Electric vehicles (or EVs) are a trend that investors simply don’t want to give up on. While investing trends and hype can get a bit manic at times, the trend in EVs is sustainable for the long haul. Naturally, that has investors looking for the best long-term EV stocks and EV stocks to buy and hold.
While mega-cap tech continues to lead the upside rally, there is some hesitancy among investors to buy even the top EV stocks.
The problem? The economy!
Investors who believe we’re entering a recession or an economic slowdown likely don’t want to rush out and buy the automakers. This group is notorious for heavy losses and poor performance as those economic worries materialize into reality.
At the same time, there’s no guarantee we will enter into a recession. So is it finally time to get involved in the automotive space and buy the best long-term EV stocks? Let’s explore.
The Undisputed Leader: Tesla (TSLA)
There’s no question that Tesla (NASDAQ:TSLA) is the leading EV stock out there. However, the ride with the stock has been incredibly volatile. At one point, it looked like Tesla was going to ride out the bear market storm but the selling pressure caught up to it in the second half of the year.
The stock lost two-thirds of its value from the September high to the January low and ultimately fell about 75% from the all-time high. However, the stock is now up 150% from the low and continues to storm higher.
While critics argue about Tesla’s price adjustments, they seem to forget that the firm is still growing. Analysts expect revenue to grow 22% this year and 28.5% next year. On the earnings front, consensus expectations do call for a 15% dip this year, but a 40% surge in 2024.
Of course, the big talking point lately has been Tesla’s recent agreement with General Motors (NYSE:GM) and Ford (NYSE:F) to use its Supercharger Network.
Best Long-Term EV Stocks: Ford (F)
Locking in a deal with Tesla is a big opportunity for Ford (NYSE:F). Back when Tesla was a smaller company, critics considered it foolish and too expensive for the company to build out its own charging network. However, Elon Musk had the vision to go for it. The network gave potential on-the-fence customers some reassurance that they could recharge while on the road.
Relieving this “range anxiety” helped significantly, and while charging networks have come a long way there’s still plenty of work left to do from an infrastructure perspective. For Ford, the hope is that inking a deal with Tesla will allow the company to boost the sales of its EV portfolio.
Ford took a big shot by electrifying its F-Series pickup truck. The F-Series is the best-selling vehicle in the US and has been for years. Along with electrifying other key vehicles (like the Mustang and its Transit van), the company is strategically carving out a nice position in the EV market.
Now Ford has its sights set on Europe.
Future of EV Stocks: Ferrari (RACE)
Admittedly, Ferrari (NYSE:RACE) isn’t quite in the EV race just yet. However, this company is absolutely dominant in the space — not just the auto space but also the luxury space.
I spoke with Maurits Pot, founder and CEO of Tema ETF, which recently launched the Tema Luxury ETF (NYSEARCA:LUX). In that ETF, Ferrari is a top-five holding and for good reason.
He noted that while “questions are arising on valuations” amid a potential economic slowdown, “luxury valuations remain below their 10-year average which we see as an opportunity.”
Pot also explained how Ferrari differs from other automakers, many of which compete on price and have constant struggles with competition and margin erosion. Conversely, Ferrari is able to sell out of its vehicles before they’re even finished building them. This preserves its margins, gives it strong pricing power and fuels the company’s long-term business ventures.
Separately, Morgan Stanley analysts said that the company’s “pricing power is based on strict supply control and a 2-year backlog, giving them the industry’s strongest pricing power.”
As for how Ferrari’s EV ambitions fit into the equation, the automaker aims to unveil an EV in 2025 and generate 40% of its sales from EVs by 2030.
On the date of publication, Bret Kenwell 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.
