The automotive sector is navigating a complex and uncertain landscape, shaped by economic volatility, regulatory shifts, and evolving consumer demand. One of the biggest concerns recently has been the proposed 25% tariffs on goods from Mexico and Canada, which triggered a strong response from MEMA, a leading vehicle suppliers trade association. MEMA warned that such tariffs could jeopardize thousands of American jobs, raise costs for consumers, and disrupt the highly integrated North American supply chain, which is essential to maintaining U.S. competitiveness in the global auto market. While a temporary agreement to delay these tariffs provides some relief, uncertainty remains, especially as new challenges emerge, including the halt in funding for the U.S. National Electric Vehicle Infrastructure (NEVI) program. This funding pause could slow the country’s transition to EVs by limiting the expansion of charging networks and reducing incentives for adoption.
Fitch Ratings, in a report published in December, assigned a ‘neutral’ outlook to the industry, expecting 2% growth in global light vehicle sales. Pricing pressure is likely to rise as competition in the EV segment intensifies, while inflation may shift consumer preferences toward more affordable vehicles. That said, they expect interest rate cuts could support stronger vehicle demand, and automakers’ strategic diversification into EVs, autonomous tech, and digital mobility solutions remains a key growth driver.
Demand expected to remain healthy
Despite the headwinds, the automotive industry remains on a path of steady growth. MarketsandMarkets’ ‘Global Automotive Outlook-2025’ projects global light vehicle sales to grow 1.3% in 2025, reaching 85.1 million units. This growth will be fuelled by rising EV and hybrid adoption, advancements in battery technology, and the expansion of autonomous and connected vehicle initiatives. Automakers are also pushing for wider commercialization of self-driving technology, 5G connectivity in vehicles, and digital car sales platforms, shaping the industry’s future. The report further elaborates that China continues to dominate the global automotive market, accounting for over 26 million light vehicle sales in 2024, nearly 50% of the global total. The country also leads EV battery production, manufacturing over 50% of the world’s EV batteries and controlling 75% of key battery components. With a growing number of high-net-worth individuals in Asia-Pacific, the region is expected to drive market expansion in 2025, particularly in premium and EV segments.
In an article published on Forbes on January 13, 2025, Sarwant Singh, President and Chief Commercial Officer at MarketsandMarkets, highlighted some predictions made by his team for the automotive industry. One of their predictions is that EV growth will slow down due to specific policy changes making electric cars less affordable for many consumers. To counteract this, the team expects hybrid vehicle sales to increase substantially, as these vehicles combine the efficiency of electric power with the reliability of traditional engines. Additionally, software-defined vehicles (SDVs), where critical functions like steering, braking, and infotainment are managed by software, are projected to experience rapid growth over the next few years.
From an investment standpoint, the sector presents both risks and opportunities. While macroeconomic and geopolitical uncertainties persist, the industry’s long-term potential remains strong, making it an attractive space for investment despite near-term risks. On that note, let us explore the 12 best automotive stocks to invest in according to analysts.
A technician working on an automotive electronic, showcasing the company’s dedication to innovation.
Our Methodology
To identify the 12 best automotive stocks to invest in according to analysts, we compiled a list of U.S.-listed companies in the auto manufacturing and auto parts sectors with market capitalizations exceeding $2 billion. While we considered promising companies from both industries, we gave preference to pure-play auto manufacturers. We then ranked these companies based on their potential upside, placing the stock with the highest upside at the top. Additionally, we included the number of hedge funds holding stakes in these companies as of Q3 2024.
Note: All pricing data is as of market close on February 14.
At Insider Monkey we are obsessed with 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).
12 Best Automotive Stocks to Invest in According to Analysts
12. Tesla Inc. (NASDAQ:TSLA)
Upside Potential: 16%
Number of Hedge Fund Holders: 99
Tesla Inc. (NASDAQ:TSLA)’s exposure to electric vehicle (EV) tech, autonomous driving and AI makes it nothing less than a tech play. The company is an EV manufacturer and clean energy company known for its innovative approach to sustainable transportation and energy solutions. It designs, manufactures, and sells electric vehicles, battery energy storage systems, solar products, and related services. It currently manufactures five different consumer vehicles: the Model 3, Y, S, X, and the Cybertruck.
