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.
11. MP Materials Corp. (NYSE:MP)
Number of Hedge Fund Holders: 31
One of the most promising EV stocks, MP Materials Corp. (NYSE:MP) is the largest producer of rare earth materials in the Western Hemisphere. It owns and operates the only large-scale rare earth mining and processing site in North America, the Mountain Pass facility.
The company is also constructing a rare earth metal, alloy, and magnet manufacturing facility in Fort Worth, Texas, for producing neodymium-iron-boron magnets and precursor products. Neodymium-iron-boron magnets are found in the electric motors of EVs as they are primarily used in the production of strong permanent magnets.
In 2023, MP Materials (NYSE:MP) began selling separated rare earth products like neodymium-praseodymium oxide and entered into a long-term agreement with General Motors to supply U.S.-sourced rare earth materials for electric vehicle motors. The company also received a $50 million prepayment from GM as part of this agreement.
In April, the company received a $58.5 million award from the U.S. Internal Revenue Service and Treasury to support the construction of the first fully integrated rare earth magnet facility in the U.S., with GM set to be a key customer for these products in their EV production.
The company has also made strides in refining rare earths and produced 272 metric tons of neodymium and praseodymium in the second quarter and selling 136 metric tons. It anticipates a 50% production increase in the third quarter due to demand from a new automotive customer.
10. EnerSys (NYSE:ENS)
Number of Hedge Fund Holders: 30
EnerSys (NYSE:ENS) provides energy storage solutions for industrial applications. The company designs, manufactures and distributes energy systems, motive power batteries, specialty batteries, chargers, power equipment, and outdoor enclosures. It operates in over 100 countries.
Its operations are divided into four segments, Energy Systems, Motive Power, Specialty, and New Ventures. Energy Systems serve industries like telecommunications, broadband, and utilities, providing power conversion and storage solutions.
Motive Power products support electric forklifts and industrial vehicles, while Specialty batteries cater to aerospace, defense, medical, and automotive sectors. New Ventures focuses on energy management for applications such as utility backup and electric vehicle charging.
On September 20, EnerSys (NYSE:ENS) announced its selection for $199 million in negotiations from the U.S. Department of Energy (DOE) to support the development of a lithium-ion cell production facility in Greenville, South Carolina. The funding comes from the Bipartisan Infrastructure Law aimed at expanding U.S. battery manufacturing capabilities.
It plans to invest $615 million over four years to build the 500,000-square-foot plant, which will create up to 500 jobs and produce five gigawatt hours (GWh) of lithium-ion cells annually for commercial, industrial, and defense use. The company is also investing $50 million to build a specialized production line for the U.S. Department of Defense.
EnerSys (NYSE:ENS) will use state, federal, and tax incentives to fund the gigafactory, with production expected to start in 2028. It is collaborating with European battery firm, Verkor SAS for manufacturing expertise and aims to strengthen its domestic supply chain.
As reported by The Fly on September 23, Roth MKM analyst Chip Moore maintained a Buy rating on the company with a $120 price target. The optimism is based on the above-discussed $199 million award negotiation with the DOE.
The analyst noted that EnerSys (NYSE:ENS) is well-positioned to support the energy transition and address complex power challenges for its customers. He also expects that trends like electrification, automation, and digitization will drive future growth, which align with the company’s 8%-10% growth target. The company ranks at 10 on our list of most promising EV stocks.
9. Stellantis N.V. (NASDAQ:STLA)
Number of Hedge Fund Holders: 31
Stellantis N.V. (NASDAQ:STLA), a major global automotive manufacturer formed in 2021 from the merger of Fiat Chrysler Automobiles and the PSA Group, is one of the largest and fastest-growing automotive brands. It is the 9th most promising EV stock to buy.
Despite its diverse brand portfolio allowing revenue generation in varying economic conditions, the company has faced challenges, especially in Europe, where inventory levels have surged due to a sluggish economy. This situation is echoed in the U.S., where rising used car inventories have impacted sales. Moreover, the company has encountered difficulties maintaining operations in American plants due to union-related issues.
Nevertheless, the company, which includes well-known brands like Chrysler, Jeep, and Maserati, is focusing on electrification as part of its “Dare Forward 2030” strategy. It aims for 100% BEV sales in Europe and 50% in the U.S. by 2030, with more than 75 BEV models expected globally.
Stellantis (NASDAQ:STLA) is aggressively entering the EV market with plans to transform its product lineup and production capabilities. It has developed four BEV-native platforms, STLA Small, Medium, Large, and Frame, which are designed to cater to different vehicle types. The STLA Large platform, introduced in January, aims to support eight vehicle launches across five brands by 2026, supporting a potential range of 800 kilometers (500 miles). By 2024, the company expects to have 48 BEV models available.
