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 Ford Motor Company (NYSE:F) 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 Ford truck roaring down a highway, with powerful headlights blazing its way.
Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 41
Share Price as of August 7: $9.77
Ford Motor Company (NYSE:F) is one of the biggest names in the automotive industry in the world. The company manufactures and sells a range of commercial and luxury vehicles under the brand names Ford and Lincoln, respectively. While Ford (NYSE:F) is mostly known for its gas-guzzling muscle cars and trucks, the company is also making significant strides in the EV industry.
The company’s CEO, Jim Farley announced plans to introduce a $30,000 all-electric vehicle in about two and a half years, emphasizing that profitability is a key focus. During the Aspen Ideas Festival held around the last week of June, Farley revealed that this vehicle, developed by a specialized Ford team, is intended to compete with Chinese automakers like BYD and an upcoming entry-level Tesla (NASDAQ:TSLA) model.
Ford (NYSE:F) is prioritizing smaller, more affordable EVs over larger all-electric trucks and SUVs, as Farley believes the latter is unlikely to be profitable due to the high costs of large battery packs. He highlighted the need for a shift in focus to smaller vehicles for both economic and environmental reasons, despite the historical profitability of larger vehicles like the company’s trucks.
Apart from that, Ford (NYSE:F) is also a shareholder-friendly company as it was mentioned in our best dividend-paying stocks under $15 article. We mentioned the company’s strong cash and liquidity position which allows the company’s long-term growth and returns to shareholders. The company has consistently issued supplemental dividends to shareholders over the years, alongside its regular common dividend. As of August 7, the company has a dividend yield of 6.1% with a payout ratio of a little over 31%.
In Q1, 41 hedge funds had stakes in Ford (NYSE:F), amounting to $1.54 billion. The most prominent stake is held by Ken Fisher’s Fisher Asset Management with 62.52 million shares worth $830.301 million.
Overall F ranks 2nd 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 F 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 F 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.