Tesla Inc. (NASDAQ:TSLA) benefits from the alignment of global goals with its mission of accelerating the world’s transition to sustainable energy. At a recent conference call, CEO Elon Musk predicted that, with the help of autonomous vehicles and humanoid robots, Tesla has the potential to become the most valuable company in the world, surpassing the combined value of the next top five companies.
In January 2025, Tesla Inc. (NASDAQ:TSLA) reported its Q4 2024 results, with vehicle deliveries of around 500,000 in the quarter, contributing to a total of approximately 1.8 million deliveries for the year 2024. Tesla continues to benefit from increasing demand for electric vehicles and advancements in battery technology. The company is currently focusing on reducing costs and improving margins through vertical integration, including in-house battery production. Additionally, the company’s software capabilities, such as Full Self-Driving (FSD) technology, are expected to enhance vehicle value and customer experience. Recently, the CEO confirmed that unsupervised FSD is planned for release in California in 2025, with potential releases in China and Europe by year-end.
Tesla Inc. (NASDAQ:TSLA) shares have dropped by about 25% since reaching a peak of around $480 in mid-December and are currently down 6% year-to-date. In a February 14 interview with Bloomberg, Dan Ives, Managing Director at Wedbush Securities, observed that investor concerns might be linked to Elon Musk’s increased involvement with the Department of Government Efficiency (DOGE), which some fear is drawing his attention away from Tesla. Despite these apprehensions, Ives remains optimistic about the stock, maintaining a price target of $550. He considers the worries over Musk’s distractions as short-term noise, believing that the company’s advancements in autonomous technology and Full Self-Driving (FSD) will continue to be significant long-term growth drivers. According to Ives, these areas represent a trillion-dollar market opportunity, bolstering Tesla Inc. (NASDAQ:TSLA)’s strong future potential.
11. NIO Inc. (NYSE:NIO)
Upside Potential: 18%
Number of Hedge Fund Holders: 20
NIO Inc. (NYSE:NIO) is a Chinese smart electric vehicle (EV) company specializing in premium, high-tech electric cars. It offers models like the ES9, ES8, and EC6 SUVs, as well as the ET7 luxury sedan. Known for its innovative battery-swapping technology, the company allows users to replace batteries in minutes rather than charging. The company is also focused on autonomous driving and AI-powered smart cockpit experiences. With global expansion plans, NIO Inc. (NYSE:NIO) has emerged as a strong competitor in the EV market.
On February 1, NIO Inc. (NYSE:NIO) announced that it has delivered 13,863 vehicles in January 2025, representing an increase of 37.9% year-over-year. Of those deliveries, 60% were from its premium smart electric vehicle brand NIO and rest from the family-oriented smart electric vehicle brand ONVO.
The stock is down 45% from its January 2024 peak and is up only marginally year-to-date. Analysts’ views are divided currently with concerns over the aggressive sales targets in coming years and challenges the company might face to fulfill such targets. However, with continued expansion in sales volume and steady improvement in gross margin, the company is aiming to improve free cash flow generation. In 2025, its three new brands are expected to start a robust product cycle which should increase the company’s sales volume even further. A key differentiator for NIO Inc. (NYSE:NIO) is its battery-swapping network, which continues to expand, providing customers with a unique alternative to traditional charging strengthening its competitive edge.
10. Toyota Motor Corp. (NYSE:TM)
Upside Potential: 21%
Number of Hedge Fund Holders: 18
Toyota Motor Corp. (NYSE:TM) is a global automobile manufacturer. It produces a wide range of vehicles, including sedans, SUVs, and trucks, with popular models like the Corolla, Camry, and RAV4. The company pioneered mass-produced hybrid technology with the Prius and continues to expand its electric and hydrogen-powered vehicle lineup, including the Mirai fuel cell car and the bZ4X electric SUV. The company is also investing in autonomous driving, AI, and mobility services.
