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 NIO Inc. (NYSE:NIO) 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 fleet of eco-friendly electric cars, a symbol of the company’s commitment to sustainability.
NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 19
Share Price as of August 7: $3.67
NIO Inc. (NYSE:NIO) is a leading electric vehicle maker in China known for its advanced electric cars. The company focuses on developing, manufacturing, and selling high-performance electric vehicles with a strong emphasis on luxury, technology, and eco-friendliness.
NIO (NYSE:NIO) has gained popularity for its electric SUVs, including the ES6 and ES8 models, and its innovative battery-swapping technology. It is one of the best EV stocks under $50.
At a stake value of $79.322 million, 19 hedge funds held positions in NIO (NYSE:NIO) in the first quarter. As of Q1, Davidson Kempner is the top shareholder in the company and has a position worth $18 million.
NIO (NYSE:NIO) is showing promising signs of recovery and growth, even though the first half of the year posed challenges. The company’s vehicle deliveries have markedly improved, delivering 57,373 vehicles in the quarter ending June 30, which is a significant increase from earlier in the year. This surge in deliveries represents a 144% year-over-year rise and has exceeded management’s forecasts.
In May, NIO (NYSE:NIO) introduced a new subsidiary brand called Onvo, aimed at the mass market. The first model under this brand, the L60, is a midsize SUV currently in its pre-order phase. Despite deliveries not being expected until September 2024, pre-orders for the L60 have been exceptionally strong, surpassing expectations by two to three times.
NIO (NYSE:NIO) plans to expand its market presence further with the upcoming release of its Firefly model. This new vehicle is set to be available in China starting in the fourth quarter of 2024, with a price range of RMB 100,000 to 200,000 (1 RMB = US$0.14 as of August 7). It will enter the European market in the second quarter of 2025.
The Firefly will complement NIO’s (NYSE:NIO) recent Onvo launch, targeting the RMB 200,000 to 300,000 range, while its existing models cater to the higher end of the market, above RMB 300,000. This broad range of offerings is a testament to the company’s ability to serve various market segments, from value to premium, enhancing its overall market position.
Overall NIO ranks 6th 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 NIO 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 NIO 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.
