As consumer preference and government incentives continue to shift toward electric vehicles, EV stocks have performed well in the market and seem like a sure bet to many investors.
With recognizable names like Elon Musk’s Tesla capitalizing on social media fame, getting involved in EV is inevitable for many investors. But doing so strategically is key. Learn how to spot lucrative investment opportunities in EV stocks and the electric car support industry.
How To Identify the Best EV Stocks To Buy Now
One of the best ways to identify good EV stocks is to determine which ones are currently undervalued. When analyzing undervalued stocks, it is important to consider their history and potential along with how they are trending compared to the general market.
Currently, the electric vehicle industry is facing several pressures that are affecting EV companies’ short-term stock prices — but not their long-term value — including things like chip shortages. Spotting big-time industry players whose stock drops below average is an excellent way to acquire solid stocks that will produce over time.
Chinese Electric Vehicle Stocks
Savvy investors long ago dropped the “Buy American” motto when investing in the auto industry, but some may still need a little push to purchase Chinese EV stocks. Their current showings should be the only push U.S. investors need when reviewing current trends from Nio and XPeng.
Nio’s sales increases from quarter to quarter are impressive, with an overall boost of 9.8% from the second to third quarters of 2021 and 102.4% year over year.
However, supply chain issues are currently pinning Nio’s stock prices down to an extent. Resolution of these issues could create an undervaluation that savvy investors will jump at.
The firm’s plan for advanced electric vehicle service stations that innovate how EV drivers will travel over long distances assures investor confidence in Nio’s future. In the nearer term, Nio plans to introduce three new products based on its technology platform in 2022.
Counter to Nio is XPeng, one of China’s other gigantic electric vehicle powerhouses. With a 199.2% year-over-year increase in vehicle deliveries in the third quarter of 2021, XPeng surpassed Nio in the numbers game.
XPeng’s sales are comparatively lower, but with consistency even in the face of shortages, XPeng’s projections for the year are solid.
Investors are excited about XPeng’s forays into tech, with its proprietary software XPILOT promising advances in its electric vehicle fleet.
American Electric Vehicle Stocks
Industry leaders on U.S. soil are also demonstrating the continued promise of the EV market, with Fisker and Tesla attracting the kind of attention that bodes well for investors.
Fisker has a slightly different production method than some of its competitors, which leaves investors curious about how this electric vehicle company will hold up over time. The company expects to launch select models of its Ocean SUV, manufactured by Magna International, in 2022, and it’s currently raising cash to start production on a second vehicle, the Los Angeles Times reported. Fisker’s Project PEAR, or Personal Electric Automotive Revolution, is set to go into production in late 2023 or early 2024.
Indeed, it appears that Fisker is moving forward into a bright future. Investors expect Fisker’s unique approach to privileging design while outsourcing production will lead to promising results.
Tesla is the elephant in the room of EV stock investment. If you walk away from it, you could be leaving serious money on the trading room floor. But is fear of missing out compelling you to buy into Tesla? Are you doing it because of social media buzz and Tesla’s ongoing media popularity?
FOMO and media attention aside, given its recent increases in price targets, Tesla seems to be on a clear path forward for the time being. The stock is up nearly 30% over the past year.
Tesla’s Impact and Current Performance
Tesla is also experiencing a sales boom, with sales and deliveries for the fourth quarter of 2021 easily beating analysts expectations. Whereas analysts predicted Tesla would deliver 267,000 vehicles for the quarter and 897,000 for the year, according to CNBC, Tesla actually delivered 308,600 during the quarter and 936,172 for the year. The stock had risen nearly 30% over the past year even before fourth-quarter deliveries were announced.
Elon Musk is notorious for his media presence, outspokenness and the corresponding effect of both on stock prices. For example, his announcement that Tesla would stop accepting Bitcoin due to energy consumption concerns caused a dip in prices. Prices have also fallen over the last couple of months as Musk has sold shares in his company — over $2.87 billion worth in December 2021, according to CNBC. However, he also exercised an option, granted in his 2021 compensation package, to purchase 2.13 million shares for a strike price of $6.24 per share — not bad considering the stock closed the year trading at $1,056.78.
Tesla’s occasional slips don’t change the fact that its potential for outsized profit is undeniable. With solid expectations of continued growth and success, Tesla remains a favorite EV stock to buy now.
EV Industry Support Stocks
Investing in the support industries around EVs is just as smart as investing in EVs themselves. With huge territories to cover and great growth potential, these well-established charging port companies are poised to drift in the wake of EVs for a long time to come.
If getting there first counts for anything, ChargePoint wins — as of April 2021, it dominated 73% of the North American charging port market, and it saw a 79% year-over-year increase in revenue in the third quarter of the company’s fiscal year 2022.
As ChargePoint expands into Europe with a three-year plan for increasing its revenue to $1 billion, investors are feeling confident about its ability to make good on these promises.
Blink Charging (BLNK)
Whereas ChargePoint dominates in a single territory, Blink Charging has diversified across the Middle East, Europe, North America and now India. But despite record revenue growth in the third quarter of 2021, the company fell short of earnings estimates, and it’s stock is down 40% since last year.
Glitches aside, Blink Charging is a solid EV infrastructure company likely to benefit from government infrastructure investment and more widespread use of EVs among consumers.
Charging Infrastructure Is Coming
The Biden administration has put plans into action for a nationwide charging network. This plan will further integrate alternative fuel corridors to make cross-country travel by EV simpler to plan and more efficient. Investments in existing charging port companies appear favorable in light of this governmental push for EV advancement.
Invest In the Future
Investments far too often feel utilitarian, limited by the demands of the market and the need to make a profit. It’s somewhat rare to make an investment that trends toward excellent returns and makes you feel positive about the future.
But investing in electric car companies lets you do both. Not only do you have great prospects but you can also feel confident in the environmental soundness of your investment and the job creation potential for workers around the globe.
Daria Uhlig contributed to the reporting for this article.
Data is accurate as of Jan. 2, 2022, and subject to change.