In this article, we discuss the 5 best EV stocks to buy now. If you want to see more stocks in this selection, check out the 12 Best EV Stocks to Buy Now.
5. XPeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 24
XPeng Inc. (NYSE:XPEV) is a Guangzhou, China-based EV company that is addressing the needs of the Chinese tech-savvy and middle-class consumers in the biggest EV market in the world.
XPeng Inc. (NYSE:XPEV) is also working on enhancing the driving experience by offering its proprietary advanced driver assistance system and in-car intelligent operating system. On September 22, Tim Hsaio at Morgan Stanley gave an Overweight rating on XPeng Inc. (NYSE:XPEV) stock with a target price of $41. The company recently revealed its fourth production model in the form of a G9 Flagship SUV that is expected to surpass the current production volume of the P7. The analyst cites the increase in benchmark interest rates by the Federal Reserve as one of the reasons for the correction in XPeng Inc.’s (NYSE:XPEV) stock price. This provides an attractive opportunity for investors to go long on one of the best EV stocks in the market.
Renaissance Technologies raised its stake in XPeng Inc. (NYSE:XPEV) by 257% during Q2 2022.
4. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 25
NIO Inc. (NYSE:NIO) is a Shanghai, China-based EV company operating in the Sedan and SUV category through its various offerings.
In August, Edison Yu at Deutsche Bank highlighted two factors that are expected to make NIO Inc. (NYSE:NIO) outperform its competitors in the EV startup segment. The first factor is the initial positive response that NIO Inc.’s (NYSE:NIO) mid-size Sedan ET5 received from customers. The company can address this strong demand for its top-selling premium model by leveraging its new production facilities.
The second factor is the stable demand for NIO Inc.’s (NYSE:NIO) present offerings which are more expensive than competitors. This reflects that the company has pricing power, and the customer is more focused on the brand than the features offered. The analyst gave NIO Inc. (NYSE:NIO) stock a Buy rating with a $39 price target in late August.
Here’s what Horos Asset Management said about NIO Inc. (NYSE:NIO) in its Q1 2022 investor letter:
“At the beginning of April the CSRC (China Securities Regulatory Commission) announced possible changes in its regulation that would allow this inspection by foreign auditors, provided that the companies previously communicate to this body the state secrets that would be exposed, as well as the sensitive information that they might have to hand over, and the subsequent audit is carried out in a framework of collaboration with the CSRC. In short, a move in the direction desired by the SEC, although still far from the optimal result, that is, unrestricted access to information. While these negotiations between the two regulatory bodies are progressing, Chinese companies have to decide how best to preserve their interests. Other entities, such as the electric vehicle manufacturer Nio, have just started trading on this stock market.”
3. Li Auto Inc. (NASDAQ:LI)
Number of Hedge Fund Holders: 28
Li Auto Inc. (NASDAQ:LI) is a Beijing, China-based EV company. The company is at the third position on our list of the 12 best EV stocks to buy now.
Li Auto Inc. (NASDAQ:LI) introduced its SUV offering Li L7 and Li L8 on September 30. The Li L8 is a six-seater all-electric SUV that will compete against the leading all-electric SUV of European auto companies operating in the Chinese market. Paul Gong at UBS believes that the EV adoption rate in China will rise to 30% in the months ahead, which could result in the annual deliveries of EVs surpassing the six million level by the end of 2022, doubling from last year’s level. Li Auto Inc. (NASDAQ:LI) delivered 11,531 vehicles in September 2022. The Swiss financial services firm UBS thinks that 60% of all automobiles in China will be electric by the end of this decade.
Tiger Global Management LLC was the leading hedge fund investor in Li Auto Inc. (NASDAQ:LI) during Q2 2022.
2. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 35
Rivian Automotive, Inc. (NASDAQ:RIVN) is a California-based EV company that is making a place in the EV market through its all-electric SUV R1S and electric truck R1T.
On September 28, Jordan Levy at Truist initiated coverage on Rivian Automotive, Inc. (NASDAQ:RIVN) stock with a Buy rating and a target price of $65, reflecting a potential upside of over 97% from the closing price as of September 30. The analyst believes that investors will soon see Rivian Automotive, Inc. (NASDAQ:RIVN) as a “next generation diversified tech powerhouse.” Furthermore, the strategic partnership with Amazon.com, Inc. (NASDAQ:AMZN) gives an edge to Rivian Automotive, Inc. (NASDAQ:RIVN) as compared to other original equipment manufacturers (OEMs) in the commercial market. The company’s competitive edge makes it one of the best EV stocks to buy currently.
Here’s what Baron Funds said about Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q2 2022 investor letter:
“Rivian Automotive, Inc. designs, manufactures, and sells consumer and commercial electric vehicles. Shares of Rivian declined 48.2% in the second quarter as investors continued rotating out of long-duration assets and have become increasingly concerned about capital intensity and cash burn.
At the same time, Rivian continues to be impacted by supply chain issues which are causing delays in its production ramp. Rivian is addressing those challenges by diversifying its supply chain to alleviate shortages while also consolidating the number of variants in development to reduce cash burn (the company guided that current cash will be enough to support the company’s future platform launch ‘R2’ in 2025). Rivian recently reported stronger-than-expected second quarter production numbers while reiterating its annual guidance of producing 25,000 units.
As semiconductor shortages ease, we believe that the company will be able to rapidly ramp its production. We retain conviction in the shares given management’s vision, Rivian’s product positioning, the company’s relationship with Amazon.com, and its strong balance sheet. As of the end of the first quarter, Rivian had $17 billion of cash and cash equivalents, which will help it overcome the current challenges while taking advantage of the long-term opportunity as the market transitions to electric vehicles.”
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
Tesla, Inc. (NASDAQ:TSLA) is a Texas-based company that has established a leadership position in the EV market under the guidance of its founder and CEO, Elon Musk.
Tesla, Inc. (NASDAQ:TSLA) anticipates a substantial increase in the production of its fully electric SUV Model Y and Model 3 during Q4 2022 and intends to capitalize on this growth next year as well. The company aims to reach the annual production levels of German luxury auto manufacturer BMW. Tesla, Inc. (NASDAQ:TSLA) is anticipating total production of 1.59 million Model Y and Model 3 vehicles during the first quarter of 2023. Despite the recent macroeconomic uncertainty causing a slump in the stock price of Tesla, Inc. (NASDAQ:TSLA), it is still in the green on a YoY basis, making it one of the best EV stocks in the market.
Baron Funds Shared its outlook on Tesla, Inc. (NASDAQ:TSLA) in its Q2 2022 investor letter. Here’s what the firm said:
“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:
- First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic;
- second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.
Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful.
Regardless, I was right to have spoken with Roger. That was since he outlined numerous issues we needed to consider, study, and question before we determined whether we believed Tesla could be a successful business…before we ultimately chose whether to invest in that company.
When we completed our initial due diligence on Tesla, which diligence has been ongoing since 2014, we decided to invest $360 million in Tesla over the next two years. I then called Roger and outlined why I thought we could earn 20 times our capital over the next 10 years. Roger was so certain I was wrong that he offered to bet me $1 million that Tesla would fail. “Roger, I can’t bet you a million dollars. First, if you are right, I couldn’t afford to pay you. Second, if I’m right, you’re my friend, and I couldn’t take your money.” We settled on a dinner bet…” (Click here to see the full text)
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