In 2021, there have been a myriad of electric vehicle (EV) companies going public or hitting the market through special purpose acquisition companies (SPACs). This has propelled the valuation of electric vehicle stocks to historic highs, despite most of them not generating a profit.
Since the beginning of the year, the performance of electric vehicle stocks, measured by the Global X Autonomous And Electric Vehicles ETF (NASDAQ:DRIV) has been flat, advancing marginally, up about 3% to $27.35 per share in the last year. In the meantime, the SPDR S&P 500 Trust ETF (NYSEARCA:SPY), a proxy of the global equity market, shrank 5.52% to $448.60 per share year-to-date.
While the EV complex has outperformed the equity market since the beginning of the year, the valuation multiples of electric vehicle stocks are still evolving above the automobile industry. Yet, most EV stocks have recently declined vigorously, providing attractive entry points for investors looking to enter this thriving market.
In this context, here are seven EV stocks that have been slashed by the market in the past year and that are offering a once-in-a-lifetime discount:
- BYD Company (OTCMKTS:BYDDY)
- Nio (NYSE:NIO)
- Li Auto (NASDAQ:LI)
- XPeng (NYSE:XPEV)
- Proterra (NASDAQ:PTRA)
- Vicinity Motor (NASDAQ:VEV)
- Electrameccanica Vehicles (NASDAQ:SOLO)
Electric Vehicle Stocks: BYD Company (BYDDY)
BYDDY stock is a major Chinese manufacturer of EV, solar panels, and rechargeable batteries. BYD dipped vigorously year-to-date, down 15% to $57.41 per share, but the stock is still up 24% since March 2021. With the current stock correction, BYDDY offers a reasonable valuation relative to its rapid development.
The fundamentals of the EV group are strong. Topline growth is expected to advance 40.5% this year to $48 billion and 22.8% to $58.9 billion in 2023. While BYD’s profitability remains weak for the moment, net income is projected to nearly double in 2022 to $1.29 billion, providing a slim profit margin of 2.68% over the year.
Besides, the balance sheet of BYDDY is well-capitalized, with an expected net debt of $1.8 billion in 2022, representing a leverage ratio of just 0.41x. More interestingly, free cash flow (FCF) is esteemed to turn positive this year, earning $0.73 billion compared to an anticipated deficit of $1.17 billion in 2021.
BYDDY is currently exchanging at a low 2022e EV/Revenue of just 2.15x but has stretched metrics as to forward Enterprise Value (EV) on Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), and Price to Book (P/B), with respective ratios of 23.9x and 5.84x.
NIO is another major player in the Chinese EV market with international aspirations. The company has a market capitalization of nearly $35 billion, with an attractive market valuation. Since the beginning of the year, NIO stock plunged 32% to $21.54 per share and plummeted 48% yearly.
Despite that, NIO is on a strong growth streak. Revenues are forecasted to advance rapidly in 2021, up 120.3% to $5.63 billion, and analysts project a fast growth path in 2022, up 77% year-on-year to $9.94 billion in 2022.
On the other side, the EV specialist is not expected to deliver a profit until 2023. However, NIO’s profitability is esteemed to improve significantly this year. After delivering a projected net loss of $1.34 billion in 2021, the consensus anticipates a yearly loss of only $370 million this year.
NIO’s balance sheet stays healthy. The huge net cash position of $4.64 billion will suffice to carry out the development and financing of its international growth plan.
With this strong growth profile, NIO’s price is currently a bargain in terms of 2022e EV/Revenue, with a ratio of only 3.17x, despite trading at an elevated forward P/B of 8.55x.
Electric Vehicle Stocks: Li Auto (LI)
LI stock, a smaller Chinese EV player in terms of market capitalization, is another supplier of premium electric sport utility vehicles. Li Auto’s shares lost 15.3% to $27.16 per share since the beginning of the year, but the stock has posted a yearly performance of 3.05%.
The top line of the EV specialist advanced robustly last year, surging 185.6% year-on-year to $4.24 billion. Going forward, top-line growth will remain solid, as revenues are esteemed to advance 90.03% to $8.06 billion this year and 66.6% to $13.4 billion in 2023. Besides, the yearly loss is expected to shrink from $50.46 million in 2021 to $16.66 million this year.
In addition, LI offers an appropriate balance sheet. LI had a comfortable cash position of $6.52 billion at the end of 2021, which is expected to contract 42.7% in 2022 to $3.73 billion, following the rapid acceleration of capital expenditures. Indeed, LI Auto will more than double investments this year to $965 million from $446.4 million in 2021.
With this rapid growth and comfortable balance sheet, LI stock is currently trading at a subdued 2022e EV/Revenue of 3.27x, but exchanges at a more expensive forward P/B ratio of 4.37x.
