In this article, we will look at the 8 Fastest Growing Auto Stocks to Invest in Now.
Auto Sector Outlook 2025
On December 20, 2024, S&P Global released its auto sales forecast for 2025. The report forecasts a slight decrease in global light vehicle production for 2025, estimating a 0.4% decline to 88.7 million units. Moreover, the production is also expected to fall slightly by 1.6%, with production levels finishing at 89.1 million units. The report predicts this decline to be across all regions except mainland China and South America. The primary factor influencing the 2025 outlook is the anticipated implementation of a widespread tariff regime by the incoming US administration, which includes a universal 10% tariff on all goods entering the US and a 30% tariff on goods from mainland China. You can read more about it in our article titled, 11 Best Undervalued Stocks to Invest in Now.
While elaborating on the expectations from a regional point of view, the report highlights stable production levels in Mainland China for 2025. The production level is anticipated to rise slightly by 0.1% to 29.6 million units. This will be driven by strong domestic demand for New Energy Vehicles and robust exports, though tempered by EU import tariffs on Chinese-made BEVs. On the other hand, in North America, the overall production is set to decrease by 2.4% to 15.1 million units. The report highlights that the US administration’s policies are expected to influence overall demand and challenge vehicle mix assumptions. Deregulation could provide tailwinds for the North American auto industry later in the administration’s second term.
Production in Europe is expected to reach 16.6 million units in 2025, a 2.6% decrease from the estimated 17.0 million in 2024. This reflects adjustments in the propulsion mix in preparation for the 2025 EU emissions rules, along with new tariffs associated with the Trump administration, which particularly impacts premium vehicles.
Despite concerns around electrification, the report expects electric vehicles to remain a significant growth sector. Global sales for battery electric passenger vehicles are projected to reach 15.1 million units in 2025, indicating a 30% increase compared to 2024 and accounting for an estimated 16.7% of global light vehicle sales. Moreover, in 2024 an estimated 11.6 million BEVs were sold globally, representing a 13.2% market share.
With that let’s take a look at the 8 fastest growing auto stocks to invest in now.
An auto warehouse filled with newly acquired used cars.
Our Methodology
To compile the list of 8 fastest growing auto stocks to invest in now, we used the year-over-year sales growth and 3-year sales growth as our primary indicators. Using the Finviz stock screener, we looked for auto manufacturers, auto parts, and auto and truck dealership companies that have a year-over-year sales growth of more than 15%, followed by a positive 3-year sales growth. We cross checked these figures from Seeking Alpha and ranked the eligible stocks in ascending order of the number of hedge fund holders sourced from Insider Monkey’s Q4 2024 database.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
8 Fastest Growing Auto Stocks to Invest in Now
8. Microvast Holdings, Inc. (NASDAQ:MVST)
Year-Over-Year Sales Growth: 39.03%
3-Year Sales Growth: 40.65%
Number of Hedge Fund Holders: 12
Microvast Holdings, Inc. (NASDAQ:MVST) is a company that focuses on creating advanced battery technologies. Its batteries are used for two main purposes including electric vehicles, and utility-scale energy systems. The company has a global presence and sells its products in Europe, the Middle East, Africa, Asia & Pacific, and the United States.
During the fiscal third quarter of 2024, Microvast Holdings, Inc. (NASDAQ:MVST) reported a record revenue of $101.4 million, representing a 27% year-over-year increase. The growth was largely driven by a 212% sales growth in the EMEA region. Moreover, the company also improved its gross margins to 33.2%, which was a substantial increase when compared to last year’s 22.3% margins. The company has made significant progress on new technologies, including silicon-based cell technologies and all-solid-state batteries.
On January 9, Microvast Holdings, Inc. (NASDAQ:MVST) announced a breakthrough in True All-Solid-State Battery technology. The company highlighted that, unlike traditional lithium-ion batteries, its ASSB technology completely eliminates liquid electrolytes, which are prone to overheating and can pose safety risks. Moreover, the ASSB technology can achieve voltages of 12V to 21V per cell, significantly higher than the typical 3.2V to 3.7V of lithium-ion batteries. This capability opens up new possibilities for applications requiring high energy density without compromising safety. It is one of the fastest-growing auto stocks to invest in now.
7. Luminar Technologies, Inc. (NASDAQ:LAZR)
Year-Over-Year Sales Growth: 27.61%
3-Year Sales Growth: 50.45%
Number of Hedge Fund Holders: 12
Luminar Technologies, Inc. (NASDAQ:LAZR) is an international automotive technology company that specializes in making vehicles safer and more autonomous. Its key products include Iris LiDAR, which is a sensor that helps vehicles detect their surroundings. Moreover, the company also develops software that helps vehicles understand and react to what the sensors detect. It works with major car manufacturing companies to support intelligent and autonomous driving.
