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 Tesla (NASDAQ:TSLA) 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.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 85

Tesla, Inc. (NASDAQ:TSLA) is a leading force in the EV sector through both its cutting-edge vehicles and an expanding charging infrastructure. The company’s Supercharger network, a key component of its strategy, has grown to over 50,000 stations worldwide since its inception in 2012. It tops our list of the best EV charging stocks to invest in.

The extensive network is designed to ease range anxiety for Tesla drivers by offering fast charging options at strategic locations along major travel routes and in urban centers. It not only facilitates long-distance travel but also improves convenience for everyday driving.

In addition to the Supercharger network, the company provides home charging solutions through its Wall Connector, which allows users to charge their cars overnight. The home charging option complements the public charging infrastructure and is integrated with the company’s advanced navigation systems, which help drivers find the best routes and locate nearby charging stations effortlessly.

The company’s recent decision to open its Supercharger network to other EV companies highlights its ambition to set the standard in the industry. By introducing the North American Charging Standard (NACS), it has made its charging technology available to vehicles from other major automakers such as Ford and Rivian. The move not only maximizes the use of its charging stations but also reinforces its role as a key player in the wider EV charging ecosystem.

On September 9, Deutsche Bank analyst Ed Yu resumed coverage of Tesla (NASDAQ:TSLA) with a Buy rating and $295 price target. Yu views the company not merely as an automaker but as a technology platform with the potential to reshape several industries.

The analyst acknowledged the company’s significant lead in battery electric vehicles, particularly in terms of scale and cost efficiency. Although there may be temporary softness in automotive deliveries and margins, this is expected to be short-lived, with new models and updates on the horizon.

Tesla (NASDAQ:TSLA) was part of 85 hedge funds’ portfolios in the second quarter with a total stake value of $5 billion. Catherine D. Wood’s ARK Investment Management is the biggest shareholder in the company and has a position worth $1.05 billion as of Q2.

Baron Partners Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q2 2024 investor letter:

“Tesla, Inc. (NASDAQ:TSLA) manufactures electric vehicles, related software and components, and solar and energy storage products. The stock contributed as Tesla continued to drive vehicle manufacturing costs lower, accelerate the launch of new models, and invest heavily in its lucrative AI initiatives. Shareholders reaffirmed the CEO’s compensation plan, alleviating personnel and legal uncertainties. Despite material operational complexities resulting in significant shutdowns of key manufacturing facilities and lower sales volume, Tesla presented better-than-expected margins in the quarter. It expects to launch a lower cost model as soon as late 2024, which should result in accelerated revenue growth, reduced manufacturing costs, and increased factory utilization. The company continued to advance its autonomous driving capabilities, expanding its already significant data centers and developing its humanoid robot Optimus. These investments increased confidence in the attractive growth opportunities that remain ahead.”

Overall TSLA ranks 1st on our list of the best EV charging stocks. While we acknowledge the potential of TSLA 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 TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

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