Three EV Stocks to Invest in Amid Growing Fuel Prices

Three EV stocks to invest in amid growing fuel prices show that going electric is not only trendy but also cost-efficient and affordable.

Over the past decade, the electric vehicle (EV) industry has become increasingly popular and competitive due to a push from net-zero emissions requirements and U.S. government subsidies.

“The time is right for electric cars – in fact, the time is critical,” said Carlos Ghosn, a Brazilian-French-Lebanese businessman and automotive executive who was one of the early advocates for the introduction of EVs before leaving Japan in 2020 after authorities there charged him with financial misconduct and planned to put him on trial.

High gas prices are among the significant factors that drive demand for EVs. According to data by AAA, gasoline prices have surged by 20% since the beginning of 2023. The main culprits responsible for the increasing costs are OPEC leader Saudi Arabia, which decided to reduce its global gas supplies, price-hiking Russia as it seeks to maximize revenues to fund its ongoing war in Ukraine and the recent flooding in Libya, which sent oil prices skyrocketing. Further impetus toward rising oil prices could be due to damage to the Finland-Estonia pipeline earlier this month amid speculation of deliberate Russian sabotage. The limited gas supply will likely exert additional pressure on energy prices. If the escalating Israel-Hamas war extends to surrounding Middle Eastern countries, this political turmoil could result in additional oil price hikes. Increased gas prices have been advantageous for the EV industry as an alternative to internal-combustion engine (ICE) vehicles.

Goldman Sachs Research wrote in February 2023 that EVs are expected to make up half of the new car sales worldwide by 2035. According to the data, Europe, the United States and Japan are expected to be the global leaders in this transformation toward EV sales.

This, in turn, signals an increased demand for EVs, driven by production from large vehicle manufacturers like Tesla Inc. (NASDAQ: TSLA), General Motors Co. (NYSE: GM), Ford Motor Co. (NYSE: F), Toyota Motor Corp. (NYSE: TM) and others. The primary reason for increasing demand, apart from the recent spike in oil and gas prices, is growing interest in renewable energy and powered vehicles that release less carbon emissions and appeal to environmentally friendly customers. Additionally, according to the February 2023 Bureau of Labor Statistics report, new federal tax credits of up to $7,500 mean that electric vehicles are less expensive and, thus, more affordable than they used to be for a broad spectrum of potential customers.

As a result of this surging demand, the data between 2018-2023 indicate that EVs have gained great potential in the market, with current revenue of $88.8 billion (an increase of 29.6%), profit of $6.5 billion (a rise of 73.5%) and overall profit margin equaling 7.3%.

Three EV stocks to invest in amid growing fuel prices show that going electric is not only trendy but also cost-efficient and affordable.

3 Best EV Stocks to Grow Your Investment: Tesla (TSLA)

Tesla, Inc. (NASDAQ: TSLA),headquartered in Austin, Texas, designs, develops, manufactures, sells and leases electric vehicles, energy generation and storage systems in the United States, China and elsewhere internationally. The company’s product line includes vehicles like Model Y, Model 3, Model X, Model S, Cybertruck, Tesla Semi and Tesla Roadster.

The company’s $789.5 billion market capitalization is currently the highest of any car manufacturer globally. However, the stock is still quite volatile, as shown by its market share of 65% in 2022 due to rising interest rates and tech-sector stock pullback.

In the third quarter, Tesla produced more than 430,000 vehicles and delivered 435,000. As management discussed on its most recent earnings call, a sequential decline in volume was caused by planned downtimes for factory upgrades. The company’s 2023 volume target of around 1.8 million vehicles remains unchanged.

Tesla’s revenue has increased steadily since 2013, having peaked at $24.9 billion in second-quarter 2023, a 47% jump since the same period of 2022, making the company part of the “Magnificent Seven,” a list of stocks that dominated the market this year. The total revenue was around $94 million, trailing 12 months (TTM), primarily generated from automotive sales.

After releasing third-quarter results, Tesla’s share price fell by almost 9%, signaling that Chief Executive Officer Elon Musk’s pessimism about the economic outlook worsened the company’s share price drop. The revenue during this quarter stands at $19.6 billion, compared to $21.3 billion during Q2 2023. The report further indicates that Tesla fell short of analysts’ consensus forecast, according to FactSet, which predicted $24.2 billion in revenue and a 72-cents-per-share earnings increase. The earnings per share in Q3 2023 finished at 66 cents.

Regarding financial performance, Tesla is on track to achieve bullish long-term growth of 33.0% within the next year, despite the short-term bearish trend of -16.70% this year, with a daily trading range of $216.78-230.61. Tesla’s 200-day average share price of $206.02 compares with a 50-day average of $220.11. Analyzing simple moving averages, exponential moving averages, oscillators and other technical indicators keeps Tesla a valued stock.

The increase can be attributed to strong financial performance, innovations, technical advancements, commitment to sustainability, strong market positions and potential for future growth. All these factors combine to make Tesla a good investment choice to tap into the green tech sector.

Additionally, the recent United Auto Workers (UAW) strike against General Motors (GM), Ford (F) and Chrysler parent Stellantis (STLA) allows Tesla to exploit the weaknesses of its competitors, according to Wedbush analysts. The transition toward EV production by the big three automakers will be costly and complicated by the ongoing UAW strike.