The company is also advancing its manufacturing capabilities, including a €103 million investment to expand electric drive module production in Hungary, scheduled to commence in late 2026.
In addition to its BEV efforts, Stellantis (NASDAQ:STLA) plans to offer 30 hybrid models in Europe by 2024, with sales already increasing by 41% in 2024 compared to the previous year. Partnerships play a vital role in its electrification strategy, such as collaborating with NHOA Energy to develop the Atlante fast-charging network in southern Europe, aiming for 5,000 fast charge points by 2025.
In September, It announced a $406 million investment to improve EV and hybrid production capabilities at three facilities in Michigan, which shows its commitment to a multi-energy strategy that incorporates electric, range-extended, and internal combustion engine models.
8. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 32
Albemarle Corporation (NYSE:ALB) is an American specialty chemicals manufacturer that operates through three main segments which include lithium, bromine specialties, and catalysts. It has established itself as a significant player in the global lithium market, especially for EV batteries, while also leading advancements in flame retardant technologies and catalysts used in petroleum refining.
It serves a diverse range of sectors, including energy, automotive, electronics, and pharmaceuticals. The company provides lithium carbonate and lithium hydroxide products for several cathode applications, alongside tailored pre-lithiation solutions that advance energy storage when combined with silicon anodes.
The company also offers ultra-thin lithium metal anodes for improved energy density and lithium sulfide for solid-state electrolytes, boosting conductivity and safety. Additionally, the company supplies flame-retardant solutions for battery enclosures that ensure safety and durability. Its commitment to developing recycled lithium options supports a sustainable supply chain for the future of clean energy.
According to the company, Albemarle (NYSE:ALB) faces a mix of opportunities and challenges in the global market, especially within lithium battery and energy storage sectors crucial for EVs. The company expects a decline in net sales and profitability in 2024 if lithium prices remain low, although increased production capacity may help offset this.
In the Specialties segment, reduced demand in some areas may lead to lower sales, but a strong performance in pharmaceuticals and agriculture could balance this. The Ketjen business is expected to grow due to lower input costs and rising demand for hydroprocessing catalysts.
Moreover, the company is focused on cash generation, cost management, and optimizing growth investments while remaining open to acquisition opportunities that align with its strategic goal.
The evidence of cost management can be seen in the second quarter as Albemarle (NYSE:ALB) announced reductions in capital spending at its Kemerton site, aiming to save $200-300 million. Moreover, the company is reducing its 2024 capital expenditure by $300-400 million compared to 2023 levels.
With 32 out of 912 hedge funds bullish on the company stock in Q2, the company makes it to the 8th spot on our list of most promising EV stocks.
7. Lumentum Holdings Inc. (NASDAQ:LITE)
Number of Hedge Fund Holders: 32
Lumentum Holdings Inc. (NASDAQ:LITE) is a global manufacturer of optical and photonic products and supplies markets across various regions, including the Americas, Asia-Pacific, Europe, the Middle East, and Africa.
The company plays a crucial role in the EV sector by providing essential components for sensing, communication, and data processing, which are important for developing electric and autonomous vehicles.
Its high-performance laser systems and optical components are significant to 3D sensing technologies in autonomous vehicles and enable features like obstacle detection and navigation. Lumentum’s (NASDAQ:LITE) optical communication solutions facilitate high-speed data transfer and improve connectivity in modern EVs.
As the demand for lithium-ion and solid-state batteries grows, the company’s laser technologies address several manufacturing challenges, as they assist in processes such as electrode cutting and surface structuring. These advancements help manufacturers lower costs and produce battery cells with greater energy and power density.
Lumentum (NASDAQ:LITE) is also playing a significant role in the AI segment as it is working to be a key provider of optical solutions for cloud data centers and AI systems, focusing on improving connectivity and reducing power use. Its strategy involves expanding its customer base, increasing production capacity outside China, and developing new technologies for data connections.
It is focusing on high-speed optical transceivers and has noticed growing demand for its Indium Phosphide lasers, which are essential for expanding data center capabilities. The company is also making progress on 800G and initial 1.6T transceivers and is engaging with several customers in this area. It is expanding its manufacturing capacity, especially in Thailand, to meet this demand.
Lumentum (NASDAQ:LITE) is one of the most promising stocks according to hedge funds. According to our database of 912 hedge funds, 32 hedge funds had a stake worth $702.421 million in Q2.
6. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 37
One of the most promising EV stocks, Rivian Automotive, Inc. (NASDAQ:RIVN) is an American electric vehicle manufacturer and technology company that is most known for its electric SUVs and pickup trucks. It also produces the electric delivery van (EDV) for Amazon.
