[Editor’s note: “The 5 Best Electric Car Stocks to Buy for the Next 10 Years” was previously published in June 2020. It has since been updated to include the most relevant information available.]
Electric car stocks are on fire.
Over the past year, the KraneShares Electric Vehicle and Future Mobility ETF (NYSEARCA:KARS) is up nearly 30%, versus a mere 5% gain for the S&P 500. This move comes on the back of optimism that rising consumer awareness, coupled with strengthening government support, will drive 36% growth in electric vehicle sales to record high levels in 2021.
While those numbers — a 30% gain for electric car stocks and a 36% rise in electric vehicle sales — may seem huge, this is just the beginning. The numbers will only get way bigger over the next 10 years.
The reality is that this is the beginning of the future of transportation. Diesel cars on their way out. Electric cars on their way in.
Over the next decade, this shift will only accelerate as battery tech improves driving ranges, battery charging infrastructure expands, consumer demand pivots, automobile production capacity makes a similar pivot, battery and electric vehicle prices come down, and public and private pressure to cut carbon emissions escalates. It’s a confluence of tailwinds that will spark a once-in-a-lifetime transportation revolution — and ultimately make electric vehicles ubiquitous by the end of the decade.
Today, electric vehicles only account for about 3% of all passenger cars.
Needless to say, the best of this growth narrative is yet to come … and the best of the rally in electric car stocks will happen over the next decade.
With that in mind, here are the five best electric car stocks to buy for the next 10 years:
- Tesla (NASDAQ:TSLA)
- Nio (NYSE:NIO)
- Nikola Motors (NASDAQ:NKLA)
- Arcimoto (NASDAQ:FUV)
- Kandi Technologies (NASDAQ:KNDI)
Electric Car Stocks: Tesla (TSLA)
The godfather of the electric vehicle industry, Tesla is and will remain one of the best electric car stocks to buy for the next 10 years.
In 2019, Tesla controlled about 16% of the global passenger electric vehicle market. That number is up from 8% in 2017, thanks to new cars and geographic expansion.
These two drivers will remain in place for the next several years. Tesla will launch the Model Y this year. Then the Cybertruck after that. Then more cars after that. At the same time, the company will continue to push deeper into Europe, establish a premium leadership position in China and eventually makes its way into Latin America.
Against the backdrop of all that growth, Tesla will continue to produce the best cars in the business, because the company has a huge lead when it comes to battery technology and autonomy. Concurrently, Tesla’s brand equity is second to none. That strong brand equity won’t be diluted anytime soon.
Tesla will remain the unparalleled leader of the consumer EV market for the next several years. As the market booms, so will Tesla’s revenues. And Tesla’s profits. And the TSLA stock price.
Tesla’s little brother from China, Nio, is also one of the best electric car stocks to buy for the next 10 years.
But everything has changed in 2020.
Nio’s vehicle deliveries doubled in both March and April, and are expected to rise more than 150% in the second quarter. The company’s adjusted net loss narrowed by more than 40% in the first quarter. And the balance sheet scored 7 billion yuan in financing from a group of strategic investors.
These favorable trends will persist for the next several years.
Population growth plus urbanization will drive auto market sales growth. Rising consumer awareness, falling prices, expanding charging infrastructure and increased government support will drive bigger EV sales growth.
New vehicle launches and increased production capacity will drive even bigger Nio sales growth. Economies of scale will kick in, and today’s losses will turn into tomorrow’s profits. NIO stock will fly higher.
All in all, investors should stick with NIO stock for the long haul. This is a potential multi-bagger in the making.
Nikola Motors (NKLA)
The newest electric car stock on Wall Street, Nikola Motors, made a splashy debut via a reverse merger in early June.
In a matter of days, NKLA stock soared from $30 to $90.
Why? Because this company has “Tesla of Trucks” written all over it.
In short, Nikola is a $23 billion next-generation vehicle maker. It’s leading the way in creating a new class of futuristic, zero-emission and cost-effective trucks. The company intends to first service the commercial market with electric and hydrogen delivery trucks, and then the consumer market with electric and hydrogen pick-up trucks.
If the company successfully executes against its opportunity to materially disrupt the trucking industry — and the company should be able to given its huge backing, technological advantages, strategic partnerships and hydrogen market leadership — then this could be a $100 billion company one day.
To that end, NKLA stock is one of the best electric car stocks to buy for the next 10 years.
One of the more exciting electric car stocks in the market is that of $72 million, Oregon-based EV maker Arcimoto.
Arcimoto is all about three-wheel EVs. The company understands that the future of cars is not three wheels. But its bet is that three-wheel EVs have enough specialty use cases across the globe, that demand for these smaller, nimbler and cheaper vehicles will be quite robust.
And that sounds like the right bet to make.
Specifically, Arcimoto’s consumer-oriented product, the Fun Utility Vehicle (FUV), looks positioned to become a next-generation ATV of sorts. It will be the urban vehicle of choice.
Then there’s Arcimoto’s commercial-oriented products, the Deliverator and the Rapid Responder. The Deliverator is a three-wheel, compact delivery EV aimed at optimizing last-mile delivery logistics by improving speed and cutting costs. The Rapid Responder is a three-wheel, compact emergency EV aimed at enabling law enforcement, security and emergency services to more quickly and affordably respond to incidents.
Deliveries of FUV started in late 2019. Production of commercial cars will start in late 2020.
Across these various consumer and commercial verticals, Arcimoto’s potential is quite enormous. Much, much bigger than its current $72 million market cap implies.
Kandi Technologies (KNDI)
Last, but not least, on this list of electric car stocks to buy for the next 10 years is Chinese EV maker and parts supplier Kandi Technologies.
Best known as the company which pioneered the EV battery swap model — which simply involves replacing an EV battery once it’s drained — Kandi was once considered a leader in China’s EV market. That was back in the early 2010s, when battery swapping was considered a necessity in a world full of EVs that took forever to charge and had limited driving ranges.
But, as EV technology has improved and charging times have dropped alongside rising driving ranges, many countries — including the U.S. — have entirely ditched the battery-swapping model.
China hasn’t. Instead, China is doubling down on its efforts to make the battery-swap model ubiquitous across the entire country through battery standardization.
Why? Because the battery-swap model is cheaper. Consumers don’t own their batteries. They rent the batteries. By removing the cost of battery ownership, the battery-swap model significantly lowers retail prices of EVs, which China hopes will promote mainstream adoption and help the country reach its ambitious sustainability targets.
In any event, all of that means that Kandi’s core technology is coming back into vogue in China. As it does over the next several years, Kandi’s growth narrative will reaccelerate and beaten-up KNDI stock — which has fallen from $20 to $3 in six years — will rebound with vigor.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he was long NIO.