XPEV is a premium sports EV carmaker based in China. The company has two main products, the G3 sport utility vehicles, and the P7, a four-door sports sedan. XPEV stock rebounded significantly last Friday, gaining 15.22% over the day to $28.77 per share. Nevertheless, the share is still down 40% year-to-date and 21% since March 2021.
The EV company is one of the fastest-growing electric vehicle stocks in the industry. Revenues surged 251.9% to $20.5 billion, last year and analysts expect this rapid growth to continue, posting respective and evolution of 97.2% to $6.37 billion this year and 58.3% to $10.08 billion in 2023.
Despite that, XPEV’s profitability is expected to deteriorate this year. After losing 870 million in 2021, XPeng’s yearly net loss is projected to increase marginally to $880 million this year, before shrinking to $230 million in 2023.
The company had however a substantial cash position of $3.79 billion, which is projected to decline 12.9% year-on-year to $3.3 billion this year.
In terms of valuation metrics, XPEV stock is currently exchanging at a low forward EV/Revenue of 3.12x and 4.51x 2022e P/B, slightly below its EV peers.
Electric Vehicle Stocks: Proterra (PTRA)
PTRA stock is a small U.S.-based EV company, supplying zero-emission electric transit vehicles and solutions, with a market capitalization of only $1.61 billion.
PTRA recently signed a multi-year supply agreement to power Shyft’s Blue Arc delivery vans with its industry-leading battery technology. Proterra’s stock plunged 54% in the past year and dipped 18% year-to-date to $7.25 per share.
The company had revenues of just $242 million in 2021 and analysts anticipate an advance of 34% to $324 million this year and 83.3% to $595 million in 2023. In terms of net income, PTRA is esteemed to deliver a net loss of $168 million in 2022 versus $250 million in 2021.
However, the balance sheet of PTRA is well-balanced for the moment, with a net cash position of $525 million at the end of 2021, which is expected to shrink 29.5% to $370 million this year.
After the steep correction of PTRA’s stock, the EV specialist has cheap valuation metrics compared to other electric vehicle stocks, posting 2022e EV/Revenue of $3.98x and a forward P/B ratio of 2.92x.
Vicinity Motor (VEV)
VEV supplies electric, gas, and clean diesel mid-sized multi-purpose transit vehicles in the U.S. and Canada. VEV stock declined marginally since the beginning of the year, down 3.48% to $3.33. Yet, the company has lost 44.4% of its market capitalization in the past year and is now valued at only $118.10 million.
Vicinity Motor is a new contender in the EV space. Net sales are expected to reach $43.3 million in 2021 and to advance robustly in the next two years, up 1136.2% to $102 million in 2022 and 67.4% to $171 million in 2023.
Besides, VEV stock is expected to deliver a positive EBITDA of $6.69 million this year versus a deficit of $1.96 million in 2021.
The company’s cash on hand totaled only $4.1 million at the end of September 2021, but VEV strengthened its balance sheet through a $10.3 million debt financing and a $17.0 million underwritten public offering of common shares.
Vicinity Motor has one of the lowest 2022e EV/Revenue multiples, with a ratio of only 1.14x. However, VEV has a much higher forward EV/EBITDA and P/B of respectively 17.4x and 4.92x.
Electric Vehicle Stocks: Electrameccanica Vehicles (SOLO)
The last electric vehicle stock of this panel is SOLO. Electrameccanica Vehicles is another small-cap EV company, based in Canada, engaged in the development of EVs and high-end custom build vehicles for the mass market. Earlier this month, Electrameccanica announced its first potential order, consisting of 20 SOLO Cargo EVs, the company’s flagship vehicle. The company is in the early stage of bringing its vehicles to the market and execution risks might not take investors by surprise at this stage.
Since the beginning of the year, SOLO stock declined less than other electric vehicle stocks, posting a loss of 4.86% to $2.35 per share, but it posted a yearly loss of 53.83%.
SOLO is expected to deliver low revenues of just $1.56 million in 2021, which should grow to $16.29 million this year and $100 million in 2023. The bottom line is in poor condition, with a net loss of $42.6 million in 2021, analysts are projecting an acceleration of SOLO’s losses to $60.7 million this year.
Besides and while the market consensus does not see Electrameccanica Vehicles turning a profit anytime soon, the company’s cash on hand stood at $128.77 million at the end of 2021, providing a two-year safety cushion to win new contracts and accelerate EV sales.
Furthermore, after the steep stock decline seen in the past year, SOLO stock is currently valued at a forward EV/Revenue of $5.07x and offers one of the lowest 2022e P/B of electric vehicle stock, with a ratio of just $1.41x.