Contrary to the doom-and-gloom prognostications many of us believed in when the novel coronavirus pandemic struck, this otherwise awful crisis has surprisingly been a positive development for the technology sector. Specifically, the valuation of electric car stocks received a massive jolt (in both good and bad ways) — leading investors to pile into this rapidly burgeoning market.
“The category of electric vehicle companies is growing quickly,” wrote Ben Forgan, cofounder and CEO of Hologram, a global cellular platform for IoT, in an email to InvestorPlace. “In general, the space is on the upswing and to capture that trend, investors can look at any of the companies that are solvent.”
Part of the reason for the interest surely has to do with some of the vulnerabilities exposed of combustion-engine cars. For one thing, they require frequent maintenance; And let’s face it: not everyone is skilled or disciplined enough to work on their cars. More critically, because combustion cars have many more parts than electric vehicles (EVs), they’re vulnerable to global supply chain disruptions.
Not surprisingly, electric car stocks have received substantial bullish interest. But to really spark the next leg higher, the EV industry will require improvements in battery technology. That said, several companies are doing just that. And although “range anxiety” is becoming less of a fear among consumers, EVs still lag in this metric against their gasoline-powered counterparts.
It’s not that surprising. “The key features that make an electronic vehicle strong are the range and reliability, like any car,” Forgan explained.
For example, the top 10 EVs with the longest range as complied by Cars.com average nearly 281 miles on a full charge. On the other hand, the median range of combustion cars is 412 miles. So, by closing that gap, EV manufacturers can make their platform much more practical for everyday drivers. And the technology to do this will make a handful of electric car stocks compelling to watch.
That said, they are:
- Tesla (NASDAQ:TSLA)
- Toyota (NYSE:TM)
- Ford (NYSE:F)
- Sony (NYSE:SNE)
- Porsche (OTCMKTS:POAHY)
- Ferrari (NYSE:RACE)
- Electrameccanica Vehicles (NASDAQ:SOLO)
Nonetheless, keep in mind that EV batteries have to be more efficient than they are right now. And while the electrical grid can support the current load of EVs, should the platform take off, we could see enormous demand occur within a narrow time band. That could cause major problems, depending on each state’s capability to feed that demand. Of course, this will have huge implications for electric car stocks.
Therefore, investors are right to be excited about EVs. Overall, though, there are significant hurdles to address before they become mainstream. Battery technology will be critical to this discussion as well as to these electric car stocks to watch.
Electric Car Stocks to Watch: Tesla (TSLA)
When you’re talking about electric car stocks, no list would be complete without mentioning Tesla. Simply put, the brand is synonymous with the industry.
While it has spawned its fair share of controversies and outright skepticism, Tesla has proven its detractors wrong. And in so doing, TSLA stock has become one of the most revered names on Wall Street.
Moreover, while I haven’t always seen eye-to-eye with Tesla CEO Elon Musk, the man is a genius; That there is no disputing. In my opinion, what was most interesting about the company’s Battery Day was a tacit acknowledgment that EVs will basically peak unless battery tech can improve to dramatically drive down costs.
Yes, the announcement itself, that Tesla’s planned in-house batteries adopting a more streamlined design and process is incredibly significant. However, the point that Musk was really making was that EVs are currently priced out of the hands of regular people.
According to the above list from Cars.com, the Tesla Model S Long Range Plus has the greatest range of all EVs at 402 miles. But that costs nearly $75,000. Even a vehicle half that price is out of the reach of the average American, who make between $50,000 to $60,000 on average.
Thus, if Tesla is right about its claims, that could truly change the game for the company. And that’s why TSLA stock is worth putting on your radar.
And then there’s the Cybertruck. “Cybertruck from Tesla, which isn’t out yet, comes to mind as one to watch,” wrote Forgan. “From a performance standpoint, its spec sheet is incredible. Interestingly, during Covid-19 and likely for a while, city driving is less important. People are looking at other driving experiences such as where to go camping, where to explore, etc. Cybertruck can be used as a mobile camping set up in different terrains and environments. ”
Although its well-known for its reliable and cost-friendly gasoline-powered cars, Japanese automotive giant Toyota would soon like to be counted among the electric car stocks to buy. Originally, it was scheduled to do this in a massive way at the 2020 Summer Olympics held in Tokyo, introducing the viability of the holy grail of EVs: the solid-state battery.
