Electric vehicle companies were red hot all year, and a few EV stocks are racing ahead of the pack.
Investors can’t seem to get enough of EV stocks. And with good reason. A growing number of automakers are announcing plans to only manufacture electric vehicles within the next decade.
Sweden’s Volvo recently became the latest automotive company to announce that it will only manufacture electric vehicles by 2030. In the U.S., major automakers such as Ford (NYSE:F) and General Motors (NYSE:GM) are making electric vehicles the centerpiece of future plans. And president-elect Joe Biden is expected to aggressively push EVs to lessen the impacts of climate change.
Add some upstart electric vehicle companies and it totals a booming market that is forecast to be worth $1.2 trillion by 2023, according to Research and Markets.
Here we look at four EV stocks that are racing ahead of the pack in this fast moving sector:
- Tesla (NASDAQ:TSLA)
- Switchback Energy Acquisition/ChargePoint (NYSE:SBE)
- Nio (NYSE:NIO)
- Electrameccanica Vehicles (NASDAQ:SOLO)
EV Stocks: Tesla (TSLA)
Let’s start with the undisputed leader of the pack: Tesla. The company led by temperamental genius Elon Musk is also developing it along the way.
The company’s vehicles, from its Model 3 sedan to its Model Y SUV and Roadster, are proving to be extremely popular with consumers. And, Tesla is that rarest of electric vehicle companies – a profitable one. The Silicon Valley-based company reported five consecutive profitable quarters, a feat that few if any other electric vehicle companies can claim.
Investors noticed and rewarded Tesla throughout 2020. TSLA stock has risen an astounding 729% from its March low this year. Even after executing a five-for-one stock split at the end of August, Tesla’s share price is trading around $630.
The arrival of a novel coronavirus vaccine will help ensure that the company won’t have to shutdown production again and keep churning out electric vehicles. In fact, Tesla recently raised its guidance for vehicle deliveries to half a million this year, up from a previous forecast of 368,000.
Switchback Energy Acquisition/ChargePoint (SBE)
It’s not setting the world on fire yet, but investors should definitely have SBE stock on their watch list. Switchback Energy Acquisition is bringing charging station manufacturer ChargePoint to market via a special purpose acquisition company deal. And ChargePoint looks to have limitless potential given that it is building the network of publicly available electric vehicle charging stations that will power the transition from gasoline-powered vehicles to electric powered cars, trucks and SUVs.
Putting electric vehicle charging stations in place is critically important. If electric vehicles are to eventually replace gas powered automobiles, there will need to be a build out of infrastructure. Electric vehicle charging stations will have to be as commonplace as gas stations today for this societal change to work. For this reason, the global electric vehicle charging infrastructure market is forecast to be worth $56.9 billion by 2026, and could be worth $190 billion by 2030.
SBE stock provides investors with exposure to the fast-growing electric vehicle market without having to take on the risks associated with other EV stocks. Switchback Energy shares tripled in value since September. Expect the stock to rise higher after the SPAC deal.
China is all in on electric vehicles and Nio is the leading electric vehicle company in the country of 1.4 billion people. Many analysts refer to Nio as the “Tesla of China.”
The company’s financials have been strong lately. Nio’s total revenue increased 146.4% year-over-year in the company’s third quarter ended Sept. 30. Vehicle sales grew 146.1% from the same period of 2019. And gross profit turned positive for Nio from a negative year-ago value.
In October of this year, Nio delivered 5,055 vehicles, up 100% from October 2019. NIO stock is up more than 1,000% year-to-date and the share price is now at $43.04.
And it is not just the Chinese government in Beijing that stands behind Nio. Analysts are bullish on NIO stock too. Bank of America forecasts that Nio will turn profitable in 2023, a year earlier than the bank had previously estimated. Bank of America recently raised its 2021 through 2023 sales volume forecast above consensus estimates, attributing the elevated expectations to a more positive view on Nio’s global strategies.
JPMorgan is also bullish and forecasts Nio growing and competing successfully in the fast-growing electric vehicle market with a charging network, online customer community, value-added service and growing following among consumers in China.
Electrameccanica Vehicles (SOLO)
Last on our list of EV stocks, we come to a more unconventional electric vehicle company – Electrameccanica Vehicles. The company, based in Vancouver, Canada, is manufacturing an unusual electric car in that it only has three wheels and has been compared to a motorcycle.
While Electrameccanica Vehicles’ product and business model turned off many conservative investors, SOLO stock managed to attract investors with an appetite for risk. And while it only has three wheels, the electric vehicle does have a range of 100 miles and a top speed of 80 miles per hour. Electrameccanica says SOLO is designed for densely populated and congested urban areas. The vehicle is also affordably priced at just $20,000 each.
Meanwhile, Electrameccanica Vehicles is opening retail stores in the western United States.
ElectraMeccanica Vehicles is clearly a start-up company with plans to take on the world. The company is preparing to launch an assembly plant in Nashville, Tennessee or Phoenix, Arizona, to serve the U.S. market, while a separate facility in China will supply vehicles to Europe and Asia. SOLO stock is still cheap but has been performing great lately, up 585% from its March low.
On the date of publication, Joel Baglole held long positions in TSLA and NIO.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.