General

6 EV stocks to watch: what you need to know before investing

Fremont, CA, USA - January 20, 2021: Tesla factory plant,  an American electric vehicle and clean energy company based in Palo Alto, California.

vzphotos / Getty Images

In early 2022, as gas prices rose, so did electric vehicle registrations. The number of new EV registrations was 158,689, or 4.7% of all new car registrations in the US, according to Experian data reported by Automotive News.

What are good EV companies to invest in?

This growth is promising for those looking to invest in the industry. A look at EV sales in the US, with Tesla’s four models dominating the top 10, can point you in the right direction. Especially after the stock split in August 2022, Tesla is one of the best values ​​in EV stock if you’re looking for a long-term investment.

But there are also many other EV stocks that show great promise at the moment – ​​including both domestic and international EV manufacturers and a conventional automaker that is currently heavily based in EVs. We’ve also included one EV ETF for more risk-averse investors looking to invest in the EV market while maintaining a diversified portfolio.

Why invest in an EV stock?

EV stocks are attractive because of their growth potential, but also for investors looking to support sustainable companies. Investing in stocks shouldn’t be an emotional game, but it’s fun to invest in brands you believe in and in almost all cases EV manufacturers are trying to build a better, more environmentally friendly world with their technology solutions.

How to identify the best EV stocks to buy now?

When evaluating EV stocks, as with stocks in any industry, it’s important to look at the company’s growth potential versus its current value. Look at the company’s cash reserves, profitability and the fundamentals of the company.

Tesla (TSLA)

Tesla has been the undisputed leader when it comes to electric vehicle sales in the US in recent years, with 56.7% of 2021 sales going to Tesla’s four models, according to CleanTechnica.org.

Tesla was trading at approximately $277 a share at the end of September 2022 and represents tremendous value after its 3-for-1 split. Analysts give Tesla a 12-month median target of $329.17, with a high estimate of $526.67 and a low of $83.33. Tesla stock has been a “buy” among the majority of analysts for several months, even prior to the split.

Ford Motor Company (V)

Ford, an old automaker with a solid history, is trailing Tesla in EV sales by orders of magnitude. Still, the Ford Mustang Mach-E, which hit showrooms in December 2020, was the third best-selling EV in 2021, right behind Tesla’s affordable Model Y and Model 3 cars. Ford’s F-150 Lightning all-electric pickup truck is also promising, especially as Tesla has yet to deliver on its much-talked-about – and highly anticipated – Cybertruck.

Facing supply chain problems and inflation, Ford delivered a mediocre quarterly report for the third quarter of 2022, causing the stock to plummet. The stock is currently trading at just over $12 on September 26, 2022 and has a price target of $18.28. It yields dividends of $4.87%, which can make it desirable for investors seeking income from stocks they hold. According to MarketBeat, the stock has 7 “buy” ratings, 10 “hold” ratings, and only three analysts recommend you sell now.

Nio (NIO)

Nio, a Chinese EV manufacturer specializing in luxury, autonomous vehicles, was recently named “top China EV choice” by a Deutsche Bank analyst.

The impending launch of the ET5 mid-size electric sedan, along with the introduction of the ET7 full-size sedan and ES7 electric SUV in 2022, has sparked positive vibes for the company among investors. The existing ES6, ES8 and EC6 continue to generate strong sales in China. These models expect upgrades over the next year, which will also bode well for sales.

Shares of NIO continued to rise for the fourth consecutive season, Investors.com reported. However, it is still 51% below its 52-week high, putting it firmly in the “buy” and “hold” areas.

XPeng (XPEV)

NIO’s main rival in China is XPENG Motors, which produces the G3 SUV and P7 four-door sports sedan. XPeng’s revenue grew 96% year-over-year, compared to NIO’s revenue increase of 28%. Given the challenges in the supply chain and the growing competition, this is almost phenomenal growth for both companies.

From an investor’s point of view, there’s a lot to like about XPeng right now. The new G9 SUV, which Electrek.co claims is “the fastest-charging EV in the world,” is expected to ship in China in October.

Despite the company’s promising future, its shares are down 73% since early 2022. Chairman and CEO He Xiaopeng increased his stake with a $30 million share purchase. Xpeng will trade for just under $15 on September 26, 2022 and will rise after purchasing Xiaopeng. Xpeng has a mediocre buy rating and a price target of $36.32. It might be wise for investors to get in before the G9 starts shipping.

ChargePoint (CHP)

With more than 20,000 charging station locations, ChargePoint is the largest and most open charging network for electric vehicles in the world. It currently operates in 14 countries, according to SeeklingAlpha.com, as well as in the US and Europe. ChargePoint has helped EV drivers travel more than 158 million miles together.

Still, the company’s ChargePoint shares have fallen below $15 lately, after hitting a record high of over $46 in December 2020. SeekingAlpha.com, however, says the company has a “long runway for growth,” meaning u’ I’m getting shares “on sale” now. The stock is recommended for growth investors with a long-term horizon. And if you follow Warren Buffet’s investment advice, you don’t want to hold stocks for 10 minutes that you wouldn’t hold for 10 years.

That longevity is one element that makes the EV market in general so attractive. And ChargePoint is one to buy or keep, right now, in the eyes of investors. MarketBeat analysts give it a “moderate buy” rating, with 10 analysts buying and another 4 saying hold. It has a consensus price target of $21.13 and plenty of room for growth.

iShares IDRV ETF

If you’re interested in investing in the EV market but prefer not to take a risk on one company, an ETF is one way to build a diversified portfolio around a strong and fast-growing industry. Save time and instead avoid all the options offered by EV manufacturers, EV charging station suppliers or companies that make components such as batteries or chips with a publicly traded fund such as IDRV.

IDRV, part of iShares Megatrend ETFs, tracks the stocks of companies heavily involved in the EV and hybrid electric vehicle industries, including Tesla, Nio, Rivian, Apple, Ford, Toyota and parts makers Qualcomm and Samsung. The interests are diversified across 119 companies, mainly involved in the production, sale or support of EVs and autonomous vehicles.

US News & World Report ranks IDRV high in the industrial sector and names it a “Best Fit” fund in the category. The fund has net assets of $414,608,152 and currently trades at just over $35 per share.

Getting Started Investing in EV Stocks

Once you’ve done your research on your favorite EV companies, as well as companies showing promise in the industry and related sectors, you can buy stocks at almost any stock brokerage through an app.

Be aware of the fees and commissions they charge, as well as the minimum accounts, when choosing a brokerage. Many stock trading apps offer commission-free trading. If you are interested in ETFs or foreign stocks, make sure that you can also trade them on the platform you choose.

Investing in EV stocks is a way to support future sustainability efforts while building a portfolio with plenty of room for growth.

Daria Uhlig contributed to the reporting for this article.

The data is correct as of September 26, 2022 and is subject to change.

Our in-house research team and on-site financial experts work together to create content that is accurate, impartial and up-to-date. We fact check every statistic, quote and fact using trusted primary sources to ensure that the information we provide is correct. You can learn more about GOBankingRates processes and standards in our editorial policy.