In 2024, the worldwide EV (electric vehicle) market value was roughly $1.32 trillion, as reported by Grand View Research, and it is expected to expand at a CAGR 32.5% between 2025 and 2030. Worldwide governmental rules and rewards are boosting EV sales. Numerous nations enact strict pollution laws and give rebates, tax cuts, and other benefits to buyers and producers, which pushes a change from gas-powered cars to electric ones. Furthermore, battery tech gains are improving EV range, power, and cost. New ideas like solid-state cells and better lithium-ion cells cut costs and boost energy storage, thus making EVs more attractive.
The EV sector navigated a turbulent 2024 due to macroeconomic pressures. Tradu recently reported that elevated inflation and surging interest rates globally constricted consumer spending, particularly on high-value items like EVs. This economic strain translated into a noticeable deceleration in battery electric vehicle (BEV) sales across key markets, notably Europe and the US. In Europe, BEV registrations experienced a decline, while hybrid vehicle sales surged. This reflected a consumer shift towards more affordable and range-extended options. The US market, while still growing, witnessed a slowdown compared to the previous year’s expansion. China, however, grew, with new energy vehicle (NEV) sales, which included BEVs, plug-in hybrids, and fuel cell vehicles, and surpassed 50% of total sales. This regional disparity underscored the varied pace of EV adoption worldwide.
Entering 2025, the EV industry anticipates a year of transition, marked by both challenges and opportunities. A risk lies in potential policy shifts, particularly in the US, where a change in administration could jeopardize existing EV incentives and regulations. The potential repeal of the federal tax credit, for instance, could impact EV affordability and demand. Furthermore, trade tensions, especially between China and Western nations, pose hurdles to market access. Increased tariffs and import restrictions could disrupt supply chains and limit consumer choice. However, there’s optimism for improved macroeconomic conditions. As inflationary pressures subside and central banks begin to lower interest rates, EV affordability is expected to improve. Moreover, the long-term trajectory towards electrification, driven by emission regulations and industry investments, appears irreversible.
A pivotal factor influencing EV adoption in 2025 will be the introduction of more affordable models. Recognizing the need to expand their customer base, major automakers are developing sub-$30,000 EVs. Chinese manufacturers, using their cost advantages and established supply chains, will play a role in this segment and offer competitive pricing and a wider range of models. The availability of affordable EVs is expected to be a major catalyst for market growth. Additionally, the advancements in autonomous driving technology are anticipated to revive the EV sector. While regulatory hurdles and safety concerns remain, 2025 could witness accelerated deployment of autonomous driving features. This will enhance the overall user experience and expand the potential applications of EVs. The convergence of electrification and autonomy will reshape the automotive landscape and drive innovation.
As the push for sustainable transportation remains strong and is further supported by autonomous driving tech, we’re here with a list of 8 most undervalued EV stocks to buy according to hedge funds.
Our Methodology
We sifted through online rankings and stock screeners to compile a list of the top EV stocks that had a forward P/E ratio under 20. We then selected the 8 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.
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 Most Undervalued EV Stocks To Buy According To Hedge Funds
8. Volkswagen (OTC:VWAGY)
Forward P/E Ratio as of March 7: 4.53
Number of Hedge Fund Holders: 1
Volkswagen (OTC:VWAGY) is an automotive giant with a growing focus on EVs. The company manufactures and sells a range of automobiles and related products worldwide, which encompasses several passenger and commercial vehicles. Its brands include Volkswagen, Audi, and Porsche, among others.
The company’s EV strategy centers on maintaining its strong European market presence while expanding globally. It holds ~21% market share of the European EV market, and in 2024, the company delivered 9 million vehicles overall. 744,800 of those were BEVs. Its European EV order bank stands at ~170,000 vehicles, which is fueled by new models like the VW ID.7 Tourer, Audi Q6 e-tron, and Porsche Macan Electric. To address charging infrastructure needs, the company plans to deploy around 45,000 high-power charging points across Europe, China, and the USA by 2025.
In the European market, there is an increase in BEV sales, with a 37% increase in January of 2025, with the Volkswagen ID.4 being the top seller. The company plans to launch another 30 new models in 2025, with a focus on expanding its EV portfolio, including a new entry-level EV. On March 5, Volkswagen (OTC:VWAGY) unveiled the ID. EVERY1 concept, which is a new budget EV brand targeting a €20,000 price point. This is part of the company’s Future Volkswagen strategy, which includes launching 9 new EV models by 2027.
