This week, electric vehicle (EV) owners learned which models will qualify for the full $7,500 tax credit in 2023. Fewer vehicles meet the standards than in previous with, with only 14 qualifying for the full incentive. In a change of pace that surprised many, Ford (NYSE:F) now has more vehicles on the full tax credit list than Tesla (NASDAQ:TSLA). But that’s not the only thing that should worry the EV leader right now.
Tesla recently reported earnings for Q1 2023, coming in just below Wall Street estimates. Some might say that any problems for Tesla should serve as a bellwether for problems facing the entire sector. But it is important for investors to see the bigger picture here: Tesla is subject to the whims and unconventional management style of Elon Musk who still seems more concerned with Twitter. For anyone still seeking exposure to the booming sector, there remain many prominent EV stocks that are better buys than Tesla.
It’s been a complicated year for the EV sector, to say the least. Tesla has lowered the costs of several vehicles, launching a de facto price war among automakers. It hasn’t been confined to the U.S., either. Chinese EV producers have been doubling down on scaling operations to keep pace with the booming market amid rising demand. But regardless of which companies are struggling, the EV market is healthy and still growing. Goldman Sachs issued the following prediction recently:
“EV sales will soar to about 73 million units in 2040, up from around 2 million in 2020, according to forecasts by Goldman Sachs Research. The percentage of EVs in worldwide car sales, meanwhile, is expected to rise to 61% from 2% during that span. The share of EV sales is anticipated to be well over 80% in many developed countries.”
It’s clear that this is still an excellent time to be betting on EV stocks. While TSLA tends to receive the most media coverage, that doesn’t make it a good buy. Here are three companies in the space with plenty of room to run.
EV Stocks to Buy: ChargePoint Holdings (CHPT)
The EV boom can’t happen with widespread charging infrastructure. And that movement is being led by ChargePoint (NYSE:CHPT), a company that has helped take EV charging to the next level. Earlier this month, a team of JPMorgan analysts named it as their preferred stock for exposure to the EV charging market.
It is partially for this reason that InvestorPlace contributor David Moadel sees CHPT stock as having an upside potential of 100%, if not more. As he acknowledges, investors will have to be patient as the company recovers from a turbulent year. However, as EV adaptation continues, CHPT will be well-positioned to soar.
Demand for EV charging technology is only going to grow. The Biden-Harris administration has prioritized EV adaption, recognizing it as a cornerstone of the green revolution that the U.S. needs. But Chargepoint also has the type of global reach that enables it to secure a sizable share of its booming market. As InvestorPlace contributor Vandita Jadeja reports, the company is also well on its way to gaining a foothold in China. As CHPT currently trades at under $10 per share, investors still have the opportunity to load up before mainstream EV adaptation sends it, along with a few other EV stocks, skyrocketing.
BYD Company (BYDDY)
Often when this Chinese auto giant makes headlines, it’s in conjunction with phrases such as “Tesla killer” and “the next Tesla.” The company has earned its place among the EV leader’s most feared rivals. While its name may not be well known in the U.S., BYD (OTCMKTS:BYDDY) has been quietly dominating Tesla in China for months.
As InvestorPlace contributor Dana Blankenhorn notes, the company has done an excellent job producing mid-market EVs, even in the face of Tesla’s price war. Charlie Munger of Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) recently marveled at how far ahead of Tesla BYD is. He described it as “almost ridiculous.”
This characterization seems apt, as BYD successfully outsold Tesla in 2022, making it the world’s top EV seller. In addition to cars, BYD is also working hard to gain a share of the electric bus market, delivering more than 70,000 across the globe. That’s a good reminder that the company’s EV market dominance isn’t the only reason to bet on it. BYDDY stock also offers investors exposure to the fast-growing artificial intelligence (AI) market. It has announced multiple partnerships with AI leader Nvidia (NASDAQ:NVDA) in an attempt to offer drivers an even better experience. These types of relationships could help it gain an edge over Tesla in the driverless race as companies double down on autonomous driving technology.
EV Stocks to Buy: QuantumScape (QS)
Much of the future success of the EV sector will depend on battery innovations. It is for that reason that many automakers have been devoting considerable resources to EV battery research and development. This part of the EV revolution hasn’t been easy, but according to InvestorPlace senior investment analyst Luke Lango, QuantumScape (NYSE:QS) is on the verge of delivering a “forever battery” with the potential to change the entire field. As he sees it, the company has figured out how to perfect the EV battery that the world needs. In his words:
“[The] key to making solid-state batteries is finding a solid electrolyte material that can resist dendrites.
That’s exactly what QuantumScape did at the end of 2020, with a single-layer battery cell. Sure, that’s not enough to power a car. But since then, the company has scaled up its breakthrough battery technology to 10-layer and 16-layer cells. In December 2022, the company began sending out its 24-layer cell prototype!”
Granted, QuantumScape is still a few years away from delivering these game-changing EV batteries, as Lango acknowledges. But if the company is able to get them to market ahead of its competitors, QS stock has the potential to surge to new levels. Like ChargePoint, it trades at under $10 per share, giving investors the chance to buy in before it helps revolutionize an already booming sector.
On the date of publication, Samuel O’Brient 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.