In June, the company announced a joint venture with Volkswagen Group, with plans to develop next-generation electric architecture and advanced software technology. The partnership aims to improve software development for both companies by combining their strengths. Rivian (NASDAQ:RIVN) will share its electrical design and technology to help lower costs and speed up innovation.
Through this joint venture, Volkswagen will be able to use the company’s existing technology, making it easier to transition to a new design system. Both companies expect to launch vehicles featuring this new technology by the end of the decade, while still running their own businesses separately.
Volkswagen plans to invest $5 billion in Rivian (NASDAQ:RIVN), starting with a $1 billion convertible loan that can turn into stock under certain conditions. The remaining $4 billion will come in later stages.
While the company was struggling with significant losses, this deal is a breath of fresh air at the right time. CNBC reported that Alex Potter, senior analyst at Piper Sandler believes that the partnership is not only crucial for the EV producer, but the entire automotive industry.
Rivian (NASDAQ:RIVN) announced its production and delivery figures for the third quarter on October 4. It reported production of 13,157 vehicles and 10,018 deliveries. The company is facing production challenges due to a shortage of a shared component affecting its R1 and RCV platforms, which began in Q3 and has intensified.
As a result, the company has lowered its annual production forecast to between 47,000 and 49,000 vehicles. However, it has maintained its annual delivery outlook, expecting low single-digit growth compared to 2023, aiming for between 50,500 and 52,000 deliveries.
After the report, Canaccord slightly reduced its price target on the company stock from $30 to $28 but maintained a Buy rating on Rivian (NASDAQ:RIVN). The firm highlighted that supply chain issues with components affected production in the third quarter of 2024. However, the company’s deliveries are still expected to stay on schedule, as management plans to utilize its inventory to satisfy demand. Despite this positive outlook, Canaccord has also adjusted its forecasts for gross margins and deliveries for 2025 downward.
Meridian Hedged Equity Fund stated the following regarding Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q2 2024 investor letter:
“Rivian Automotive, Inc. (NASDAQ:RIVN) is a US-based electric vehicle manufacturer focused on the design, development, and production of electric adventure vehicles, pickup trucks, and commercial delivery vans. We own Rivian because we believe the company is a future leader in the growing electric vehicle market with a strong brand, compelling products, and a vertically integrated business model. During the quarter, Rivian’s stock price was driven by its progress on cost reduction initiatives and management’s stated confidence in achieving positive gross margins by the end of 2024. The recent announcement of a joint venture with Volkswagen, involving up to $5 billion in investment, also significantly boosted Rivian’s financing outlook and validated its technology. We trimmed our position in Rivian given the strong performance in the quarter.”
5. Cummins Inc. (NYSE:CMI)
Number of Hedge Fund Holders: 38
Cummins Inc. (NYSE:CMI) is a power solution company headquartered in Indiana. The company operates through five segments that include Components, Engine, Distribution, Power Systems, and Accelera by Cummins.
The company offers a wide range of products, including diesel, natural gas, electric, and hybrid powertrains, in addition to powertrain components. It serves markets in North America, Europe, and Asia and provides important components for battery electric vehicles. These include batteries, hydrogen fuel cells, e-axles, traction drives, and electrolyzers, which are essential for the growing demand for clean energy solutions.
In May, Accelera by Cummins, the zero-emissions division of Cummins (NYSE:CMI), unveiled several new clean energy products at the 2024 Advanced Clean Transportation Expo. The innovations included upgraded hydrogen fuel cell engines (FCE300 and FCE150), a more efficient 14Xe eAxle, and the adaptable BP104E battery platform.
The fuel cells offer higher power density and durability, while the 14Xe eAxle increases torque and energy efficiency. The BP104E battery, using advanced lithium iron phosphate technology, offers superior performance and flexibility. These next-gen products are designed to accelerate the transition to zero-emissions transportation.
In July, the company announced a $150 million investment to advance battery electric vehicle component manufacturing at its Columbus Engine Plant in Indiana. The project, funded by a $75 million federal grant as part of the Inflation Reduction Act, will transform 360,000 square feet of manufacturing space to produce zero-emissions components and electric powertrains for Accelera.
The investment is expected to create approximately 250 jobs and is projected to reduce greenhouse gas emissions by 104 million metric tons of carbon dioxide by 2030.
On October 2, TipRanks reported that Morgan Stanley analyst Angel Castillo maintained a Buy rating for Cummins (NYSE:CMI) with a $341 price target. The analyst’s positive outlook is based on the company’s strong position in the backup power systems market, especially its service to major tech companies like Microsoft, Amazon, and Meta.