During the fiscal third quarter of 2024, Luminar Technologies, Inc. (NASDAQ:LAZR) reported that its LiDAR has been selected as standard equipment on another Volvo model. Moreover, the company also signed a contract for developing next-generation ADAS systems with a major Japanese OEM. This includes paid development for hardware, software, and vehicle integration, highlighting Luminar’s role in enabling advanced automotive technologies. Moreover, as a result of cost-cutting measures, the company also improved its GAAP operating cash flow by approximately $20 million quarter-over-quarter. It is one of the fastest-growing auto stocks to invest in now.
6. XPeng Inc. (NYSE:XPEV)
Year-Over-Year Sales Growth: 66.09%
3-Year Sales Growth: 35.25%
Number of Hedge Fund Holders: 17
XPeng Inc. (NYSE:XPEV) is a Chinese automotive manufacturing company that designs, manufactures, and sells smart electric vehicles. Its main products include G3 SUVs and P7 sports sedans. The company focuses on developing advanced technologies such as autonomous driving systems and intelligent operating systems for cars. Additionally, it also offers various services like supercharging, maintenance, ride-hailing, and vehicle leasing to its customers.
On February 13, Ming-Hsun Lee from Bank of America Securities maintained a Buy rating on the stock with a price target of $18.6. During the fiscal third quarter of 2024, XPeng Inc. (NYSE:XPEV) delivered 46,533 vehicles, marking a 54% increase quarter-over-quarter and a 16% increase year-over-year. This surpassed their previous guidance and contributed to strong revenue growth. Moreover, the company also achieved a record gross margin of 15.3%, driven by technology-driven cost reductions and improved product mix.
Looking ahead, XPeng Inc. (NYSE:XPEV) aims to become a global AI-defined car company, integrating AI into vehicle development to enhance user experience and drive innovation. The launch of its P7+ model, which features AI-driven intelligent driving features, has been highly successful. It is one of the fastest-growing auto stocks to invest in now.
5. NIO Inc. (NYSE:NIO)
Year-Over-Year Sales Growth: 15.67%
3-Year Sales Growth: 24.29%
Number of Hedge Fund Holders: 20
NIO Inc. (NYSE:NIO) is a Chinese holding company that researches, develops, and manufactures premium electric vehicles. Some of its popular models include ES8, ES6, EC6, and ET7. In addition, the company also focuses on advanced technologies including battery swapping and autonomous driving.
In Q3 2024, the company achieved a record 61,855 deliveries, maintaining its top position in China’s BEV segment. NIO Inc. (NYSE:NIO) holds a 48% market share for BEVs priced above RMB 300,000. Moreover, the company reported a vehicle margin of 13.1% in Q3, reflecting improvements in component costs.
Looking ahead, NIO Inc. (NYSE:NIO) is ramping up its supply chain capacity, aiming for a monthly production of 20,000 units by March 2025. In addition, it also continues to grow its charging infrastructure with over 2,700 power swap stations globally. It is one of the fastest growing auto stocks to invest in now with a year-over-year sales growth of 15.67%.
4. Lucid Group, Inc. (NASDAQ:LCID)
Year-Over-Year Sales Growth: 35.71%
3-Year Sales Growth: 210.02%
Number of Hedge Fund Holders: 24
Lucid Group, Inc. (NASDAQ:LCID) is an automotive technology company that designs, develops, and manufactures luxury electric vehicles, EV powertrains, and battery systems. It is known for its flagship model, the Lucid Air, a luxury sedan that offers impressive range and performance. The company also develops proprietary software and hardware in-house, which enables them to offer advanced features and technologies in their vehicles.
Fiscal 2024 was one of the best years for Lucid Group, Inc. (NASDAQ:LCID) as it delivered 10,241 cars during the year. As per the management, Lucid Air was a top-selling EV in its class in the US, even beating out some gas-powered cars in the second half of 2024. During the year the company produced 9,029 vehicles, which aligned with its projected target of 9,000. Moreover, the fourth quarter revenue was $234.5 million, with improved gross margins at negative 114% from the previously negative 225% margins.
Looking ahead, Lucid Group, Inc. (NASDAQ:LCID) is aiming at increasing customer deliveries through marketing and retail. Moreover, it is also advancing its technologies with hands-free driving. It is one of the fastest-growing auto stocks to invest in now.
3. Li Auto Inc. (NASDAQ:LI)
Year-Over-Year Sales Growth: 42.25%
3-Year Sales Growth: 90.48%
Number of Hedge Fund Holders: 28
Li Auto Inc. (NASDAQ:LI) is a Chinese smart electric vehicle manufacturer. It makes electric SUVs and MPVs, with notable models including Li MEGA, Li L9, Li L8, and Li L7. The company also offers other services such as vehicle servicing, pick-up and delivery, data plans, and charging station installation.
