In this article, we discuss the 13 most promising EV stocks to buy according to hedge funds along with the industry outlook.
According to a September 13 report by S&P Global, the auto industry’s shift to electric vehicles (EVs) is accelerating, with 2026 seen as a pivotal year for adoption. By 2030, over 25% of new passenger cars sold are expected to be electric, as the transition away from internal combustion engines (ICE) gains momentum.
Major automakers are projected to produce over 70% of global EVs by 2030, up from just 10% in 2022. However, a few challenges remain, like range anxiety, especially for those without convenient charging options. Addressing these issues will require collaboration among automotive, utilities, government, and property owners, which could create a way for significant growth in vehicle electrification and potentially end the ICE era.
We discussed the market dynamics of the EV industry in our article, 11 Small Cap EV Stocks to Invest In. Here is an excerpt from the article:
“While the growth in the US and Europe is slowing down, China is picking up a significant pace and dominating the EV landscape. According to a World Economic Forum report, Chinese EVs are much cheaper than their Western counterparts, with an average price of $34,400, compared to $55,242 in the U.S. The price gap is driven by lower labor costs, favorable government subsidies, and more affordable battery sourcing.
Chinese automakers now produce more than half of the world’s EVs and are using their cost advantages to potentially dominate the global market. As Chinese brands gain scale and expertise, their competitive pricing could allow them to challenge Western automakers.”
The Electric Vehicle Shift and Its Economic Impact on Europe
While Europe saw significant adoption of EVs in the earlier years, it has seen a slowdown. According to an October 3 report by McKinsey, the growth of EVs in Europe poses both opportunities and challenges for the automotive industry, which currently contributes $1.9 trillion to the economy.
While electric mobility could add up to $300 billion in gross value added (GVA) by 2035, the industry could risk losing $400 billion if European OEMs’ global market share declines from 60% to 45%.
Key strategies for success include expanding the domestic battery supply chain, improving manufacturing capabilities, streamlining regulations, and investing in R&D and talent development. By proactively addressing these challenges, European OEMs can capitalize on the EV shift, generate new value, and secure the region’s economic future in the automotive sector.
Shifting Gears to the Inevitable Future of Electric Vehicles
In a CNBC interview, Young Liu, Chairman of Hon Hai Technology Group said that the future of the automotive industry will be dominated by electric vehicles, with hybrids playing a limited role due to advancements in battery technology. He made a note of current challenges such as charging times and range anxiety, but expects improvements in battery systems will eliminate the need for hybrids.
Liu outlined a path to profitability for EV companies based on three key strategies: “platformization, modularization, and standardization”. He believes these will help streamline operations and reduce the need for individual investments in proprietary platforms, which is a challenge for traditional manufacturers due to their existing structures.
13 Most Promising EV Stocks to Buy According to Hedge Funds
Our Methodology
For this article, we used stock screeners and ETFs to identify over 40 companies with significant operations related to the EV industry. Next, we narrowed our list to 13 stocks most widely held by institutional investors. The most promising EV stocks are listed in ascending order of their hedge fund sentiment which was taken from Insider Monkey’s Q2 database of 912 hedge funds.
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).
13 Most Promising EV Stocks to Buy According to Hedge Funds
13. Enovix Corporation (NASDAQ:ENVX)
Number of Hedge Fund Holders: 22
Enovix Corporation (NASDAQ:ENVX) is dedicated to producing high-performance batteries that improve the capabilities of various technology products, including IoT devices, mobile phones, and vehicles. It is one of the most promising EV stocks according to hedge funds.
The company collaborates with OEMs globally to drive advancements in battery technology through a flexible, materials-neutral approach. The company generates revenue from two primary sources: the sale of lithium-ion batteries and battery packs, and engineering contracts for lithium-ion battery technology development.
Enovix (NASDAQ:ENVX) has successfully developed prototype silicon anode lithium-ion batteries that offer superior energy density and higher storage capacity compared to industry standards.
In late 2023, the company expanded its product offerings by acquiring Routejade, Inc., which allowed it to enter the conventional lithium-ion battery market, targeting sectors such as wearables and medical applications. The company has also significantly increased its research and development personnel and is exploring next-generation battery materials across its labs in India and Malaysia.
On October 2, Enovix (NASDAQ:ENVX) announced that it has started shipping samples of its EX-1M battery cells from the new Agility Line in Malaysia. It is a significant step in the company’s scaling efforts, which follows the initial sample shipments from its California facility and the recent opening of the high-volume production line in Malaysia.
The cells have received UN38.3 certification, which ensures compliance with strict safety standards for lithium-ion batteries. With sample shipments completed in the third quarter of 2024, it is set to start high-volume production in 2025.
Due to this development, analyst George Gianarikas from Canaccord Genuity maintained a Buy rating on Enovix (NASDAQ:ENVX) with a price target of $20.00 on October 3, as reported by TipRanks. Gianarikas believes that this development shows the company’s ability to meet its deadlines and fulfill commitments.
The analyst also expects new developments, such as the announcement of a new customer and the shipping of improved EX-2M cell samples. The company’s focus on utilizing 100% silicon anodes positions it as a key innovator, especially with growing AI demands. The company’s plans for high-volume manufacturing and additional production lines by 2026 suggest significant growth potential.
12. Blue Bird Corporation (NASDAQ:BLBD)
Number of Hedge Fund Holders: 24
Blue Bird Corporation (NASDAQ:BLBD) is a recognized leader in school bus technology and innovation. The company focuses on designing, engineering, and manufacturing school buses that prioritize safety, reliability, and durability, transporting approximately 25 million children daily.
It excels in low and zero-emission school buses, with over 20,000 propane, natural gas, and electric buses currently in operation.
Through its commitment to cleaner energy solutions, the company is actively transforming the student transportation sector. In August, the company achieved a significant milestone by delivering its 2,000th electric, zero-emission school bus. The company takes the 12th spot on our list of most promising EV stocks.
In the third quarter of fiscal 2024, Blue Bird’s (NASDAQ:BLBD) net sales reached $333.4 million, up 13.3% from $294.3 million in the same period of fiscal 2023. The growth was driven by product mix changes, pricing adjustments in response to rising inventory costs, and a slight rise in unit bookings.
Bus sales alone rose by $37.8 million (14.0%), supported by a 13.2% increase in average sales price and a 0.7% increase in booked units, despite ongoing supply chain issues that hindered production.
Parts sales also increased by $1.3 million (5.5%) due to inflation-related price hikes. The total cost of goods sold was $264.0 million, up 6.2%, but improved as a percentage of net sales from 84.5% to 79.2%. Operating profit rose to $39.7 million, significantly higher than $19.4 million in the same quarter last year, thanks to a $23.6 million increase in gross profit, offset by rising operating expenses.
Most analysts are bullish on Blue Bird (NASDAQ:BLBD) as it has been covered by 7 analysts and 6 of them maintain a Buy-equivalent rating on the company stock. Their average price target of $66 represents a nearly 60% upside to the company stock, as of October 8.