The EV market is, by now, well established. Investors are well aware of the proliferation of publicly traded EV stocks available.
EV firms are well represented in ETFs and many investors thus have some degree of exposure to the market in general. Yet, it also makes sense to invest directly in individual stocks in the sector across the industry.
Those investors who hold a mix of EV manufacturers, lithium producers, infrastructure players, and even battery recycling firms will do best overall. They’ll be diversified and protected while also being exposed to strong growth overall.
The result is that those who invest in EVs today have every possibility of becoming long-term millionaires.
Investors are going to continue to have trouble predicting Tesla (NASDAQ:TSLA) stock. CEO Elon Musk is notoriously unpredictable, which means it’s difficult to know where the firm is headed for long.
Earlier this year, it resulted in lower prices aimed at increasing market share. Pundits then worried that Tesla’s resultant falling margins would negatively affect share prices. That hasn’t been the case, as Tesla has been among the better performers this year.
Now the company is changing tack. It has increased prices on its overhauled Model 3 in China. The Model 3’s range has been increased and its interior improved. It’s also a high-volume seller.
The improvements justify the price hikes and should lead to greater Model 3 sales. That’ll increase margins because it’s a high-volume seller and help to allay greater investor worries.
We will see the results over the short-to-mid term but it remains likely that Tesla will be a long-term winner.
Li Auto (LI)
Li Auto (NASDAQ:LI) stock receives far less attention than its main competitors, Nio (NYSE:NIO) and XPeng (NYSE:XPEV). All three firms are vying to grab as great a share of the EV market in China as possible with the latter two garnering more headline space. However, that’s an opportunity for investors because Li Auto is very much worth investing in.
When you look at Li Auto’s growth figures, you’ll be reminded just how quickly the EV sector is growing in China. Li’s deliveries increased by 202% in Q2. That’s a phenomenal rate of growth but what also impresses is the actual figures.
The firm delivered 86,533 vehicles. That’s a high figure and serves to remind investors that China is a massive market worth considering. Margins are increasing and the firm turned losses into gains during the period. That makes it exactly the kind of growth firm to consider.
The firm anticipates delivering more than 100,000 vehicles in the third quarter, a number that could catalyze greater interest overall.
ChargePoint (NYSE:CHPT) is reaching a critical point that could result in great progress and improvement of its stock.
Make no mistake, CHPT shares are risky but they’re clearly full of potential at the same time. ChargePoint is falling after releasing second-quarter earnings but continues to possess substantial upside.
Wall Street and Main Street are right to be cautiously pessimistic about ChargePoint’s losses. They increased from $93 million to $124 million in Q2.
The 33% increase in losses doesn’t help ChargePoint at all. Investors are hungry for evidence that the company is moving toward profitability and not away from it. Q2 results indicated the opposite.
That said, there’s reason to believe in ChargePoint and reason for optimism. For one, revenue growth -at 39% – outstripped growth in net losses. Further, the company is restructuring to address growing losses.
It is cutting 10% of its workforce, which is expected to reduce operating expenses by $30 million in Q3. Meanwhile, revenues are expected to be between $150-165 million, or 26% higher at the midpoint in Q3.
My guess is that CHPT stock will make a lot of investors money in Q3 while addressing a few long-term obstacles.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) stock is expected to be both a short-term and long-term winner.
In the short term, the firm’s most obvious catalyst is the separation of its operations into two distinct operating entities. Those who invest now will be investing in the Thacker Pass operations in Nevada.
Thacker Pass holds the second-largest lithium deposit on earth. The separation has passed voting and will take effect in October. It’s reasonable to believe that the event will boost share prices.
Thacker Pass is being developed currently. It’s all about potential. That’s clearly the reason that Lithium Americas enacted the separation. Management recognizes the strategic importance of Thacker Pass.
LAC shares will benefit as the development of Thacker Pass continues. It holds enough lithium for 4 plus decades of mining. It is poised to become a major supply chain leader for EV production in the West.
It’s one of the most straightforward and obvious opportunities as North American EVs continue to grow.
Blink Charging (BLNK)
I believe Blink Charging (NASDAQ:BLNK) and its stock are beginning to make a lot more sense to investors.
The opportunity is predicated upon rate cycles, profitability, and the convergence of both for the firm. That combination will make Blink Charging much more attractive in the mid-to-long term.
The company is projecting EBITDA breakeven by the end of 2024. That’s a positive but investors continue to be hesitant of growth firms in this sensitive rate environment. Blink lost more than $41 million in Q2.
Those losses draw more attention now that capital is much more expensive due to rate hikes. Investors care less that revenues increased by 186% during the same period.
However, rate hikes are nearing an end and it’s reasonable to expect rate decreases by late 2024. Remember, Blink Charging should reach EBITDA breakeven by that time.
It’ll be way more attractive because of the combination of profitability and cheaper financing. Growth stocks including BLNK will be much more attractive then.
Li-Cycle Holdings (LICY)
Li-Cycle Holdings (NYSE:LICY) is another EV stock to consider for the long term. The company’s business centers on the emerging issue of battery recycling.
Inevitably, every EV will die. EVs have massive batteries that pose a serious environmental risk. Opponents of the industry argue that the risk invalidates the economic case behind EVs entirely. That’s unlikely.
Instead, battery recycling is an emerging growth opportunity within the broader EV sector. LICY shares are one such opportunity to consider.
The company is developing a spoke-and-hub network from which it expects to produce up to 25,000 tons of lithium carbonate annually. The company is building a global network of recycling facilities. The network spans North America, Europe, Asia.
Spokes refer to pre-processing facilities where end-of-life batteries are processed into a powder from which nickel, lithium, and cobalt are derived. Hubs are processing plants where that powder is processed into battery-grade materials.
Li-Cycle Holdings makes minimal revenues currently but has a first-mover advantage, strong liquidity, and significant future funding from the Department of Energy bolstering its prospects.
Albemarle (NYSE:ALB) is, like Lithium Americas, a vital link in the EV supply chain. The firm is currently established whereas Lithium Americas is more of a future bet.
Both are worth considering for those who understand the geopolitical implications of lithium. I won’t belabor that point but domestic lithium production is important and will be important.
Albemarle already sells vast quantities of lithium and is a vital link in the EV supply chain. It’s grown rapidly over the past few years as the EV industry has matured and its sales have grown.
Those sales remain impressive. In Q2, Albemarle’s sales totaled $2.4 billion, an increase of 60%. Lithium demand is strong but commodity prices are also volatile. That makes Albemarle risky and prone to price fluctuations. The result is a beta of 1.55.
Investing in ALB shares is likely to require the patience to ride out the ups and downs but it’s well-connected to the industry and will remain vitally important to the domestic market for a long time.
On the date of publication, Alex Sirois 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.