On February 5, Toyota Motor Corp. (NYSE:TM) reported its Q3 FY 2025 results (FY ending March 2025), where it witnessed a 4% year-over-year (YoY) decline in global vehicle unit sales for the first nine months of FY 2025. Japan unit sales were down over 10% whereas overseas units were down 2.1%. Despite this, total sales increased around 5%. Moreover, profit also increased due to ongoing cost-saving initiatives and improvement in product competitiveness which are supporting earnings. As per Statista, Toyota Motor Corp. (NYSE:TM) had 10.7% global automobile market share in 2024 and thus holds the top position globally. The company continues to solidify its position as the global leader in the automotive industry, leveraging its diversified powertrain strategy, including hybrid, electric (EV), hydrogen fuel cell, and internal combustion vehicles.
On February 6, Macquarie analyst upgraded Toyota Motor Corp. (NYSE:TM) from Neutral to Outperform. The analyst anticipated the company would report weaker earnings due to a slower-than-expected volume recovery. However, they also projected that Toyota’s production would stabilize, resulting in less exciting earnings, but improved quarters ahead.
9. Li Auto Inc. (NASDAQ:LI)
Upside Potential: 21%
Number of Hedge Fund Holders: 26
LI Auto is a Chinese EV manufacturer focusing on extended-range electric vehicles (EREVs) and smart SUVs. The company is a pioneer in successfully commercializing extended-range electric vehicles. Its flagship models feature the proprietary range-extending gasoline engine that charges the battery, reducing range anxiety. The company is expanding into fully electric models with advanced driver-assistance features.
On February 7, Macquarie upgraded Li Auto (NASDAQ:LI) to Outperform from Neutral with a $29 price target. While the company’s Q4 vehicle deliveries missed the lower end of guidance, largely due to a higher mix of lower-priced L6 and L7 models, the firm believes potential sales weakness is already priced into shares. Despite concerns over seasonally weak premium EV sales, Macquarie sees lower downside risk at current levels, justifying the upgrade. The analyst expects Li Auto (NASDAQ:LI)’s electric SUV segment to stabilize, supporting long-term growth.
8. Honda Motor Co. Ltd. (NYSE:HMC)
Upside Potential: 24%
Number of Hedge Fund Holders: 11
Honda Motor Co. Ltd. (NYSE:HMC) is a multinational automaker and motorcycle manufacturer. Its popular car models include the Civic, Accord, and CR-V, while its motorcycles, such as the Honda CBR series, dominate global markets. The company is also known as a pioneer in hybrid and electric vehicle development, producing the Insight, Clarity, and the Honda-e. The company also develops robotics, aviation technology, and hydrogen fuel cell solutions.
On February 13, Honda Motor Co. Ltd. (NYSE:HMC) and Nissan Motor Co. Ltd. (OTC:NSANY) announced the termination of their merger plan, initially signed in December 2024 and was believed to be valued at $60 billion. The decision was made after evaluating market conditions, integration structures, and stakeholder feedback. Honda Motor Co. Ltd. (NYSE:HMC) had proposed a stock swap making Nissan Motor Co. Ltd. (OTC:NSANY) a wholly owned subsidiary, but they couldn’t agree on the terms and both companies decided against integration to maintain agility in the fast-changing EV market. They will continue collaborating within a strategic partnership for electrification and intelligent vehicle development. The termination has no financial impact on either company.
Honda Motor Co. Ltd. (NYSE:HMC) is aligning its future growth with its transition to electric vehicles (EVs), planning $40 billion in investments for electrification by 2030. The company’s long-term plan targets 100% of its global vehicle sales to be EVs and fuel cell electric vehicles (FCEVs) by 2040. In January 2024, Honda Motor Co. Ltd. (NYSE:HMC) introduced a new global EV platform, the “Honda 0 Series,” with two next-generation models scheduled for launch in 2026, following the unveiling of two prototypes at CES 2025. Management is also focused on significantly reducing battery and production costs to enhance profitability. These initiatives are expected to support the company in achieving profitable growth and maintaining, as well as expanding, its market share in this highly competitive industry.