We all know how that went, though. And if recent coronavirus stats are anything to go by, even the 2021 edition is at jeopardy. If so, that would be a major bummer, particularly for TM stock.
However, this awful pandemic shouldn’t deter from what Toyota is developing. What makes the solid-state battery so compelling is that the innovation could effectively facilitate the attributes where EVs fall short against their gasoline-powered counterparts; namely, range, timely charging capacity and overall cost.
Granted, improvements in both have been made by non-solid-state batteries. But the issue remains that it’s too costly for EV makers because the expense invariably has to be picked up by the consumer. Should Toyota make this breakthrough, it could leapfrog TM stock above the others.
Nevertheless, Toyota is running into some challenges with its research and development. Therefore, in its present form, the solid-state battery isn’t yet ready for primetime. But Toyota has a history of innovation, which makes TM one of the electric car stocks to watch closely.
Electric Car Stocks to Watch: Ford (F)
Over the last few decades, Ford and other American automakers lost to Japanese competition due to a variety of factors. If I may be blunt, it’s largely because this country for some inexplicable reason implemented a culture of privileged laziness and mediocrity.
And people wonder why Americans are either potatoes or snowflakes. It’s the acquiescence to mediocrity, folks! If I were President of the United States, I would implement discipline as a national mandate and get this sinking ship sailing again.
Well, it seems like Ford has been taking some harsh lessons to heart. With its foray into the EV space with its Mustang Mach-E, the American icon is finally on the right track. Enough so that I’ve switched my disdain for the U.S. auto industry and bought F stock.
Additionally, one of the other reasons why consumers are concerned about transitioning to electric is environmental resilience. According to a Wired.com report, EVs struggle in extremely cold weather. Thus, the future of EV battery tech must address this concern. And that’s why I thought it was very significant that Ford tested its Mach-E in an environment that Californians like me find completely foreign.
Overall, F stock is an everyman investment. And should new innovations drive down battery costs, Ford could be one of the biggest beneficiaries among electric car stocks.
Consumer technology firm Sony is known for many things, most conspicuously its PlayStation video game consoles. But a car? This was perhaps the most stunning announcement of this year’s Consumer Electronics Show, when Sony unveiled a concept EV called the Vision-S. Will Sony soon join the ranks of Tesla and other electric car stocks?
The answer is, not likely. As you know from its relationship with Apple (NASDAQ:AAPL), Sony has become relevant recently not just for making standalone products but in providing specialized platforms (such as optics) where the organizations is arguably unrivaled. And that’s the plan here, with Sony developing sensors and entertainment products that could integrate with the burgeoning EV market.
Therefore, the most probable answer for why the company created the Vision-S was to have an in-house platform from which to finetune its specialties. As you know, only a small percentage of global auto sales is attributed to EVs. But improving battery tech will lead to lower overall costs, which then accelerates this growth. That’s why Sony is positioning itself early as a specialist, which makes SNE stock an interesting idea.
Still, I can’t help speculating a little. If advanced batteries drive down costs dramatically, it’s possible down the line that Sony could participate directly in this market. Should that happen, the PlayStation craze wouldn’t be the only reason to buy SNE stock.
Electric Car Stocks to Watch: Porsche (POAHY)
According to Porsche’s outrageously catchy slogan, there is no substitute for the famous German automaker. Well, I would argue that the substitute is Mercedes-Benz, but that’s neither here nor there. For decades, Porsche has covered the walls of young boys’ (and probably some girls’) bedrooms. It’s the pinnacle of outrageous Teutonic performance.
It’s also ridiculously complicated, corporate structure wise. Porsche both owns and is owned by Volkswagen (OTCMKTS:VWAGY). And the actual manufacturing of Porsches fall under Volkswagen, which also owns many other car brands. To avoid confusion, I’m sticking with the original premium brand.