7. Niu Technologies (NASDAQ:NIU)
Forward P/E Ratio as of March 7: 6.42
Number of Hedge Fund Holders: 5
Niu Technologies (NASDAQ:NIU) specializes in electric mobility and designs, manufactures, and distributes a range of EVs. Operating under the NIU brand, the company offers smart electric scooters, motorcycles, bicycles, and kick-scooters, alongside accessories, spare parts, and related services. All of these are supported by its proprietary NIU app.
In Q3 2024, the company’s total EV sales reached 312,000 units, which was a 17.5% year-over-year increase. Sales within China grew by 12.4% to 259,000 units, while overseas sales surged by 50% to 53,000 units. This growth was driven by the launch of several new EV models in 2024. These include premium electric motorcycles like the NX Hyper and NX Ultra. Such new models contributed to over 50% of total units sold in 2024. This resulted in an overall Q3 revenue of RMB 1.02 billion, which was a 10.5% year-over-year increase. For Q4, the company projects a revenue between RMB 622 and 718 million, which indicates a 30% to 50% improvement.
The company is expanding its overseas presence, particularly in the micro-mobility segment. In the US, partnerships with major retailers have expanded distribution for its kick scooters, like the KQi 100 series. In Europe, the company is focused on direct sales and expanding its dealer network. It aims to double the number of dealers by mid-2025. New EV models, which include the NX and SQi series e-motorcycles, are being introduced to the European market.
6. Toyota Motor Corp. (NYSE:TM)
Forward P/E Ratio as of March 7: 9.22
Number of Hedge Fund Holders: 13
Toyota Motor Corp. (NYSE:TM) is a global automotive manufacturer. It operates through automotive, financial services, and other segments and designs, produces, and sells a range of vehicles. These include passenger cars, commercial vehicles, and EVs, under the Toyota and Lexus brands.
The company is transitioning from a hybrid-heavy portfolio to increasing its EV presence. However, 2024 saw less than 200,000 EV sales in the first 9 months. Still, the company targets 3.5 million annual BEV sales by 2030, with at least 30 BEV models in its lineup. Toyota Motor Corp. (NYSE:TM) is also investing $13.5 billion in EV battery development by 2030 and aims for solid-state battery commercialization by the same year.
On March 7, Toyota Motor Corp. (NYSE:TM) launched the Bozhi 3X in China, which is the company’s cheapest smart EV, with prices starting at 104,800 yuan and the smart version at 139,800 yuan. The launch saw over 10,000 orders within an hour of its release. Earlier on February 6, Macquarie analyst upgraded the company from Neutral to Outperform. Analysts expect the company’s near-term earnings to be weak due to slow volume recovery, but also predict that production stabilization will lead to steadier future earnings.
5. Stellantis (NYSE:STLA)
Forward P/E Ratio as of March 7: 3.82
Number of Hedge Fund Holders: 32
Stellantis (NYSE:STLA) is a global automotive manufacturer that is expanding its EV presence alongside its traditional offerings. The company designs, engineers, manufactures, and distributes a range of vehicles under brands like Peugeot, Citroën, Fiat, and Jeep.
The company is pushing its EV segment, despite a challenging 2024. It launched 20 new models in 2024, with 10 more planned for 2025, which includes the electric Jeep Wagoneer S. Still, consolidated shipments for the company fell 12% in 2024 to 5.4 million units, and net revenues dropped 17% to EUR157 billion. The company plans to recover from a difficult 2024 through collaboration and market expansion in the EV segment. In China, the Leapmotor International venture is a critical partnership, with Leapmotor doubling its sales to 300,000 units in 2024. In Europe, Stellantis (NYSE:STLA) is introducing new EVs and mild hybrids in the competitive B segment.
It’s also addressing the growing importance of software in EVs, particularly with AI and autonomous driving features. The company is integrating software and engineering teams to accelerate the development of these technologies. Stellantis (NYSE:STLA) aims to return to positive industrial free cash flow in 2025, weighted more towards H2 of the year. Inventory reduction, market coverage enhancements, and increased competitiveness are also a focus for 2025.