7. General Motors Company (NYSE:GM)
Upside Potential: 24%
Number of Hedge Fund Holders: 64
General Motors Company (NYSE:GM) is one of the largest American automakers, producing vehicles under brands like Chevrolet, GMC, Buick, and Cadillac. The company is accelerating its transition to electric mobility with Ultium battery technology, powering models like the Chevrolet Bolt EV, GMC Hummer EV, and Cadillac Lyriq. GM is also investing in self-driving technology through Cruise, its autonomous vehicle division, and aims for an all-electric future with a carbon-neutral goal by 2040.
On February 4, 2025, General Motors Company (NYSE:GM) announced that it acquired full ownership of Cruise, its autonomous vehicle subsidiary. This move consolidates the company’s control over Cruise’s operations and technology development. The acquisition aligns with its strategy to integrate autonomous driving capabilities into its vehicle lineup, aiming to enhance safety and efficiency. As discussed in December by the company, the ensuing streamlining of operations would potentially reduce annual expenditures by over $1 billion.
The investment management company Hotchkis & Wiley Funds talked about the company in its “Hotchkis & Wiley Large Cap Value Fund” Q3 2024 investor letter. He stated:
“General Motors Company management provided a cautious outlook for the second half of 2024. Comments from GM mirrored those of other OEMs and auto suppliers, leading investors to believe the automotive cycle has peaked. We believe this is an overreaction, and we continue to view GM as an attractive investment. We like GM for many reasons. First, we believe GM has leading market positions in its main business segments. Second, the valuation is extremely attractive. Finally, it is a strong free cash flow generator, and the management team is committed to repurchasing their undervalued shares.”
On January 21, 2025, Deutsche Bank upgraded General Motors Company (NYSE:GM) from Hold to Buy, raising its price target from $56 to $60. The analyst cited the company’s recent strategic decisions, including pausing development of its Cruise robotaxi unit and restructuring its struggling China operations, as key factors behind the upgrade. Additionally, Deutsche Bank expressed confidence in General Motors Company (NYSE:GM)’s strong execution track record and aggressive share buyback strategy, which they believe position the company well despite potential policy challenges for the electric vehicle industry under the Trump administration.
6. Visteon Corp. (NASDAQ:VC)
Upside Potential: 32%
Number of Hedge Fund Holders: 29
Visteon Corp. (NASDAQ:VC) is an automotive technology company specializing in digital cockpit technologies. It develops advanced infotainment systems, domain controllers with advanced driver assistance systems (ADAS), digital instrument clusters, displays, and connectivity solutions for modern vehicles. The company collaborates with major automakers worldwide.
Visteon Corp. (NASDAQ:VC) is focused on increasing the penetration of its offerings. In the nine months leading up to Q3 2024 (FY ending December 2024), the company launched 71 new products across various regions, with 30 of them launched in Q3 2024 alone. Year-to-date through September, they reported $4.9 billion in new business wins and were confident of achieving $6 billion for the full year. The company also projected market share gains in 2024, with anticipated year-over-year growth in all regions except China, including double-digit growth-over-market in the Americas, driven by electrification and the ramp-up of recent product launches.
On January 24, an RBC Capital analyst had raised the price target on Visteon Corp. (NASDAQ:VC) from $124 to $127, while maintaining his Outperform rating. The analyst highlighted that his analysis suggests that January U.S. auto sales remain resilient, despite a typical seasonal slowdown. While sentiment around EVs remains negative, he believes that EV sales data from Europe and the U.S. in late 2024 indicates a potential recovery in 2025, driven by the launch of more affordable models. He therefore maintained his positive view.
5. BorgWarner Inc. (NYSE:BWA)
Upside Potential: 32%
Number of Hedge Fund Holders: 27
BorgWarner Inc. (NYSE:BWA) provides clean and efficient technology solutions for combustion, hybrid, and electric vehicles. The company’s products enhance vehicle performance, propulsion efficiency, stability, and air quality. It manufactures and sells these products globally, primarily to original equipment manufacturers (OEMs) of light vehicles, including passenger cars, sport-utility vehicles, vans, and light trucks.
