This is a challenging time for automakers. The Big Three vehicle manufacturers based in Detroit just endured a costly six-week strike by the United Auto Workers (UAW) union. At the same time, demand for motor vehicles, particularly electric ones, is in decline, requiring manufacturers to slash prices to ignite sales. This has led to declining profit margins and poor earnings reports on the part of many automakers. And yet, nearly all automakers remain undeterred in their efforts to convert their operations and vehicle line-ups to fully electric versions within the next five to 10 years. Despite the current struggles, the pivot to electric vehicles continues apace. Here are the three EV stocks best positioned to win the race in 2024.
Tesla (TSLA)
Market leader Tesla (NASDAQ:TSLA) is going through a difficult period right now. Global demand for its electric vehicles has slumped, especially in China. It has been forced to lower prices to boost sales, which has hurt margins. And its most recent earnings reports have missed Wall Street expectations. Consequently, TSLA stock has been trading in a volatile pattern lately, rising and falling sharply in recent weeks. That said, there is still reason to be bullish on Tesla.
Despite the current difficulties, Tesla is now launching its hotly anticipated Cybertruck, it is expanding into India and other developing countries where it has room to grow and gain market share and it’s even developing an AI supercomputer called “Dojo.” Additionally, as interest rates begin to decline in 2024 and beyond, Tesla’s sales should rebound. Long term, the company and stock will be just fine. So far this year, TSLA stock has gained 120%.
Toyota (TM)
After remaining fiercely loyal to its gas-electric hybrid strategy for over a decade, Toyota (NYSE:TM) did an about face this past June, announcing a full line-up of electric vehicles and plans to manufacture next generation batteries to power them. It was the announcement investors had been waiting to hear from the Japanese automaker. The shift to prioritize EV production comes under the new leadership of CEO Kōji Satō, who took over the company in April of this year.
Going forward, Toyota plans to sell 1.5 million electric vehicles per year by 2026 and 3.5 million battery-powered vehicles annually by 2030. The company is also developing a method for mass producing solid-state batteries for EVs and aims to commercialize the technology by 2028. The automaker is also aiming for a driving range of 1,000 kilometres for all of its future electric vehicles. TM stock is up 40% this year, with most of that gain coming after the company’s EV strategy was announced in the summer.
General Motors (GM)
Although its endured a six-week strike by its unionized workforce, General Motors (NYSE:GM) seems undaunted in its quest to electrify its vehicle fleet. The tentative new labour agreement with the United Auto Workers (UAW) union will see General Motors invest $13 billion more in its American manufacturing facilities, including $2 billion in Spring Hill, TN where it builds electric vehicles. In all, GM has committed to invest $35 billion in EVs by the end of 2025.
Additionally, the UAW strike does not appear to have harmed GM’s financial performance. Not yet anyway. The company reported Q3 financial results that beat Wall Street expectations despite the labor strike at its various manufacturing plants. The automaker reported Q3 earnings per share (EPS) of $2.28 and revenue of $44.1 billion. That was better than the EPS of $1.87 and revenue of $42.5 billion that analysts had been looking for from the company. GM’s stock is down 17% year-to-date.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