Earlier in 2024, Ariel Global Fund expressed its bullish sentiment on Stellantis (NYSE:STLA) and stated the following in its first quarter 2024 investor letter:
“We added multinational automotive manufacturing company, Stellantis N.V. (NYSE:STLA), which was formed from the merger of Fiat Chrysler Automobiles and the French PSA Group in the period. With deal synergies lowering overall operating expenses and contributing to healthy free cash flow generation, management has begun increasing shareholder returns through dividends and share buybacks. Although some investors remain on the sidelines over concerns auto sales and margins have peaked, STLA’s average transaction price is growing year-over-year. We think this momentum will continue and expect STLA to deliver double-digit operating profit margin as it further expands its leading position in the Middle East and South America. Furthermore, the company’s Leapmotor joint venture presents a unique way to benefit from the strengths of Chinese original equipment manufacturers. Meanwhile, in the current electric vehicle slowdown environment, we believe STLA is best positioned to weather the storm. Management believes it can maintain profitability and is open to rationalizing its 14 brands. STLA seeks to be number one in the commercial vehicle segment by 2027, which comes with high customer stickiness, solid profitability and recurring revenue streams.”
4. Albemarle Corp. (NYSE:ALB)
Forward P/E Ratio as of March 7: 18.45
Number of Hedge Fund Holders: 36
Albemarle Corp. (NYSE:ALB) provides energy storage solutions and plays a crucial role in the EV industry by supplying key lithium compounds. Through its Energy Storage segment, the company offers lithium carbonate and hydroxide, which are essential components for EV batteries. It also offers recycling services for lithium-containing materials.
The company’s Energy Storage segment, which is crucial for EV battery production, saw a 26% year-over-year sales volume increase in 2024. This growth came from project ramp-ups and increased spodumene sales. Spodumene is a mineral that serves as a source of lithium. For 2025, the company’s outlook is based on varied lithium market prices: $9, $12-$15, and $20 per kilogram LCE. Albemarle Corp. (NYSE:ALB) has also improved how much lithium it gets from the site in Chile. The new processing plants in China (Meishan) and Australia (Kemerton) are also increasing production. 50% of the company’s lithium salts are sold via long-term contracts.
Albemarle Corp. (NYSE:ALB) remains optimistic about the EV market’s long-term growth and noted a 25% increase in global EV registrations in 2024. It’s adapting to market fluctuations by optimizing production and focusing on cost efficiency. Earlier on February 19, Scotiabank reduced its price target on the company to $75 from $85, maintaining a Sector Perform rating. Analysts predict continued lithium oversupply and stable prices for the year.
3. Ford Motor Co. (NYSE:F)
Forward P/E Ratio as of March 7: 7.63
Number of Hedge Fund Holders: 45
Ford Motor Co. (NYSE:F) develops, delivers, and services Ford trucks, sport utility vehicles, commercial vans and cars, and Lincoln luxury vehicles worldwide. It is transitioning towards EVs. Operating through segments like Ford Model e, the company develops, delivers, and services both EVs and its signature trucks, and other traditional vehicles.
The company’s Model e division is in a phase of heavy investment despite facing market headwinds. In 2024, the division achieved $1.4 billion in cost reductions, even with an extra $100 million spent on new battery plants and next-gen EV development. However, revenue declined by 35% year-over-year due to industry-wide pricing pressures. For 2025, Ford Motor Co. (NYSE:F) anticipates Model e losses of $5 billion to $5.5 billion. This is attributed to continued pricing challenges and investments in battery facilities and new EV models launching in two years.
Ford Motor Co. (NYSE:F) is increasing global EV volume, particularly through European launches. The BOSK battery joint venture, which is a partnership for producing batteries later in 2025, is expected to generate cost savings via production tax credits. The company performed 9 million over-the-air updates in Q4 2024, with 80% addressing customer and warranty issues. It’s also implementing design improvements and enhancing software development to reduce EV costs.
2. ON Semiconductor Corp. (NASDAQ:ON)
Forward P/E Ratio as of March 7: 17.21
Number of Hedge Fund Holders: 52
ON Semiconductor Corp. (NASDAQ:ON) provides components for the EV industry and specializes in intelligent sensing and power solutions. Through its segments, it offers semiconductors critical for power management, analog and mixed-signal processing, and intelligent sensing. All of these are vital for the functionality and efficiency of EVs and related infrastructure.
