Whether you agree or not, electric vehicles (EV) are the future, and they are going to make a place for themselves on the road. China accounts for more than half of the total EV sales across the world, and the government aims to achieve carbon neutrality by 2060. Several other countries, including the United Kingdom and the United States, have set long-term goals to achieve electrification of their fleet as well.
The rising oil and gas prices, increasing levels of pollution and the cost efficiency offered by EVs as compared to fuel-driven cars have led to a rise in the demand and adoption of EVs. Automakers are turning towards electrification, and some of the biggest names in the industry have started to increase production to meet the rising global demand. With that in mind, let’s take a look at the three EV stocks every bold investor should own.
EV Stocks: Tesla (TSLA)
It isn’t possible to talk about EVs and not mention Tesla (NASDAQ:TSLA). A leader in the industry, the company enjoys an early-mover advantage and offers leading technology in its cars. Having enjoyed exceptional success over the years, Tesla has easily navigated through the market and has gone from delivering 367,500 cars in 2019 to about 1.31 million in 2022. I believe the company will continue to see growth momentum for at least a few more years.
The company has been working on fully driven technology for years and it aims to roll out Tesla robot taxis very soon. Many believe that Tesla can become the largest company in the world and ARK Invest has a price target of $2,000 in 2027 on TSLA stock. While the stock is currently exchanging hands for $238, it is down around 10% in the past month. Overall, the stock is up 120% year to date. The stock dropped after the company announced results and reported a drop in margins. However, I believe this is a temporary dip and we will see the stock pick up soon.
If you look at the bigger picture, the company reported a net income of $2.7 billion, up 20% year-over-year and it hit a record deliveries of nearly 480,000. Its gross margins dropped from 25% in the second quarter of 2022 to 18.2% this quarter due to the price cuts. The company has opened its superchargers network for other automakers and this will drive revenue in the long term.
At the end of the day, Tesla is still performing better than several other EV makers in the industry and has the potential to grow tremendously in the coming years. TSLA is one of the EV stocks to buy in this dip.
General Motors (GM)
Another EV company navigating its way through the EV industry is General Motors (NYSE:GM). The company has made significant investments in the industry and managed to report impressive revenue numbers. It saw a revenue growth of 25% year-over-year and hit $44.7 billion. Its earnings per share came in at $1.92, a 67.5% rise.
The management raised the full-year guidance after an impressive quarter. It now expects the EPS to come in between $7.15 to $8.15, up from the previous expectation of $6.35 to $7.35. General Motors is already an established company with many years of experience in the industry. While it may take some time for it to navigate through the EV sector, it can easily make it to the end. The company has recently invested $60 million in an EV battery startup, Mitra Chem that makes cheaper and better batteries.
While its gas-powered vehicles are still making the most of the revenue, including the trucks and SUVs, the electric vehicle business is also growing. The company produced 50,000 EVs in the first half of the year and aims to double the production in the second half.
The company has also signed an agreement with Tesla for the adoption of its superchargers, making it easier for GM car owners to charge their cars. It aims to hit $50 billion in EV revenue by 2025 and expand the production capacity to 1 million units. While the EV business isn’t profitable right now, the management aims to see profits by 2025. GM stock is exchanging hands at $32 right now and looks undervalued to me. The company has a rock-solid balance sheet and experience of several years in the auto space, making it one of the top electric vehicle stocks to invest in right now.
Li Auto (LI)
Chinese EV makers have suffered in 2022 due to supply chain issues and China lockdowns, but one company that came out strong is Li Auto (NASDAQ:LI). The company has maintained impressive delivery numbers and is capturing a large share of the market. Also, LI saw its revenue grow in line with the deliveries and while it is still reporting losses, it is expected to turn profitable very soon. The company reported stellar numbers in the recent quarter with sales of over $3.86 billion and revenue up by 230% as compared to the same quarter the previous year.
LI stock looks highly undervalued and is trading at $39 right now while up 87% year to date. As the company increases car deliveries and fulfills its goal of increasing the lineup, it can reach new heights. Li Auto is one of the best-performing Chinese EV companies right now. Considering the high demand for its vehicles, I strongly believe there is positive momentum around the automaker and we could see it achieve the milestone of delivering 40,000 cars by the end of this year.
LI has enough cash flow to keep going through the year while also investing in research and innovation. This is one of the top EV stocks with the potential to double and the company is in a good place. Li Auto could have stronger quarters ahead and the stock can reap solid benefits for you over the long term.
On the date of publication, Vandita Jadeja did not hold (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.
