In this article, we look at the 11 best EV stocks to buy now.
The EV industry has seen an exponential growth over past couple years off the back of strong investment support and favorable government intervention. As per International Energy Agency, governments across the world spent US$14 billion on direct purchase incentives and tax deductions for EVs in 2020, exhibiting 25% year-on-year growth. Over 10 million EVs were seen on the world’s roads in 2020, with expansion being driven by battery electric models. Perhaps this fertile ground was backed by fall in the battery costs.
EVs tend to gain more importance principally because electrification of transport sector has its own benefits and can result in higher energy efficiency and lower local pollution. Data by the US Environmental Protection Agency’s Green Vehicle Guide suggests that 27% of 2020 greenhouse gas emissions was because of transportation sector. More than 90% of the fuel utilized for transportation is petroleum based, mainly gasoline and diesel. CO2 emissions are detrimental to the environment and can cause global warming. Gases trapping heat in the atmosphere are commonly referred to as greenhouse gases. Apart from CO2 emissions, conventional cars also emit methane and nitrous oxide. Emissions of methane and nitrous oxide can cause more harm to the environment than carbon dioxide because these gases have high global warming potential (GWP).
In contrast, EVs provide an opportunity to replace fossil fuels by the electric systems in transport sector. The electric vehicles offer environmental savings as they reduce emissions during their use and over their whole lifecycle. A range of new developments, principally relating to electric cars, represent a positive trend for the EV industry. With some big names joining in, solid growth in production and sales of EVs is expected.
Keeping the present and future context in mind, governments across the globe have made policies in the favour of EV adoption. According to International Energy Agency, significant fiscal incentives stemmed the initial growth in electric light-duty vehicles and supported the rise of EV manufacturing and battery industries. The measures including purchase subsidies, and/or vehicle purchase and registration tax rebates helped in reducing gaps in pricing with conventional vehicles.
As per International Energy Agency, governments in Europe and in the US promoted industrial policies focused on domestic development of EV supply chains. This is because more than half of all lithium, cobalt and graphite processing and refining capacity is in China.
The growth of EV market has made big companies like Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Fisker Inc. (NYSE:FSR) more popular. Today, these companies are leading the EV market.
Our Methodology
To select the 11 best EV stocks to buy now, we went through the various publications by International Energy Agency and then looked for the stocks likely to benefit from the current trends and developments. We also looked at the hedge fund sentiment for each stock using Insider Monkey’s database, which as of the first quarter of 2022, tracks 912 renowned hedge funds.
Best EV Stocks to Buy Now
11. BYD Company Limited (OTCMKTS:BYDDF)
Number of Hedge Fund Holders: 2
BYD Company Limited (OTCMKTS:BYDDF) is a Chinese automobile and electronics manufacturing company. Its automobile business manufactures and sells electric and internal combustion automobiles, principally passenger vehicles and buses. This segment is engaged in providing low-carbon urban rail transportation products.
Apart from expansion into new export markets like Americas, BYD Company Limited has plans to come up with several plants in upcoming months. A range of new models are in the company’s pipeline.
BYD Company Limited continues to work on addressing its supply challenges as it plans to acquire 6 lithium mines in Africa. According to local media reports, new supplies are expected to meet capacity for over 20 million pure EVs. Capitalizing upon strong market in China, its expansion spree is expected to continue in Latin America.
BYD Company Limited, which is backed by Warren Buffett, was able to deliver solid preliminary first-quarter earnings. Sales volume of new EVs touched record high and its market share continued to increase.
10. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 29
Rivian Automotive, Inc. (NASDAQ:RIVN) is engaged in designing, developing and manufacturing category-defining EVs and accessories.
The company, which ranks 10th on our list of the 11 best EV stocks to buy now, saw total production of 2,553 vehicles in 1Q22. It delivered 1,227 vehicles, resulting in revenue of $95 million. The company continues to target ramping up of production throughout 2022.
By the end of the first quarter of 2022, 29 hedge funds out of 912 tracked by Insider Monkey held stakes in this company. Their stakes were valued at $3.94 billion.
Baron Funds, an asset management firm, released its first-quarter 2022 investor letter and mentioned Rivian Automotive, Inc.. Here is what the fund said:
“Rivian Automotive, Inc. designs, manufactures, and sells consumer and commercial electric vehicles. Shares of Rivian continued its volatile trading following the stock’s IPO in late 2021, declining 52% in the first quarter as investors rotated out of fast-growing long-duration stocks and as industrywide supply-chain issues delayed Rivian’s production ramp. In addition, even while other automotive companies raised prices due to inflationary pressures, Rivian launched a price increase campaign that was not well communicated and, as a result, was met with dissatisfaction by existing reservation holders. While this was an unforced error, the company quickly corrected course, reversing its decision to raise prices for existing reservations, while maintaining the increase on new buyers (which has not caused a material impact to demand). We retain conviction in the shares given management’s vision, Rivian’s product positioning, the company’s relationship with Amazon.com, and the company’s strong balance sheet, which will help it overcome the current challenges while taking advantage of the long-term opportunity as the market transitions to electric vehicles.”
