In this article, we discuss the 5 electric car stocks to buy for 2022. If you want our detailed analysis of these stocks, go directly to the 10 Electric Car Stocks to Buy for 2022.
5. Li Auto Inc. (NASDAQ:LI)
Number of Hedge Fund Holders: 20
Li Auto Inc. (NASDAQ:LI), an electric vehicle manufacturer from Beijing, China, is one of the best electric car stocks to buy for 2022. Li Auto Inc. (NASDAQ:LI) is a trusted supply chain partner of Bosch, Valeo, Magna International Inc. (NYSE:MGA), and Boe, among others.
On December 8, Tiger Securities analyst Bo Pei initiated coverage of Li Auto Inc. (NASDAQ:LI with a Buy rating and a $40 price target. The analyst believes that extended range electric vehicles offer an attractive value proposition to buyers, which should help Li Auto Inc. (NASDAQ:LI) “obtain a reasonable market share”.
Li Auto Inc. (NASDAQ:LI), on November 29, announced earnings for the third quarter, posting an EPS of $0.05, beating estimates by $0.04. The Q3 revenue jumped 220.23% to $1.22 billion, outperforming estimates by $86.37 million.
Of the 867 hedge funds tracked by Insider Monkey in Q3 2021, 20 funds were long Li Auto Inc. (NASDAQ:LI), with stakes worth $468.1 million. Hedge funds in the third quarter increased their stakes in Li Auto Inc. (NASDAQ:LI) as compared to Q2, when the same number of funds held total stakes valued at $457.2 million in Li Auto Inc. (NASDAQ:LI).
Jericho Capital Asset Management is one of the leading Li Auto Inc. (NASDAQ:LI) stakeholders from the third quarter, with 4.64 million shares worth roughly $122 million.
4. XPeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 25
Reporting its third quarter results on November 23, XPeng Inc. (NYSE:XPEV) posted a loss per share of $0.28, beating estimates by $0.06. The $894.88 million revenue gained 197.34% from the prior year quarter, outperforming estimates by $75 million.
XPeng Inc. (NYSE:XPEV) is an electric vehicle manufacturer from Guangzhou, China, and is ranked among the leading Chinese EV companies. Leveraging the internet, artificial intelligence, and advanced driver assisted technologies, XPeng Inc. (NYSE:XPEV) is working on smart EVs. In addition to electric vehicles, the company is offering charging facilities, auto finance, and post sales services.
Morgan Stanley analyst Tim Hsiao on December 7 named XPeng Inc. (NYSE:XPEV) a “Research Tactical Idea”, expecting the share price to rise in absolute terms over the next 15 days. He stated that the company’s fundamentals “remain solid”, in addition to recent valuation becoming more compelling, and kept an Overweight rating on the shares with an HK$275 price target.
25 hedge funds were bullish on XPeng Inc. (NYSE:XPEV) in the third quarter, up from 19 funds in the preceding quarter. The leading XPeng Inc. (NYSE:XPEV) stakeholder from Q3 is Philippe Laffont’s Coatue Management, holding 9.64 million shares worth $342.73 million.
3. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 30
A multinational automobile manufacturer from Shanghai focused on designing and developing electric vehicles, NIO Inc. (NYSE:NIO) is one of the best electric car stocks to buy for 2022.
In Q3 2021, 30 hedge funds monitored by Insider Monkey were long NIO Inc. (NYSE:NIO), with total stakes valued at $1.13 billion. One of the leading NIO Inc. (NYSE:NIO) stakeholders from the third quarter is billionaire Ken Griffin’s Citadel Investment Group, increasing its stake in the company by 232%, holding over 4 million shares worth $143.1 million.
On November 9, NIO Inc. (NYSE:NIO) posted its Q3 results, announcing a loss per share of $0.06, missing estimates by $0.01. Revenue over the period jumped 122.23% to $1.53 billion, exceeding revenue estimates by $62.90 million.
Tiger Securities analyst Bo Pei initiated coverage of NIO Inc. (NYSE:NIO) with a Buy rating and $45 price target on December 8. According to the analyst, NIO Inc. (NYSE:NIO) is well positioned to “ride the global smart” electric vehicle adoption trend in the coming decade and “become a major player in the field”. NIO Inc. (NYSE:NIO) has “successfully established a first-class brand image with superior performance, elegant design, leading services, and a unique user community”, the analyst elaborated further.
2. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Elon Musk’s Tesla, Inc. (NASDAQ:TSLA) is one of the most famous companies in the EV space, specializing in electric vehicles, clean energy, battery storage, and solar products. Tesla, Inc. (NASDAQ:TSLA) reported solid earnings for the third quarter on October 20, posting an EPS of $1.86, beating estimates by $0.25. The revenue increased 56.85% year-over-year, reaching $13.76 billion, outperforming estimates by $54.61 million.
On December 8, New Street analyst Pierre Ferragu raised the price target on Tesla, Inc. (NASDAQ:TSLA) to $1,580 from $1,298 and kept a Buy rating on the shares. The analyst expects 280,000 to 285,000 Tesla, Inc. (NASDAQ:TSLA) vehicles to be delivered in Q4, which would reflect an increase of 40,000 units from Q3 and exceed the consensus forecast of 266,000 units.