Source: StockCharts.com

3 Best EV Stocks to Grow Your Investment: Li Auto (LI)

Li Auto Inc. (NASDAQ: LI), a Beijing-based vehicle manufacturer founded in 2015, designs, develops, manufactures and sells new energy vehicles through its subsidiaries. The company also offers sales and after-sales management, technology development and corporate management services online and offline.

Currently, the company’s lineup includes Li L9, a six-seat flagship family SUV; Li L8, a six-seat premium family SUV and Li L7, a five-seat flagship family SUV, with plans to expand this by developing new battery electric vehicles (BEVs) and extended-range electric vehicles (E-REVs) to target a broader range of customers. Li Auto employs over 19,000 people, having delivered 105,108 vehicles in the third quarter of 2023 — an increase of 296.3% year over year.

The stock has a market cap of $31.87 billion as of October 20, 2023, and is expected to grow bullishly in the long term, given its P/E (price-to-earnings) ratio of 138.5. Regarding profitability, the Stock Rover investment service projects a 350.0% increase in earnings per share compared to a five-year EPS growth estimate of 77.7%. Li Auto also has a sales growth estimate for 2024 at 54.2%.

Further indicators also suggest that investors may want to pay more attention to this stock. The total year-to-date (YTD) returns on the stock show 58.73% growth as of the close of October 19, 2023, whereas the stock P/B (price to book) ratio is 4.8. Regarding ratings, the stock gets an overall rating of 86/100 on Stock Rover, which evaluates growth, valuation, efficiency, financial strength, dividends and momentum compared to its peers.

The major competitors of Li Auto are Dublin, Ireland-based Aptiv PLC (NYSE: APTV), Italy-based Ferrari N.V. (NYSE: RACE) and Shanghai, China-based NIO Inc. (NYSE: NIO). When comparing the two Chinese companies, Li Auto is better positioned to achieve projected revenue of $14 billion compared to $12 billion of NIO at the end of 2023. That said, Li Auto’s market cap is $31.2 billion, significantly higher than NIO’s market cap of $14.0 billion, as of October 19, 2023. The NIO’s stock has decreased 29.58% in the past year, as of October 19, 2023, with Li Auto increasing by 92.74% in the past year.

The Chinese government has poured significant investment into new energy and innovation sectors, increasing the prospects of these markets becoming profitable.

Source: StockCharts.com

3 Best EV Stocks to Grow Your Investment: BYD Company ADR

BYD Company ADR (BYDDF),a Shenzhen, China-based vehicle manufacturer founded in 1995, designs, develops and produces new energy vehicles (NEV). The company mainly targets the growing mid-priced segment in the Chinese market and, as of March 2022, ceased its production of internal-combustion engine (ICE) vehicles. In 2022, the company sold over 1.8 million NEV vehicles, 28% of all Chinese passenger NEVs.

Besides automotive production, the company builds handset components, assembly devices, rechargeable batteries and the photovoltaics business. It has also established over 30 industrial parks across the globe. BYD has a market cap of $5.99 billion and employs over 570,000 people — the total sales of the company amount to $35.51 million (RMB 260.124 million).

In terms of profitability, investors should consider the high P/E ratio of 27.51 and a five-year EPS growth estimate of 105%, which makes BYD a strong buy in the market, according to Stock Rover. In terms of returns, the stock has a YTD return of 28.21% and a P/B ratio of 5.63 as of October 19, 2023.

In comparing BYD to its peers, the stock receives a rating of 84/100 from Stock Rover, performing particularly well in growth (96), efficiency (89) and financial strength (83). However, the stock lacks when it comes to valuation (42) as well as dividends (28).

The major competitors of BYD are Hyundai Motor (HYMLF), Bayerische Motoren Werke Aktiengesellschaft (BAMXF) and Mercedes-Benz Group AG (MBGAF). However, in the Chinese market, BYD has become a local EV powerhouse. Compared to Tesla, this stock offers steady and consistent growth in the upcoming years, having sold more EVs than Tesla in 2023.

With the company’s management looking to expand across Asia, Europe and the United States, it aims to further raise its revenue beyond 80% during the last quarter, according to Stock Rover. BYD has a true potential to revolutionize the EV industry in China and across the globe.

Source: StockCharts.com

Electric vehicles (EVs) are rapidly gaining mainstream acceptance, not only driven by their eco-friendly attributes and energy efficiency but also by the surge in fuel prices caused by political and economic dynamics. With EV sales experiencing exponential growth and a rising number of automotive manufacturers either incorporating EVs into their portfolios or transitioning entirely to EV production, the market is poised for even greater expansion.

Tesla, Li Auto and BYD are three EV stocks to invest in because they all exhibit strong potential in the years ahead. Please refer to the chart below for a comparative overview of their one-year price performance.

Source: Stock Rover

Furthermore, the decreasing costs of EV batteries and the thriving lithium market are facilitating widespread adoption. Governments and policymakers are also providing funds and incentives, respectively to embrace EVs. For example, the Inflation Reduction Act (IRA), which was enacted into U.S. law in August 2022, incorporates around $370 billion in energy-related expenditures, with EVs gaining significant support in this initiative.

With electric vehicles set to becoming the dominant presence on our roads, now is a good time to consider investing in them.