9. Fisker Inc. (NYSE:FSR)
Number of Hedge Fund Holders: 16
Fisker Inc. is engaged in building the technology-enabled, asset-light automotive business model. The company believes that the business model will be among first of its kind and it will be aligned with the future state of the automotive industry.
The stock ranks 9th on our list of the 11 best EV stocks to buy now. As of the first quarter of 2022, 16 hedge funds out of the 912 funds tracked by Insider Monkey held stakes in the company. In the preceding quarter, 21 hedge funds out of the 924 funds tracked by Insider Monkey held stakes in the company.
The performance of the company depends on its products and production timeline. Fisker Inc. has plans to triple its production of Ocean SUV model from 2024 with contract manufacturer Magna. It is only fair to increase production when the demand increases. Production at the Magna plant should commence in November 2022. For the company, 2023 will be 1st year of production and it plans to manufacture 50,000 cars.
Fisker Inc. has over 40,000 reservations in its hand for the Ocean, signifying higher potential for revenues. Credit Suisse has a positive view on this sector and has an “Outperform” rating on Fisker Inc.. Analyst Dan Levy gave a price target of $20 as he views that the company is ready to capitalize on increasing EV inflection.
8. Nikola Corporation (NASDAQ:NKLA)
Number of Hedge Fund Holders: 16
Nikola Corporation (NASDAQ:NKLA) is a designer and manufacturer of battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, and hydrogen fueling station infrastructure.
There were several notable achievements in the first quarter. The final 10 of a total fleet of 40 pre-series Tre BEVs came off the production line. These trucks find usage in customer pilots, dealer demos, and internal R&D testing. Nikola Corporation commenced shipping saleable Tre BEVs to dealers in April. The company received POs, LOIs, and MOUs for total of 510 Nikola Tre BEVs.
In 1Q22, 16 hedge funds out of the 912 funds tracked by Insider Monkey reported owning stakes in the company. In the preceding quarter, 13 hedge funds out of the 924 funds tracked by Insider Monkey held stakes in the company.
7. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 26
NIO Inc. (NYSE:NIO) carries out operations in China’s premium EV market. The company is engaged in designing and jointly manufacturing, and selling smart and connected premium EVs, driving innovations in next-gen technologies in connectivity, autonomous driving, and AI. The stock ranks 7th on our list of the 11 best EV stocks to buy now.
NIO Inc. delivered 5,074 vehicles in April 2022. In April 2022, the company joined hands with the World Wide Fund for Nature in Clean Parks, an ecosystem co-construction initiative which was launched by NIO Inc. in 2021.
Bank of America analyst Ming-Hsun Lee upgraded the stock’s rating to “Buy”, with a price target of $26 per share. The analyst is optimistic on the company and anticipates improvement in sales and margins in the second half of the year. According to the analyst, NIO’s ET7 model EV has started shipping in March, and ET7 should commence delivery as soon as August, which is slightly ahead of expectations. NIO Inc. plans a secondary listing of ADRs in Singapore. The company seems to be on growth track given its premium EV leadership and global expansion in EU.
By the end of the first quarter of 2022, 26 hedge funds out of the 912 tracked by Insider Monkey held stakes in this company. The total value of their stakes was $716.09 million.
6. Lucid Group, Inc. (NASDAQ:LCID)
Number of Hedge Fund Holders: 16
Lucid Group, Inc. (NASDAQ:LCID) is the technology and automotive company, engaged in developing next generation EV technologies. It is a vertically integrated company which designs, engineers, and builds EVs, EV powertrains, and battery systems in-house by using its own equipment and factory.
In the 1Q of fiscal 2022, it reported revenue of $57.7 million on deliveries of 360 vehicles to customers. The company has reiterated its 2022 production volume outlook of 12,000-14,000 vehicles. It ended 1Q22 with ~$5.4 billion cash on hand, and this should fund it well into fiscal year 2023.
