EV stocks have been on the rise in recent years, as more and more people are turning away from gas guzzling vehicles to save money and help the environment. However, this sector has been beaten up this year as bearishness takes hold of the markets. Hence, investors may have a difficult time deciphering which companies present the best EV stocks to buy in this environment.
Between China’s zero-Covid policy, rising interest rates, and supply chain issues, EV bulls have had little time to rejoice. The result is that top companies in this sector are now trading at big discounts. Accordingly, several quality players now look attractive to the value investor looking to add a few gems to the portfolio.
When it comes to top EV stocks to buy, there are a few things to be aware of before investing. First and foremost, it’s important to analyze a given company’s financial stability and recent performance. This provides a good idea of how the stock will likely perform in the future. Next, assessing the company’s EV production plans is important. Is the company investing in new technologies? Are they planning to ramp up production in the coming years? Finally, the overall EV market provides unique catalysts and headwinds. Are sales increasing or slowing down?
Undoubtedly, it isn’t easy to choose which stocks are the best stocks to buy, when so many factors exist. It depends on one’s goals, risk tolerance, and investing timeline.
When making this list of the best EV stocks to buy, I’ve focused on three companies with strong fundamentals that have lost at least 25% of their value this year.
For those looking for EV stocks to buy, there are few options as enticing as Nio (NYSE:NIO). The company has a very good relationship with the Chinese government, and is looking for another big European opportunity.
The Chinese electric-car startup will conduct its European launch event in Berlin on Oct. 7. This is the company’s attempt to explore new opportunities in Europe. Nio is exploring the possibility of opening battery swapping stations in five European countries to expand their car sales. Among these countries are Germany, Holland, Sweden, and Denmark.
To compete with gas-powered cars, Nio offers an integrated EV that will be more affordable for European buyers. The company plans to remove the battery as their most expensive component and keep it separate from ownership, which should help lower upfront costs. Nio is also looking to partner with a European asset management company to give its consumers on the continent easier access to finance for leasing.
Nevertheless, despite these positive developments, Nio is down substantially this year. Part of the reason is the company’s increasing losses.
Nio posted revenue growth in the second quarter, up 22% year on year, while its net loss quadrupled to around $409.8 million. China’s strict “zero-Covid” policies are leading to supply chain issues. Nio also fell victim to this policy, leading to “cost volatilities” that affected the bottom line.
That said, Nio has the ability to withstand these issues and emerge stronger than ever. The company’s strong relationship with the local government of Hefei in China’s central Anhui province provides long-term stability for this China-based manufacturer. Nio is unique, which is why it is one of the best EV stocks.
Ford (NYSE:F) fell the most since 2011 after the company recently reported preliminary earnings. According to the company, the iconic American automaker will report adjusted earnings from $1.4 billion to $1.7 billion. This reduced range is expected to be a result of supply chain issues which could increase the company’s costs by approximately $1 billion. For investors looking for more insight into the matter, the company will report earnings on Oct. 6.
Like many other companies, Ford faces challenges in the current economy. In short- to medium-term, the outlook for the company remains stressed. However, Ford has looked to growth in the electric vehicle segment as a way to stem this bearish macro tide. Ford will invest $50 billion in electric vehicles by 2026, with 40% of its sales being electric by the end of the decade. I think this is a smart move that will position Ford well for the future.
Just recently, Ford announced the company has broken ground on a brand-new assembly line factory, the first such instance in 53 years. The electric-vehicle manufacturing factory will cost the company $5.6 billion. However, this facility will provide Ford and Lincoln models with the batteries to use. In addition, Kentucky will be the site for two new factories to be completed at a later date.
As time passes, Ford will need to keep adding to its product line to stay competitive. The latest Ford factories will provide a big lift in this regard. The new factories will allow Ford to produce electric vehicles more efficiently and at a lower cost. With only three EV models in its portfolio, Ford still has a long way to go to realize its EV ambitions. That said, investors stand to reap the benefits along this journey.
Rivian Automotive (RIVN)
Rivian (NASDAQ:RIVN) is an American automotive and energy company founded in 2009. It is known for its electric vehicles and has developed a technology platform for battery-electric vehicles. Rivian has received investment from Amazon (NASDAQ:AMZN), among other companies. Notably, the company is working with Amazon to develop a new generation of electric delivery vehicles.
Rivian plans to produce several hundred thousand vehicles annually at its factory in Normal, Illinois. In addition, the company is partnering with Mercedes Benz (OTCMKTS:MBGYY) to establish a factory near one of Mercedes-Benz’s existing plants in Europe.
Rivian’s lineup includes the R1T pickup truck, the R1S SUV, and the R1T Adventure Vehicle. Rivian is also working on various new technologies, including autonomous driving and connected car services.
So far, 98,000 U.S. and Canadian customers have pre-ordered Rivian R1s. By all accounts, Rivian has an excellent product that the masses are eager to get their hands on. The company also has a significant amount of cash on its books, with $15.5 billion in cash and equivalents as of June 30. This is expected to last Rivian through 2025, when the company completes its second manufacturing facility. That’s more than enough leg room to navigate any troubled waters, making it one of the better EV stocks to buy.
On the publication date, Faizan Farooque did not have (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.