BorgWarner Inc. (NYSE:BWA)’s strategy focuses on expanding its product portfolio through organic investments and technology-focused acquisitions. The company’s balanced portfolio is particularly crucial as the automotive industry experiences volatility in electric vehicle adoption across different regions. It reported steady Q4 2024 results, although they were slightly below street expectations. Q4 sales declined by 2.4% to $3.4 billion, but the adjusted operating margin was 10.2%, which was at the upper end of its guidance. For FY 2025, the company forecasted net sales to be between $13.4 billion and $14.0 billion, indicating an expected decline in sales next year. However, it anticipates maintaining an operating margin similar to 2024. Overall, the performance remained healthy given the lackluster market conditions.
Most analysts on the street, including Wells Fargo, JP Morgan, and Evercore ISI, have maintained their Buy rating on BorgWarner Inc. (NYSE:BWA) in their recent updates. On February 11, Barclays analyst also reiterated his Buy rating but marginally lowered the price target to $42 from $43. He believes the company’s guidance for 2025 was a necessary reset of expectations and anticipates continued margin outperformance from BorgWarner Inc. (NYSE:BWA).
4. BRP Inc. (NASDAQ:DOOO)
Upside Potential: 38%
Number of Hedge Fund Holders: 6
BRP Inc. (NASDAQ:DOOO) is a Canadian company renowned for manufacturing recreational vehicles like snowmobiles, boats, ATVs, and side-by-side vehicles. It owns brands such as Ski-Doo, Sea-Doo, Can-Am, Manitou and Quintrex boats, Rotax outboard engines, and Rotax jet propulsion systems.
In Q3 FY 2025 (FY ending January), BRP Inc. (NASDAQ:DOOO) reported revenues of $1.96 billion, a decrease of 18% year-over-year, attributed to softer demand and a focus on inventory reduction. Net income declined by 69.7% to $27.3 million, while normalized EBITDA dropped 42.9%. Profit decline was mainly driven by higher fixed and operating costs on lower production. North American retail sales fell by 11%, though off-road vehicle inventory reductions met targets ahead of schedule. Despite these challenges, BRP reaffirmed its full-year revenue guidance of $7.6-$7.8 billion and projected normalized EPS of $4.25-$4.75.
The company has begun the process of divesting its Marine business to concentrate on its core powersports operations. Management is said to be sharpening its focus on these core activities to foster long-term profitable growth, with plans to launch exciting new products in the coming years. Although there are ongoing concerns about tariffs and exposure to China, the analyst from RBC reaffirmed his confidence in BRP Inc. (NASDAQ:DOOO) on January 6, maintaining a Buy rating and a price target of approximately $70.
3. ZEEKR Intelligent Technology Holding Ltd. (NYSE:ZK)
Upside Potential: 39%
Number of Hedge Fund Holders: 9
ZEEKR Intelligent Technology Holding Ltd. (NYSE:ZK) is a premium electric mobility technology brand under China’s Geely Holding Group, focusing on high-performance electric vehicles. Its flagship models, the ZEEKR 001 and 7X, feature advanced technology, long-range batteries, and a luxurious smart cockpit. ZEEKR focuses on connectivity, autonomous driving, and high-speed charging solutions to broaden its global portfolio of cutting-edge electric mobility offerings.
ZEEKR Intelligent Technology Holding Ltd. (NYSE:ZK) reported vehicle deliveries of 11,942 units for January 2025, bringing cumulative deliveries to 430,698 as of the end of January. For the full year 2024, the company achieved total deliveries of 222,123 vehicles, reflecting a robust 87% growth compared to the previous year. For 2025, the company has set a target of 320,000 vehicle deliveries. It has a strong launch portfolio for 2025, including the recent launch of the Zeekr 7X, an all-electric midsize software-defined SUV, in Europe. ZEEKR Intelligent Technology Holding Ltd. (NYSE:ZK) has an ambitious global roll-out plan over the next five years to capitalize on the rapidly expanding global EV demand. These new product launches should expand its breadth in the market and thus lead to share gains.