The company’s EV segment is driven by silicon carbide (SiC) technology, which showed growth in Q4 2024. Automotive revenue increased 8% sequentially, with China leading at an 18% rise. However, the company is seeing EV adoption slowdowns in other regions and is monitoring tax credit and infrastructure uncertainties. SiC revenue grew sequentially in Q4, with a 22% increase in H2 2024 over H1. The acquisition of Corbus SiC JFET business strengthens ON Semiconductor Corp.’s (NASDAQ:ON) position, especially in AI data centers and EV applications.
On February 12, Needham reduced the price target on this company to $57 from $66, but maintained a Buy rating. This sentiment came from the weaker-than-expected Q1 2025 guidance due to ongoing demand softness and excess inventory in the automotive sector, which is projected to decline by 25% due to a slowdown in China. Despite market uncertainties, ON Semiconductor Corp. (NASDAQ:ON) is committed to its long-term EV strategy. It’s rationalizing its manufacturing footprint via the Fabrite strategy. This is an optimization plan by reducing excess capacity to improve cost efficiency.
Alger Mid Cap Growth Fund maintained a long-term positive outlook on the company and stated the following regarding ON Semiconductor Corp. (NASDAQ:ON) in its first quarter 2024 investor letter:
“ON Semiconductor Corporation (NASDAQ:ON) specializes in designing, marketing, and manufacturing a range of semiconductors, including analog, discrete, and data management types, with an emphasis on power semiconductors. The company has a global operational and sales presence, catering to key electronics sectors such as computing, wireless communications, networking, automotive, industrial, and consumer electronics. During the quarter, the company reported fiscal fourth quarter results, where revenues and earnings met analyst estimates. While the company has executed well compared to other automotive and analog semiconductors, shares detracted from performance after management lowered their fiscal first quarter guidance, citing near-term industry headwinds. While the company is navigating a challenging operating environment with an ongoing inventory correction and EV demand weakness, we believe the company has the potential to be a strong secular grower over the long- term.”
1. General Motors Co. (NYSE:GM)
Forward P/E Ratio as of March 7: 4.11
Number of Hedge Fund Holders: 68
General Motors Co. (NYSE:GM) is a global automotive manufacturer that is actively transitioning to EVs. It operates through various segments, which include GM North America. It designs, builds, and sells a range of vehicles, with an increasing focus on EVs under brands like Chevrolet, Cadillac, and GMC.
The company produced and wholesaled about 189,000 EVs in North America in 2024 and had its full year revenue grow by 9% year-over-year. It is launching lower-cost and longer-range versions of the Silverado EV, with work trucks offering ~500 miles of range. The company is also introducing the full Equinox EV and Blazer EV ranges, which include a more affordable Blazer. It’s expanding the GMC Sierra EV lineup. Cadillac’s EV portfolio is expected to drive luxury EV sales.
To boost sales, General Motors Co. (NYSE:GM) is training dealers on EV technology and charging. Chevrolet has met with over 7,000 sales employees. The company is also using its battery manufacturing joint ventures with LGES in Ohio and Tennessee to reduce cell costs and improve yields. In China, the company’s EV and plug-in hybrid sales have surpassed ICE models. It has reduced dealer inventory by over 50% to improve pricing and cost management.
Hotchkis & Wiley Large Cap Value Fund sees General Motors Co. (NYSE:GM) as an attractive and undervalued investment due to its strong market position, free cash flow, and management’s commitment to share repurchases. Here’s what it said in its Q3 2024 investor letter:
“General Motors Company (NYSE:GM) is one of the world’s largest manufacturers of passenger vehicles. GM reported a strong Q2; however, management provided a cautious outlook for the second half of 2024. Comments from GM mirrored those of other OEMs and auto suppliers, leading investors to believe the automotive cycle has peaked. We believe this is an overreaction, and we continue to view GM as an attractive investment. We like GM for many reasons. First, we believe GM has leading market positions in its main business segments. Second, the valuation is extremely attractive. Finally, it is a strong free cash flow generator, and the management team is committed to repurchasing their undervalued shares.”
While we acknowledge the growth potential of General Motors Co. (NYSE:GM), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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