Undoubtedly, a major draw of Porsches is their raucous engine note and the marriage of art and science to craft the ult…no, definitive driving machine, excuse me! On the surface, that would rule out POAHY stock among consideration for among electric car stocks to buy. Simply, Porsche drivers want something that goes “vroom,” not “eeeee,” if you hear anything at all.
However, even Porsche has to get with the times. Therefore, the company bit the bullet and developed the Taycan, its first EV. Yes, I’m sure the purists are crying foul. But keep in mind that they cried foul when the company developed the Cayenne, an SUV for goodness sake! Eventually, the purists made peace with that so I’m sure they’ll make peace with the Taycan.
Forgan agrees. “More legacy companies will introduce electric vehicles,” he wrote. “When you’re looking to purchase a car or invest in the company, you should ask, ‘Is this better than what Porsche or Audi will make as an electric vehicle?’ Porsche has made some nice electric vehicles.”
Interestingly, improved battery technology would do wonders for POAHY stock. That’s because with lowered manufacturing costs, Porsche can make a killing on earnings. Let’s be brutally honest: Porsche cares as much about the environment as I care about knitting. Its buyers want performance and brand exclusivity.
So, with lowered overhead implications, advanced battery tech would be music to Porsche’s ears.
According to the legendary Ferrari, the company will not make a pure EV until the year 2025. Frankly, that may be a little optimistic. I doubt that the Prancing Horse will ever make a plug-in EV. It’s just not what Ferrari does. So, why include this company at all in this list of electric car stocks to watch?
Because it is an organization to watch closely particularly if EV battery technology improves dramatically over the next few years. You see, EV tech isn’t just relevant for pure electric car stocks. Far from it, actually. As Ferrari proved, it has enormous implications for the rarefied market of supercars.
Take for instance the Ferrari LaFerrari. Technically, LaFerrari is a hybrid, but don’t think of it as a Toyota Prius hybrid. Instead, this exotic utilizes the same technology underlining modern Formula 1 racecars. Underneath the LaFerrari’s hood, you’ll find a V12 combustion engine and an electric motor working together to deliver breathtaking performance.
For me, that’s what makes RACE stock stand out. EV-based investments don’t have to involve hugging trees or sipping soy lattes. Instead, with LaFerrari, you have the best of both worlds: a blistering V12 combustion engine and an electric motor that converts kinetic energy that’s normally wasted into usable power.
Plus, Ferrari’s customers belong in an exclusive category. And this category is the only one that’s doing remarkably well during this crisis, making RACE stock a cynically great investment.
Electric Car Stocks to Watch: Electrameccanica Vehicles (SOLO)
A controversial name among electric car stocks due to its ridiculous flagship Solo EV, Electrameccanica Vehicles is nevertheless a company to watch closely as battery technology improves. Before we get into that, though, let’s talk about what makes SOLO stock tick.
As you may know, Electrameccanica specializes in electric commuter cars. According to the company, we spend most of our time commuting alone. And that means we’re lugging around extra seats that are going to waste. Furthermore, the unnecessary consumption of extra fuel contributes to environmental challenges.
But by removing those seats — hence the name Solo — Electrameccanica is counting on sparking a niche market: pure commuter vehicles that serve an exclusive purpose with maximum efficiency. I get the big picture argument supporting SOLO stock. However, I doubt that consumers want a “dumbed” down EV.
It’s not just that the Solo has seating for only one. It also loses one wheel compared to a regular car. And that may pose safety issues, both in terms of stability and durability during accidents.
However, Electrameccanica and companies like it specializing in discount EVs could be helped tremendously by battery innovations. Should costs come down substantially, it’s possible that automakers won’t have to skimp out on cutting seats, doors and wheels. Thus, instead of laughing at it — like I’ve admittedly done — SOLO could be one of the electric car stocks to watch.
On the date of publication, Josh Enomoto held a long position in F and SNE.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.