ZEEKR Intelligent Technology Holding Ltd. (NYSE:ZK) is a consensus buy, with all analysts covering it giving a Buy recommendation. In October, China International Capital Corporation (CICC) initiated coverage with an Outperform rating and a $31.74 price target. Before that, Bank of America reiterated their Buy rating in August with a $26 price target.
2. Volkswagen AG (OTC:VWAGY)
Upside Potential: 54%
Number of Hedge Fund Holders: 1
Volkswagen AG (OTC:VWAGY), a German automotive giant, is one of the world’s leading manufacturers of automobiles and commercial vehicles, and the largest carmaker in Europe. The company owns well-known brands such as Volkswagen, Audi, Porsche, and Lamborghini. Volkswagen’s investments in battery technology and autonomous driving underscore its commitment to a carbon-neutral future.
On January 14, Volkswagen AG (OTC:VWAGY) released its vehicle delivery report. Despite challenging market conditions and intense competition in China, the company delivered nine million vehicles in 2024. Volkswagen has been aligning its group strategy towards innovative mobility solutions and is working on transforming into a software-oriented organization. As part of this strategy, the company introduced more than 30 new models in 2024, featuring numerous innovations. In the all-electric vehicle segment, Volkswagen AG (OTC:VWAGY) has achieved market leadership in Europe. The company plans to introduce another 30 new models in 2025.
In the second week of December, Morgan Stanley analysts anticipated a significant recovery for Europe’s leading automakers, including Volkswagen AG (OTC:VWAGY), in 2025. This optimistic outlook follows a challenging 2024, during which the industry faced elevated energy costs, declining sales in China, and slower-than-expected adoption of electric vehicles (EVs). The analysts said that automakers’ worst problems may be behind them and believe that the situation could improve dramatically as vehicle affordability continues to improve driven by rising incomes and decreasing interest rates. Additionally, potential government support, in response to increasing competition from Chinese EV manufacturers, could further bolster the prospects of European carmakers. On similar lines, in October, Barclays had suggested that European car manufacturers have hit rock bottom, which again supports a stronger outlook in 2025.
1. VinFast Auto Ltd. (NASDAQ:VFS)
Upside Potential: 59%
Number of Hedge Fund Holders: 5
VinFast Auto Ltd. (NASDAQ:VFS) positions itself as an emerging pure-play electric vehicle (EV) manufacturer. The company designs and produces a range of EVs, including electric cars, scooters (e-scooters), and buses (e-buses). It offers an e-mobility ecosystem focused on customers, community, and connectivity, alongside new vehicle rollouts. Headquartered in Hai Phong City, Vietnam, VinFast is recognized as Vietnam’s first global automotive manufacturer.
VinFast Auto Ltd. (NASDAQ:VFS) delivered 53,139 electric vehicles globally in fourth quarter 2024, reflecting a 143% increase over the last quarter. For the full year, the company exceeded its guidance and delivered 97,399 vehicles (+192% YoY) and expects to at least double its global deliveries for the full year 2025. In its February 2025 corporate presentation, the company outlined its strategy for international market expansion. It boasts of a highly automated manufacturing design, enabling scalable growth. VinFast Auto Ltd. (NASDAQ:VFS) has an aggressive expansion plan – from its effective annual designed capacity of 300,000 units, VinFast plans to expand to more than double the capacity by 2025 and further to 850,000 units by 2028.
The majority of this scale-up before 2025 is expected from India, Indonesia, and Vietnam, while between 2025 and 2028, capacity expansion will primarily come from North America. VinFast Auto Ltd. (NASDAQ:VFS) is also expanding its global distribution network and strategically targeting new high-growth markets in Europe, Asia, the Middle East and Africa. The company has ample liquidity to fund its expansion plans in addition to the $3.6 billion of free grants and loans it is expecting from its founder and parent company.
While we acknowledge the potential of VFS to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VFS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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