On February 25, JPMorgan analyst Nick Lai upgraded the stock from Neutral to Overweight and also upgraded the price target from $22 to $40. The analyst noted that the decision was influenced by the unveiling of a photo of Li Auto’s second battery electric vehicle. Lai believes the i8 signifies Li Auto’s long-awaited BEV strategy. He anticipates Li Auto Inc. (NASDAQ:LI) sales volume will double to approximately 1 million units by 2027, with over 35% coming from new BEV models. Lai also noted the company leads in L2+ semi-autonomous driving technology compared to its Chinese competitors.
During the fiscal third quarter of 2024, the company grew its deliveries by 45.4% year-over-year to reach 152,831 vehicles. As a result, proceeds from vehicle sales grew 22.9% year-over-year with margins improving from 18.7% in Q2 2024 to 20.9% in the recent quarter. It is one of the fastest-growing auto stocks to invest in now.
2. ACV Auctions Inc. (NASDAQ:ACVA)
Year-Over-Year Sales Growth: 32.40%
3-Year Sales Growth: 21.14%
Number of Hedge Fund Holders: 35
ACV Auctions Inc. (NASDAQ:ACVA) operates a digital marketplace for wholesale automotive transactions, providing data and services to facilitate the buying, selling, and valuation of vehicles by dealers and commercial partners. It also offers a platform that includes a digital marketplace, data services, and technology-driven tools.
On February 21, Gary Prestopino analyst from Barrington maintained a Buy rating on the stock. The analyst noted that the rating was backed by strong financial results in Q4 2024, where it beat revenue and adjusted EBITDA expectations. The company delivered a 35% increase in sales and a significant improvement in adjusted EBITDA compared to the previous year, indicating market share gains and better operational efficiency. Moreover, growth in high-margin auction and assurance revenue, along with controlled expenses, boosted profitability.
During the fiscal fourth quarter of 2024, ACV Auctions Inc. (NASDAQ:ACVA) sold 183,000 vehicles and 743,000 for the full year, marking a 24% increase driven by market share gains and solid execution across remarketing centers. It is one of the fastest-growing auto stocks to invest in now.
1. Carvana Co. (NYSE:CVNA)
Year-Over-Year Sales Growth: 26.94%
3-Year Sales Growth: 2.19%
Number of Hedge Fund Holders: 84
Carvana Co. (NYSE:CVNA) operates an online platform that makes it easier for people to buy and sell used cars. It allows users to research cars, get financing, and arrange delivery or pickup. On March 7, Bank of America Securities analyst Mike McGovern maintained a Buy rating on the stock with a price target of $270.
McGovern believes Carvana Co. (NYSE:CVNA) is well-positioned for sustained long-term growth in the used car market, which he estimates to be over $800 billion. The analyst noted that the company is expected to improve its unit economics and leverage as growth accelerates. Moreover, he expects the company’s 2025 revenue to be $15.45 billion and EBITDA of $1.50 billion, which is slightly above estimates.
During the fiscal fourth quarter of 2024, Carvana Co. (NYSE:CVNA) achieved record revenue of $13.67 billion for 2024, reflecting a 27% increase compared to the previous year. It also reported a net income of $404 million and an adjusted EBITDA of $1.38 billion, with a 10.1% margin. Notably, management noted the company sold 416,348 retail units in 2024, a 33% increase from the previous year, and emphasized that it did this with only 1% of the market. It is the fastest-growing auto stock to invest in now.
Recurve Capital stated the following regarding Carvana Co. (NYSE:CVNA) in its Q4 2024 investor letter:
“One year is too short a time frame to evaluate anything and we will never be perfect, but overall, nailing Carvana Co. (NYSE:CVNA) mattered much more than anything else.
We assess our portfolio management performance by looking at the breadth of participation across the portfolio and by comparing our actual results to two parallel scenarios: (1) our performance relative to an equal-weight portfolio of the same positions, and (2) our performance relative to the actual portfolio assuming no further trading over the evaluation period. Encouragingly, our actual performance has been better than both alternate scenarios across substantially all evaluation periods. The primary exception is at the end of 2022, when an equal-weight portfolio would have produced better forward returns by having significantly more exposure to Carvana at its record-low prices. These analyses give me comfort that we add value through our active management and optimization of the portfolio.
We care most about portfolio-level returns which largely depend on slugging percentages, but we also know that having a consistent batting average is important. As shown in the chart below, the median position in our portfolio returned +35% in 2024 on a total return basis (including dividends), below our actual performance but nicely above the returns for the major indices. Carvana’s excellent performance in 2024 pulled our actual performance well above the median, but that was our intention given our large position size. We had healthy contributions across the portfolio, but we also benefited from great slugging percentages in 2023 and 2024…” (Click here to read the full text)
While we acknowledge the potential of Carvana Co. (NYSE:CVNA) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CVNA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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