We recently compiled a list of the 7 Best EV Stocks Under $50. In this article, we are going to take a look at where Li Auto Inc. (NASDAQ:LI) stands against the other EV stocks under $50.
EV Sales are Growing
Since 2018, electric vehicle (EV) sales have been rapidly growing as the world tries to reach its carbon neutrality goal by 2050. According to the International Energy Agency (IEA), only 2% of new vehicles registered globally were electric vehicles, and reached 18% by the end of 2023. Even though most of these sales were concentrated in China, Europe, and the US, other markets such as India, Thailand, Vietnam, and Latin America have also been adopting the EV trend at a fast pace.
In 2024, while the high costs due to interest rates stalled EV sales a little, they are still growing at a significant pace as the sales reached 3.4 million units in Q1, compared to 2.6 million in the first quarter of 2023, according to the IEA. Furthermore, the accounting and consulting firm, PwC analyzed 21 markets and found out that in the second quarter of 2024, 37% of vehicles sold in these markets were battery-electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), or hybrids, marking an increase from 30% in the same period of 2023. At the same time, overall EV sales rose by 21% compared to Q2 2023, while sales of internal combustion engine (ICE) vehicles declined by 9% during the same period.
BloombergNEF’s Long-Term Electric Vehicle Outlook shows that as technology improves and battery prices drop, EV adoption is increasingly driven by consumer demand. Passenger EV sales are expected to surpass 30 million units in 2027 and reach 73 million units by 2040.
Global EV Market to Reach $63 Trillion by 2050
Despite such progress, strong policy support is still needed, as only 69% of the global car fleet is expected to be electrified by 2050 in the base case scenario, short of the 100% target in the Net Zero scenario.
Heavy trucks and other segments lag in reaching net zero and full combustion vehicle sales need to stop by 2038 to reach the goal. The report states that the global EV market could reach $63 trillion by 2050, with significant investment needed in battery production and charging infrastructure.
According to estimates by Fortune Business Insights, the global EV market is expected to grow at a compound annual growth rate of 13.8% from 2024 to 2032, and Asia is currently the dominant region with a 51.24% market share. This is the time for investors to take positions in EV stocks, as the EV market is just getting started and is poised for a lot of growth.
Our Methodology
For this article, we used the FinViz stock screener to identify over 25 electric vehicle manufacturers with a stock price of under $50, as of August 7. We narrowed down our list to 7 stocks that were most widely held by institutional investors and listed the stocks in ascending order.
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).
A factory worker welding a car body with precision.
Li Auto Inc. (NASDAQ:LI)
Number of Hedge Fund Holders: 29
Share Price as of August 7: $19.23
Li Auto Inc. (NASDAQ:LI) is a Chinese company that is engaged in designing, producing, and selling high-end smart electric vehicles. The company focuses on the mid to premium segments of the automotive market. It offers a range of models including multi-purpose vehicles (MPVs) and sport utility vehicles (SUVs).
Since launching its initial model, the Li ONE, Li Auto (NASDAQ:LI) has broadened its range with additional models such as the Li L9, Li L8, Li L7, and Li L6, which are designed with family-friendly features and advanced smart technology.
Li Auto (NASDAQ:LI) began delivering its vehicles in 2019 and saw rapid growth in the following years. Although the company faced challenges in 2022 due to supply chain issues, macroeconomic pressures, and increased competition in the Chinese EV market, it rebounded strongly in 2023. This resurgence highlights Li Auto’s (NASDAQ:LI) resilience and adaptability.
In July, Li Auto (NASDAQ:LI) set a new record by delivering 51,000 vehicles, marking a nearly 50% increase from the previous year. This impressive performance pushed the company’s total deliveries for 2024 to approximately 240,000 units, and the growth continued with a 6.75% increase from June. As of the end of July, the company had delivered a cumulative total of around 873,000 vehicles.
A significant highlight is the success of Li Auto’s (NASDAQ:LI) new L6 model. With over 20,000 units sold as of July, this model has quickly become popular in the RMB200,000 to RMB300,000 price range. The strong market reception for the L6 reflects the company’s effective market research and its ability to address consumer needs with its latest offerings. This success bodes well for the company’s future, showcasing its capability to innovate and capture market share.
In the first quarter, 29 hedge funds had stakes in Li Auto (NASDAQ:LI), with total positions worth $796.400 million. As of March 31, Israel Englander’s Millennium Management is the most dominant shareholder in the company. The firm increased its position by 383% to 4.07 million shares worth $123.197 million.
Overall LI ranks 4th on our list of the best EV stocks to buy. You can visit 7 Best EV Stocks Under $50 to see the other EV stocks that are on hedge funds’ radar. While we acknowledge the potential of LI 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 LI 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.