One of the leading Tesla, Inc. (NASDAQ:TSLA) from the third quarter is Cathie Wood’s ARK Investment Management, with 3.95 million shares worth over $3 billion. Tesla, Inc. (NASDAQ:TSLA) is an immensely popular EV stock among hedge funds, with 60 funds being bullish on Tesla, Inc. (NASDAQ:TSLA) in Q3 2021, holding total stakes valued at $10.64 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q3 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock contributed as Tesla continued to present strong deliveries growth and a meaningful improvement in profitability despite a complex supply-chain environment. Demand remains robust, new localized manufacturing capacity is expected to support more efficient growth, and the autonomous program is accelerating. We expect Tesla’s growing vehicle offering, battery technology, and energy businesses to drive meaningful growth opportunities.”
1. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 77
Ranking first on our list of the best electric car stocks to buy for 2022 is General Motors Company (NYSE:GM), an American multinational automobile manufacturer that is aiming to deliver 30 new electric vehicles worldwide by 2025. The flagship vehicles at General Motors Company (NYSE:GM) include Chevrolet, Buick, GMC, and Cadillac. General Motors Company (NYSE:GM) is expanding its operations into Michigan, investing over $3 billion in multiple EV projects in the region.
Publishing its third quarter earnings on October 28, General Motors Company (NYSE:GM) posted an EPS of $1.52, beating estimates by $0.55. Revenue for the period equaled $26.78 billion, missing estimates by $1.10 billion.
Daiwa analyst Jairam Nathan downgraded General Motors Company (NYSE:GM) to Neutral from Outperform with an unchanged price target of $65 on December 15, as part of a broader research note on the U.S. auto sector. He shifted his view on the US auto sector from Positive to Neutral, saying “there are risks in the horizon that could undermine valuations”. The risks include slowing growth in China, the transition to electric vehicles hurting margins and cash flow, a flattening yield curve, deteriorating consumer confidence, and uncertain vehicle buying conditions.
General Motors Company (NYSE:GM) is a popular stock among the smart money, with 77 funds in the third quarter being bullish on the company. Warren Buffett’s Berkshire Hathaway is the leading General Motors Company (NYSE:GM) stakeholder from the third quarter, with 60 million shares worth $3.16 billion.
Here is what Miller Value Partners has to say about General Motors Company (NYSE:GM) in its Q3 2021 investor letter:
“Another name we’ve recently purchased and have grown incredibly excited about: General Motors (GM). GM is interesting on many levels. We see it as an attractive investment opportunity and it might be a microcosm of current markets, both past and prospective.
Tesla trounced GM over the last decade. Tesla rose 15,797% crushing GM’s 238% increase, which lagged the S&P 500’s 365%. Tesla came out of nowhere creating what many said was the best car ever made. A decade ago, no one saw that coming, including GM. GM’s historical strength led to arrogance. It completely dismissed the threat of any newcomer.
Where are we now? Expectations are entirely different. Tesla’s current price embeds 18 years of growth while GM embeds under one year (see a pattern in what we like?!). Tesla’s expectations look even loftier when you consider that in that 18th year, Tesla would be projected to earn $1.35 trillion revenues at very high, Ferrari-type margins. The largest automakers today generate roughly $250 billion revenues at less than half those margins.
Tesla’s priced to go where no man (or woman!) has gone before. It’s impossible for Tesla to meet these expectations with auto manufacturing alone. It requires something more. Bulls believe Tesla can dominate an autonomous driving future and make significant money on software subscriptions. We don’t have a view on this other than that Tesla needs to do so to be attractive at the current price.
Market expectations for GM, on the other hand, are muted. There appears to be no innovation or growth priced into the stock. Yet GM plans to launch 30 EV (electric vehicles) models globally by 2025 (Tesla has launched a total of 4). GM’s new electric vehicles, like the Hummer and Cadillac Lyric, are extremely impressive. It’s revamping its manufacturing production to be modular, allowing greater speed and adaptability. The entire culture has transformed from a stodgy, bureaucratic old manufacturer to a speedier, more innovative software-enabled automaker. GM currently employs 25,000 software engineers.
GM believes it can double revenues by 2030, and improve margins through software and services. GM currently earns $2 billion of high margin software and services revenue, which is more than Tesla. Cruise, GM’s majority owned autonomous company, recently detailed why it sees the potential for $50B in revenues within 6-8 years of its 2023 launch of the Origin vehicle. BrightDrop, its autonomous commercial vehicle unit, looks promising as well with the potential for $10 billion in revenues. We don’t think this optionality is reflected in the current price. Investors started to see the potential after GM’s recently analyst day. We can easily get values for GM more than double its current price of $58.
The contrast between GM and Tesla illustrates what we see more broadly in the market, which is why we see more opportunity in classic value names than in the secular growth names. After a decade of dominance, expectations for innovative and disruptive companies are quite high. Many classic value companies were caught flat-footed, but have invested heavily to catch up. Muted expectations don’t reflect their improved prospects.”
You can also take a look at Billionaire Ken Griffin’s Portfolio: Top 10 Stock Picks and 10 Favorite Stocks of Cathie Wood and Ken Fisher.