By the end of the first quarter of 2022, 16 hedge funds out of the 912 tracked by Insider Monkey held stakes in Lucid Group, Inc.. The total value of their stakes was $159.1 million. Lucid Group, Inc. ranks 6th on our list of 11 best EV stocks to buy now. This EV maker has signed a massive agreement with Saudi Arabian government. The agreement is for purchase of up to 100,000 Lucid vehicles over 10 years. Saudi Arabia plans to purchase 50,000 vehicles, with an option to buy additional 50,000 vehicles anytime during 10 years. Lucid Group, Inc. manufactures vehicles in Arizona. Plans are there to expand production into Saudi Arabia later in the year, where it should manufacture up to 150,000 vehicles per year.
Citigroup initiated coverage on Lucid Group, Inc. and reduced its price objective from $45.00 to $36.00. They gave a “Buy” rating on the stock. The company has over 30,000 reservations for Air sedan, and plans to raise pricing on various Air models by ~10% to 12% from June 1. The company clarified that 30,000 reservations do not include any vehicles from order by Saudi Arabian government. Lucid Group, Inc. has confirmed that its next vehicle, a luxury SUV called Gravity, is expected in 1H24.
Just like Tesla, Inc., NIO Inc. and Ford Motor Company (NYSE:F), Lucid Group, Inc. is one of the 11 best EV stocks to buy now.
5. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 80
Tesla, Inc. is the vertically integrated sustainable energy company, aiming to transition the world to electric mobility through the manufacturing of the EVs.
By the end of the first quarter of 2022, 80 hedge funds out of 912 tracked by Insider Monkey held stakes in this company. In the preceding quarter, 91 hedge funds out of 924 tracked by Insider Monkey reported owning stakes in this company.
Oppenheimer raised its target price on Tesla, Inc. from $1,103.00 to $1,291.00 and gave it an “Outperform” rating.
Despite supply chain challenges and factory shutdowns, the company produced over 305,000 vehicles and delivered over 310,000 vehicles in 1Q22. The company posted total revenue of $18.8 billion, up 81% year-over-year. Over the multi-year horizon, Tesla, Inc. expects achieving 50% average annual growth in vehicle deliveries. The company enjoys healthy liquidity levels to fund its product roadmap, long-term plans for capacity expansion and other miscellaneous expenses.
Baron Funds, an asset management firm, released its first-quarter 2022 investor letter and mentioned Tesla, Inc.. Here is what the fund said:
“During the first quarter, we bought back shares in Tesla, Inc., which designs, manufactures, and sells electric vehicles, solar products, energy storage solutions, and batteries. We believe that despite the run in the stock over the last few years, Tesla presents a favorable risk/reward profile and remains a Big Idea with only about 1% market share of the automotive market. Since we bought the stock during the first quarter, shares increased 27.1%, despite a complex supply-chain environment, on continued revenue growth and record profitability. Robust demand and operational optimization allow the company to offset inflationary pressures while vertical integration provides flexibility around supply bottlenecks. Moreover, we expect new localized manufacturing capacity to drive additional efficiencies while software initiatives, including the autonomous driving program, are accelerating, offering valuable optionality to the stock.”
4. Lightning eMotors, Inc. (NYSE:ZEV)
Number of Hedge Fund Holders: 15
Lightning eMotors, Inc. (NYSE:ZEV) manufactures electric fleet of medium and heavy-duty vehicles, that include delivery trucks, shuttle buses, passenger vans, chassis-cab models, and city transit buses.
The company has turned heads of numerous hedge fund managers in the recent quarter. By the end of the first quarter of 2022, 15 hedge funds out of 912 tracked by Insider Monkey held stakes in this company. Their stakes were valued at ~$10.5 million. In the preceding quarter, 7 hedge funds out of 924 tracked by Insider Monkey held stakes in Lightning eMotors, Inc..
Northland Securities gave an “Outperform” rating on Lightning eMotors, Inc., with a price target of $6.50. The company has narrowed profitability gap in its 1Q22 results. Quarterly net loss of $10.8 million against $27.4 million net loss in 1Q21 means the company has a clear path to profitability. The company, which has given increased revenue guidance of $6 million- $8 million for second quarter, has teamed with Blue Bird Corporation (NASDAQ:BLBD) and General Motors Company. Not only this, it has won new and repeat orders with major fleets in the U.S. and Canada.
In 1Q22, the company saw record revenue of $5.4 million, exhibiting 18% year-over-year growth, on 68 units sold. Lightning eMotors, Inc. expects selling 55 units to 75 units of vehicle and powertrain in the second quarter.
3. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 46
Ford Motor Company is engaged in manufacturing automobiles under its Ford and Lincoln brands. In March 2022, the company made an announcement that it will run its combustion engine business, Ford Blue, and its BEV business, Ford Model e, as separate businesses.
The company has maintained its FY22 outlook of $11.5 billion-$12.5 billion for adjusted EBIT. It anticipates posting adjusted FCF for FY22 of $5.5 billion-$6.5 billion. The outlook numbers are being backed by solid demand and pricing environment for its vehicles.
