We recently compiled a list of the 11 Best EV Stocks To Buy For The Long Term. In this article, we are going to take a look at where ZEEKR Intelligent Technology Holding Limited (NYSE:ZK) stands against the other EV stocks to buy for the long term.
The Challenges of EV Adoption and the Promise of Solid-State Batteries
On August 30, Mark Fields, former Ford CEO and President joined CNBC’s ‘Squawk Box’ to discuss the challenges facing electric vehicle (EV) adoption. Fields pointed out that early enthusiasm for EVs was driven by automakers and government regulations, but mass adoption is proving more difficult. Consumers are hesitant due to several factors including the high cost of EVs, the lack of visible and convenient charging infrastructure, and the slow charging times compared to gas refueling.
Fields suggested that automakers need to offer more affordable EVs and expand hybrid offerings while working towards breakthroughs in battery technology, especially solid-state batteries. These batteries could eventually reduce charging times to match the convenience of filling up at a gas station.
Fields commended his former company’s strategy as it involves focusing on hybrid models to ease consumers into EV technology without the range anxiety that comes with current models. He noted that automakers are also facing financial challenges in the EV space, as shown by his former company’s recent writedowns.
He emphasized that while automakers are working on delivering low-cost EVs, the real game-changer will be the development of solid-state batteries, which could significantly improve charging times and consumer convenience.
Exploring Three Scenarios for the Future of EVs
Despite the challenges, the EV industry seems inevitable and is poised to grow over the next few decades. We discussed the International Energy Agency’s (IEA) EV outlook in our article about the best EV stocks according to short sellers. Here is an excerpt from it:
“The IEA’s Global EV Outlook 2024 examined the potential paths to electrifying road transport by 2035. The report presents three scenarios: the Stated Policies Scenario (STEPS), the Announced Pledges Scenario (APS), and the Net Zero Emissions by 2050 Scenario (NZE). The STEPS considers current policies and market trends, the APS assumes that all government pledges will be fully implemented on time, and the NZE outlines a pathway to achieve net zero CO2 emissions by 2050.
The projections show that the global EV fleet could grow significantly by 2035. Under the STEPS, the number of EVs is expected to increase from less than 45 million in 2023 to 525 million by 2035. In the APS, this number could reach 585 million, while the NZE Scenario projects a more ambitious growth to 790 million EVs by 2035.
The report also discussed the growth of electric light-duty vehicles (LDVs), buses, and two/three-wheelers (2/3Ws). LDVs, which include passenger cars and light commercial vehicles, are expected to remain the largest segment of the EV market. Electric buses and 2/3Ws are also projected to see significant growth, especially in regions like China and India, where policy support is strong. However, achieving full electrification of these segments will require continued policy support and technological advancements.”
Moreover, governments worldwide are pushing for increased EV production due to environmental concerns, with the U.S. making significant moves in this direction. On July 11, the Department of Energy (DOE) announced $1.7 billion in grants to support the conversion of 11 auto manufacturing plants in eight states to produce electric vehicles and their components. This is part of President Biden’s “Investing in America” initiative, which is aimed at protecting union jobs and giving a boost to EV manufacturing.
The program is funded by the Inflation Reduction Act and will preserve over 15,000 union jobs and create nearly 3,000 new ones, which will support the production of EV components like batteries and electric motorcycle parts.
Our Methodology
For this article, we used screeners and ETFs to identify 22 EV manufacturers with a market cap of above $50 million and narrowed our list to 11 stocks with the highest average analyst price target upside, as of September 11. We took analyst comments mostly from The Fly and TipRanks. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An iconic skyline of a major city, the towering buildings display the strength of the company’s regional banking success.
ZEEKR Intelligent Technology Holding Limited (NYSE:ZK)
Average Analyst Price Target Upside as of September 11: 96.18%
Number of Hedge Fund Holders: 11
ZEEKR Intelligent Technology Holding Limited (NYSE:ZK), a budding name in the EV sector, is constantly working on establishing itself as a player in the industry. Founded in March 2021 by the Geely Group, the company is focused on designing, producing, and marketing advanced battery electric vehicles and related technologies. It is among our best EV stocks to buy for the long term.
The company’s recent IPO on the New York Stock Exchange in May 2024, which raised approximately $441 million, marked the largest IPO of a Chinese company in the U.S. since 2021, which is an indication of strong investor confidence in its future prospects.
The company’s product lineup is both diverse and innovative. The ZEEKR 001, a full-size shooting brake introduced in April 2021, was followed by the ZEEKR 001 FR, ZEEKR 009, and ZEEKR X models, each catering to different segments of the market. Since its initial launch, the ZEEKR 001 has gained substantial traction, with deliveries surpassing 200,000 vehicles in June alone. A key factor in its appeal is the integration of CATL’s Qilin long-range batteries, which allows the ZEEKR 001 to achieve a range of over 1,000 kilometers on a single charge.
The company’s growth trajectory is supported by its expanding international footprint. In June, the company announced partnerships with PT Premium Auto Prima in Indonesia and Sentinel Automotive Sdn. Bhd. in Malaysia, marking its official entry into these markets. Currently operating in over 25 major markets, it plans to broaden its reach to more than 50 international markets this year, covering regions such as Europe, Asia, Oceania, and Latin America.
In the second quarter, ZEEKR (NYSE:ZK) more than doubled its vehicle deliveries year-over-year, reaching a total of 54,811 vehicles. The surge in deliveries translated into a substantial increase in revenue, which grew by 58% to over 20 billion yuan (1 Yuan = US$0.14 as of September 11).
Additionally, the company’s second quarter was marked by new product launches, further strengthening its market position. The company updated its foundational ZEEKR 001 in August and introduced two new models, the Zeekr 009 minivan and the Zeekr 7X SUV. It adds more variety to its offerings and caters to a broader range of consumer needs.
In the second quarter, 11 hedge funds had stakes in ZEEKR (NYSE:ZK), with total positions worth $59.158 million.
ZEEKR (NYSE:ZK) has received Buy ratings from 7 analysts. As of September 11, the average price target of $33.19 implies an upside of 96.18% from the present levels.
Overall ZK ranks 3rd on our list of the best EV stocks to buy for the long term. While we acknowledge the potential of ZK as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ZK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.