The company effectively combines generator manufacturing with installation and service, which shows solid pricing power and revenue growth. It ranks at 5 on our list of most promising EV stocks to buy.
Parnassus Investments stated the following regarding Cummins Inc. (NYSE:CMI) in its first quarter 2024 investor letter:
“Cummins Inc. (NYSE:CMI), a leader in diesel and alternative fuel engines and generators, guided to a shallower-than-expected downcycle in 2024. New rules from the Environmental Protection Agency are expected to drive higher demand for the company’s truck engines in the coming years.”
4. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Holders: 42
Enphase Energy, Inc. (NASDAQ:ENPH) is a leading company in the energy technology sector, recognized for its innovative solar micro-inverter technology that converts direct current from solar panels into alternating current suitable for home use and the power grid.
The company mainly serves residential customers and offers a range of solar solutions, energy storage systems, and EV charging products.
One of its significant products is the Enphase IQ EV Charger, designed for efficient and flexible EV charging. The charger connects to the internet and allows users to monitor and manage their charging sessions through a digital interface. It helps users optimize charging times for cost savings and lower environmental impact. Moreover, an accompanying app provides insights into energy consumption based on the EV’s battery capacity, which guarantees safe charging while delivering real-time data on energy usage.
Enphase (NASDAQ:ENPH) also offers flexible and reliable commercial EV chargers suitable for several applications, such as workplace charging, fleet management, and improving amenities in residential properties. The chargers are built for all-weather reliability, kept in fully sealed NEMA 4-rated enclosures, and come with integrated cable management solutions.
Its product lineup includes different charging stations, like the IQ EV Charger and HCS models, which offer several power levels and features such as energy monitoring and integration with existing energy systems and it meets different commercial needs.
Enphase (NASDAQ:ENPH) is constantly expanding and increasing its global footprint. On September 24, the company announced that it launched its most powerful system in India, which features the scalable IQ Battery 5P and IQ8 Microinverters to provide reliable backup during frequent outages. The system, with advanced lithium iron phosphate technology, offers continuous and peak power to run appliances and can restart using sunlight.
In addition to that, on October 3, it announced the launch of its IQ8X Microinverters in Australia, which offer peak output power of 384 W and is suitable for high-powered solar modules. Starting October 1, all IQ8 Microinverters activated in Australia will come with a 25-year limited warranty, the longest in the residential solar market there.
According to the Insider Monkey database of 912 hedge funds, 42 hedge funds had stakes in Enphase (NASDAQ:ENPH) in the second quarter, which brings the company to the 4th spot on our list of most promising EV stocks to buy.
3. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 47
Ford Motor Company (NYSE:F) is a well-established car manufacturer with a diverse range of vehicles under the Ford and Lincoln brands. Through its electrification strategy, the company seeks to upgrade key models like the Mustang, F-150, and Transit to electric versions, including the already available Mustang Mach-E and F-150 Lightning.
The company is also expanding its manufacturing capabilities with significant investments, including the Rouge Electric Vehicle Center, as part of its goal to achieve carbon neutrality by 2050. Additionally, it is focusing on improving battery technology, including solid-state batteries.
However, due to increased competition and a decline in global EV sales, Ford (NYSE:F) has reduced its EV operations and is shifting focus to hybrid technology. This strategy allows consumers to transition gradually to new technologies. Ford plans to offer hybrid options across its entire Ford Blue lineup in North America by the end of the decade.
For the third quarter, Ford (NYSE:F) reported a 4% increase in U.S. retail sales, outperforming the overall market, which saw flat sales. Total sales rose by 1%, while the broader industry experienced a 2% decline. The company experienced a 12% increase in EV sales and is the leading hybrid truck seller, which captures 77% of the segment, according to the company.
Sales of the F-150 hybrid jumped by 64%, while Lincoln saw a 26% increase in sales, with the Nautilus achieving its best third-quarter performance since 2007. New Explorer sales rose by 25% following its recent launch.
Ford’s (NYSE:F) electric vehicle sales are up 45% year-to-date, with significant gains from the F-150 Lightning and the E-Transit van. The Ford Pro Intelligence software platform also saw a 30% rise in active subscriptions, now totaling approximately 620,000.
Finally, Ford and Lincoln dealerships provided over 1 million remote service experiences in Q3, a sign of a growing trend in customer convenience. The company’s strategy of offering diverse powertrains appears to resonate well with consumers, which is contributing to its strong sales performance.