EV sales of the company jumped 221.5% in May. The company commented that it is ~4 times faster in comparison to overall EV sales growth in the United States.
In the same month, Ford Motor Company commenced selling its F-150 Lightning pickups, and the company said over 75% of its customers booking all-electric truck are new to the company. Therefore, we can now have a fair idea about the market size which F-150 Lightning can capture in upcoming years. The company has plans to invest ~$3.7 billion and add over 6,200 new union jobs at 3 of its plants. This investment comes on the heels of its decision to ramp up production of gas-powered and EVs both.
At the end of the first quarter of 2022, 46 hedge funds in the database of Insider Monkey held stakes worth $1.23 billion in Ford Motor Company, down from 53 in the preceding quarter worth $1.70 billion. Recently, BNP Paribas initiated coverage on the company, and gave it an “Outperform” rating.
2. Aptiv PLC (NYSE:APTV)
Number of Hedge Fund Holders: 48
Aptiv PLC (NYSE:APTV) is a leading global technology and mobility company. The company principally serves the automotive sector, and it designs and manufactures vehicle components and offers electrical, electronic and active safety technology solutions to the global automotive and commercial vehicle markets.
In 1Q22, its U.S. GAAP revenue was $4.2 billion, exhibiting a rise of 4%. The company anticipates net sales of between $17,750 million – $18,150 million in FY22. That’s a growth of ~13.7% year-over-year on lower end of the range. It expects its adjusted EBITDA to come in the range of $2,415 million-$2,695 million. The company continues to benefit from one of the strongest secular tailwinds. Rapid transition around the globe on producing BEVs should lend support to the company’s profits, margin, and ROI.
Furthermore, planned cash acquisition of $4.3 billion of Wind River from private equity firm TPG should give the company an edge over its competitors, mainly with autonomous driving vehicles. The company is scheduled to close this acquisition in mid-2022. The company has been working with over 20 global automakers and should be a lead beneficiary from megatrends driving change in this industry as car and truck makers are battling to roll out next generation of fleets which are greener and smarter. Several changes are due to the government mandates.
As of the first quarter of 2022, 48 hedge funds out of the 912 funds tracked by Insider Monkey held stakes in the company, up from 44 hedge funds in the preceding quarter. Analysts at BNP Paribas initiated coverage on Aptiv PLC, and gave an “Outperform” rating with the price target of $160.00. The company seems to be in an excellent position to strengthen its competitive position given its relentless focus on execution.
ClearBridge Investments, an investment management firm, published first quarter 2022 investor letter and mentioned Aptiv PLC. Here is what the fund has to say:
“The acceleration in electrification of transport should support electric vehicle (EV)-related stocks like Aptiv (NYSE:APTV), which came under pressure in the quarter on concerns the auto cycle is past its peak. Aptiv provides a range of solutions for the auto industry, including autonomous driving technologies, safety technologies, components, and wiring. The large exposure of APTV to EVs should lead to long-term value as EVs continue their growth, boosted by their relative attractiveness as prices at the pump hit near-historic highs.”
1. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 76
General Motors Company designs, builds and sells trucks, crossovers, cars and automobile parts worldwide. Cruise is the company’s global segment, which takes care of the development and commercialization of autonomous vehicle technology. Its automotive operations address the demands of its customers through automotive segments: GM North America and GM International.
By the end of the first quarter of 2022, 76 hedge funds out of the 912 tracked by Insider Monkey held stakes in this company. The total value of their stakes was $5.50 billion. Comparatively, in the previous quarter, 90 hedge funds held stakes in the company worth $7.13 billion. The company ranks 1st on our list of the 11 best EV stocks to buy now.
In the first quarter of 2022, the company saw EBIT-adjusted of $4 billion. This solid start to the year was off the back of strong customer demand for its products. General Motors Company expects reporting diluted EPS in the range of $5.76-$6.76 for FY22. The company anticipates FY22 net income of between $9.6 billion-$11.2 billion. The company expects that its biggest opportunity in North America is in electric trucks.
General Motors Company continues to make progress on the electrification of their offerings. The company has plans to launch 30 EVs by the year 2025. By the mid-decade, plans are there to sell more than 2 million EVs annually only in North America. It has been betting big on battery technology and autonomous driving given its plans to invest ~$35 billion on these verticals.
Oakmark Funds, an investment management firm, published its 1Q22 investor letter and mentioned General Motors Company. Here is what the fund said:
“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are underappreciated.”
You can also take a peek at Top 10 Electric Bike Companies in the World and 10 Electric Car Stocks to Buy for 2022
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This article is originally published at Insider Monkey.
