will cover 90% of major highway routes and key urban areas in tier-four cities and developed regions across mainland China.

To support this growth, the company plans to invest around 10 billion yuan (1 Yuan = US$0.14 as of September 9) into the new network, which will feature advanced 5C charging technology capable of providing five full charges within an hour. The expansion is crucial as the company shifts focus from extended-range electric vehicles (EREVs) to fully electric models, with new battery electric vehicles (BEVs) on the horizon.

In addition to its supercharging stations, Li Auto (NASDAQ:LI) is enhancing the charging experience at home. The company offers home charging piles for overnight charging convenience. The collaboration with CNPC will also integrate the company’s charging platforms with CNPC’s services, which will optimize the overall charging experience and support leisure and home charging needs.

The company’s efforts in building its charging infrastructure are complemented by agreements with other partners, such as PetroChina Kunlun Wanglian Electric Energy Technology Co., Ltd., to develop charging facilities along highways and in urban centers.

The company reported a strong second quarter in August, with a non-GAAP EPS of $0.20 and revenue of $4.4 billion, which grew by 10.6% from the previous year. For the third quarter, the company expects revenues between RMB 39.4 billion (US$5.4 billion) and RMB 42.2 billion (US$5.8 billion), which represents a 13.7% to 21.6% increase from the same period in 2023.

Overall LI ranks 6th on our list of the best EV charging stocks. While we acknowledge the potential of LI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure. None. This article is originally published at Insider Monkey.