One of the company’s biggest growth catalysts is its focus on smaller, more affordable EVs. In our article about best EV stocks under $50 article, we shared the CEO’s comments about its plans. Here is an excerpt from the article:
“The company’s CEO, Jim Farley announced plans to introduce a $30,000 all-electric vehicle in about two and a half years, emphasizing that profitability is a key focus. During the Aspen Ideas Festival held around the last week of June, Farley revealed that this vehicle, developed by a specialized Ford team, is intended to compete with Chinese automakers like BYD and an upcoming entry-level Tesla (NASDAQ:TSLA) model.
Ford (NYSE:F) is prioritizing smaller, more affordable EVs over larger all-electric trucks and SUVs, as Farley believes the latter is unlikely to be profitable due to the high costs of large battery packs. He highlighted the need for a shift in focus to smaller vehicles for both economic and environmental reasons, despite the historical profitability of larger vehicles like the company’s trucks.”
2. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 72
General Motors Company (NYSE:GM) is a leading global automotive manufacturer known for brands such as Chevrolet, Buick, GMC, and Cadillac. The company offers a diverse range of vehicles, from affordable options to luxury models, and announced and promoted its transition towards an all-electric future with its Ultium Platform.
However, the company announced on October 8 that it will abandon the “Ultium” branding for its electric vehicle batteries and associated technologies as part of a strategic reevaluation of its EV and battery operations. This decision was revealed ahead of an investor event. While the company’s EV and EV battery operations will continue, the name Ultium is going.
Although General Motors (NYSE:GM) has revised its EV sales targets, it reported notable growth as it sold nearly 21,000 EVs in July and August, nearly matching total sales from the second quarter. GM aims for profitability in EV production at an output of 200,000 units and is committed to becoming fully electric by 2035.
In the third quarter, it experienced a 3% increase in U.S. retail sales, totaling 659,601 vehicles, despite a 2% decline in overall deliveries. EV sales reached a record high of 32,095 units, a 60% increase year-over-year. General Motors (NYSE:GM) plans to launch five ICE models and two new EVs in the fourth quarter.
The company recently showed its optimistic 2025 outlook to financial analysts at its Spring Hill, Tennessee site. The company reported strong sales for both gas-powered vehicles and EVs, becoming the second-largest EV seller in North America with plans to produce around 200,000 GM-branded EVs this year.
Its diverse EV lineup, including models like the Chevrolet Equinox EV and Cadillac LYRIQ, addresses range anxiety with most models offering over 300 miles per charge. As the company nears EV profitability, it benefits from declining battery costs and reduced fixed expenses. For the future, GM will continue to launch new gas and diesel SUVs while maintaining capital spending levels for 2025.
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 85
Tesla, Inc. (NASDAQ:TSLA) is the pioneer of the electric vehicle industry and has revolutionized the automotive and clean energy sectors. It specializes in designing, manufacturing, and selling BEVs, alongside offering advanced energy storage solutions and solar energy products.
It stands out as one of the world’s most valuable automakers and a leader in the EV market, influencing industry standards such as the North American Charging Standard (NACS) for electric vehicle charging. NACS has been used since 2012 and in 2022, the company opened it to other manufacturers, which led to widespread adoption among EV makers and charging networks.
In 2023, the company also announced the groundbreaking of its in-house lithium refinery in Corpus Christi, Texas, representing an investment of over $1 billion. The facility aims to improve the supply of battery-grade lithium hydroxide in North America.
All eyes are on Tesla (NASDAQ:TSLA) due to the upcoming robotaxi event on October 10. Analysts are keeping a close eye on it and many of them are considering it as a substantial event for the company.
As reported by The Fly, Analyst Colin Rusch from Oppenheimer expects that the company’s upcoming Robotaxi event will effectively highlight the company’s advancements in AI. Oppenheimer also believes that the company will illustrate how its investments in computing and software are creating unique advantages compared to its competitors.
However, the firm warned that the excitement surrounding the event might be hard to meet and that both supporters and critics of the company will find evidence to back their views. Oppenheimer currently rates Tesla’s (NASDAQ:TSLA) stock as Perform, indicating a neutral stance.
On the other hand, RBC Capital analyst Tom Narayan increased the price target on the stock to $236 from $234 with an Overweight rating. He emphasized that the company’s upcoming Robotaxi event is significant because it could show a business that accounts for $153 billion in revenue, making up 63% of the company’s overall value.
Narayan pointed out that the global Robotaxi market could reach $1.7 trillion in revenue by 2040, with several players like fleet operators, app providers, car manufacturers, and software developers competing for market share. The profit margins from these Robotaxi revenues are expected to be much higher than those of traditional car manufacturers.
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.”
While we acknowledge the potential of Tesla, Inc. (NASDAQ: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. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
