Though electric vehicles may be the future, the market doesn’t see it that way at the moment, with several EV stocks suffering from the current market rout. Nevertheless, astute and daring investors may want to target this sector for speculative (and long-term) acquisitions. With myriad factors affecting this market segment, betting on the electrification of mobility may be wise.
Fundamentally, EV stocks align with broader ideological and political principles. With climate change becoming a top priority here and internationally, merely conducting business as usual won’t fly anymore. Instead, societies must deliver substantive solutions. Moving to zero-emissions electric cars could be a step in the right direction.
In addition, a market rout could be the best thing to happen to EV stocks against a longer-term framework. Presently, much speculative energy is baked into market valuations for various sectors, not just electric cars. But once the equities sector eliminates the speculation and the weak hands of the market, it could rise sustainably.
With that in mind, here are seven EV stocks to buy should the equities market crash.
An obvious choice among EV stocks to buy, Tesla (NASDAQ:TSLA) remains the sector king because of its incredible social cachet. Tesla so utterly dominated the market that it’s almost become synonymous with the EV segment itself. Of course, this advantage can always go away without proper care and competitiveness. Nevertheless, Tesla opened a huge gap to its rivals.
According to an August 2022 post on Electrek.co, Tesla still dominates the U.S. electric car market with 68% share. As well, the proof is in the hard numbers. Up until the end of December 2020, Tesla featured a retained earnings loss of $5.4 billion. However, in the following year, retained earnings turned positive to the tune of $331 million.
Interestingly, though, TSLA is down 40% on a year-to-date basis. Should a downturn occur, this is one of the EV stocks to buy on the dip.
Arguably, premium electric car manufacturer Lucid (NASDAQ:LCID) offers the most credible challenge among upstart EV stocks to Tesla’s throne. Fundamentally, I appreciate how Lucid concentrates (for now) exclusively on the affluent user base. Although the underlying lithium-ion battery packs gradually declined in price annually, the events of the new normal – and of this year in particular – will likely see costs escalate.
If so, you’re not going to have too many people lining up to acquire electric cars. According to data from Kelley Blue Book, the average price of a new EV stood at nearly $63,000. That was early this year. By now, I’m almost certain that prices significantly increased due to hotter-than-fire inflation. Considering that the median U.S. household income is around $70,000 today, electric cars have become inaccessible to many.
Thus, Lucid’s focus on the wealthy should keep the lights on. As well, investors should admire the company’s CEO Peter Rawlinson and his willingness to roll up his sleeves. If you want to speculate on EV stocks to buy, LCID presents an attractive profile.
Stepping aside from the exciting (and pure-play) EV stocks, it’s time to go boring with Toyota (NYSE:TM). As you may know, Toyota courted criticism recently for its conservative approach to the electrification of mobility. Rather than going all-in on EVs, the Japanese auto giant insists on pushing hybrid vehicles. It’s still interested in electrification but it’s basically hedging its bets.
I’m not going to sit here and defend the decision because it’s too difficult to say what will happen. Nevertheless, with so many people gambling on pure-play EV stocks, betting on TM could be a smart wager. For one thing, the economics will start to impact the pure-play participants. Again, with the average price of a new electric car running at nearly $63,000, the transition is simply not available to everyone.
Also, the company run a profitable business with its large mix of combustion and hybrid vehicles. While others are putting their eggs in one basket, Toyota collects a net margin of 8.42%, one of the best figures in the industry. As well, Toyota commands retained earnings of over $200 billion.
General Motors (GM)
For years (actually for decades), I never found American car manufacturers to be all that exciting. My personal taste in vehicles focus on Japanese, German and now British iterations. Nevertheless, General Motors (NYSE:GM) is changing my mind. Not only is the company a legacy outfit that will soon challenge Tesla’s hegemony in the realm of EV stocks, it’s not abandoning its heritage.
I speak of course of the eighth generation Corvette, also known as the C8. Since its introduction, GM obliterated all competitors in the sports car segment in terms of sales volume. It continues to churn out impressive numbers despite the ravages of inflation. As well, nearly half of all C8s ordered have been acquired as convertibles, indicating robust demand within the broader demand profile.
While the manual transmission may be dead, combustion engines are not. Thank you, General Motors.
As for relevancies toward EV stocks, GM is electrifying the Hummer. It’s also bringing out other electric offerings to suit a variety of income brackets.
Rivian Automotive (RIVN)
In my opinion, it’s natural for investors to have a love-hate relationship with Rivian Automotive (NASDAQ:RIVN). On the pessimistic front, what appeared to be an intriguing idea among EV stocks turned into a nightmare. For instance, the company launched its initial public offering in November of last year. Since then, it’s been almost nothing but red ink.
According to data from Google Finance, since its first public close, RIVN stock hemorrhaged 75% of market value. One of the main problems is competition. With everyone churning out EVs, it’s difficult to remain relevant.
That said, since apparently hitting a bottom on May 11 of this year, RIVN shares gained almost 52%. Unlike other upstarts, Rivian features actual revenue. In the second quarter of 2022, it posted sales of $364 million, up an infinite magnitude compared to the zero-sales result of Q2 2021.
Further, in the copycat world of EVs, Rivian’s electric pickup truck and SUV look downright gorgeous. I’ve seen them in person and they’re stunning. Maybe, that could be the “it” factor that distinguishes RIVN from other EV stocks.
While we could spend our time focusing exclusively on primary EV stocks – that is, on the automakers themselves – it pays to consider the infrastructural market ideas. After all, companies like ChargePoint (NYSE:CHPT) benefit from the ticket sales concept.
Infrastructural EV stocks to buy align with the principle of selling tickets to the big game. You don’t know which team might win the contest. All you care about is getting your hind ends in the seats. Therefore, you’ll do anything, even pit rival fans against each other, to deliver on your objective. In other words, the robust competition in the EV sector presents a downwind opportunity for CHPT stock.
As well, data cited by the Office of Energy Efficiency & Renewable Energy notes that 63% of all occupied housing units have a garage or carport. By logical deduction, 37% of housing units don’t have a garage or carport. Therefore, infrastructure must be built out, which could support CHPT. However, no guarantees exist so be aware of the risks.
In recent publications for InvestorPlace, I’ve mentioned Volta (NYSE:VLTA) as one of the more intriguing EV stocks to buy for speculators. The emphasis is on speculation. For one thing, VLTA closed the Oct. 19 session priced at $1.03. Under arguably most investors’ definition, VLTA represents a penny stock.
It’s also a good time to bring up the performance of Volta this year in the market. Shares hemorrhaged nearly 85% of market value. Needless to say, that’s an enormous loss so prospective participants must pay close attention and conduct their due diligence.
However, Volta represents a distinct take on the EV charging segment. Utilizing an advertisement-driven business model for its charging posts, Volta seeks to enhance EV integration while also improving foot traffic and sales volume for underlying advertisers.
It’s a bold, innovative approach, one that might be a high-risk, high-reward winner among EV stocks.
On the date of publication, Josh Enomoto 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.