SPECIAL REPORT The Top 7 Stocks for 2024

EV Trailblazers: 3 Stocks Driving the Electric Dream

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  • The adoption of EVs is actually growing quite rapidly in the U.S., while EV makers are greatly improving their offerings. Here are three top EV stocks.
  • General Motors (GM): GM is making its batteries significantly cheaper.
  • Tesla (TSLA): Tesla’s Cybertruck is quite innovative. 
  • Rivian (RIVN): Rivian plans to introduce battery packs that are more affordable and easier to manufacture. 
EV stocks - EV Trailblazers: 3 Stocks Driving the Electric Dream

Source: Sopotnicki / Shutterstock.com

As I’ve noted in past columns, data shows that, despite the recent skepticism of the American media towards electric vehicles, EV ownership is continuing to grow rapidly in the U.S. Specifically, U.S. EV sales rose 50% last quarter versus the same period a year earlier, while the sales of Ford’s (NYSE:F) Lightning EV truck soared 113% year-over-year in November to a record 4,393.

Also noteworthy is that U.S. EV sales for the first 11 months of 2023 are estimated to have exceeded the 1 million mark, representing the first time that annual EV sales have come in over 1 million. Now automakers are embarking on innovations that will cause the growth of EV sales to accelerate even more going forward. Among these changes are more affordable batteries and the launch of exciting new EVs.

Here are three EV stocks that are likely to meaningfully benefit from such upgrades going forward.

General Motors (GM)

Image of General Motors (GM) logo on corporate building with clear sky in the background.
Source: Katherine Welles / Shutterstock.com

In August, GM (NYSE:GM) disclosed that it would “lead a $60 million investment in Mitra Chem,” Reuters reported. The latter startup utilizes AI “to accelerate development of lithium-ion battery materials”, and its technology will reportedly allow the automaker to use cheaper substances to make its batteries starting in 2025. As a result, GM will be able to charge less for its EVs and boost the gross margins that it generates from selling them.

Indeed, the automaker recently disclosed that it expects its pretax profit margins on EV to come in at around 5%, versus the “substantially negative” margins that it’s generating now.

Also importantly, GM intends to have enough capacity by the end of 2025 to turn out 1 million EVs annually in the U.S., while it has launched many new EV models recently, including electric versions of its Blazer and Equinox vehicles.

Given these points, along with GM’s very low valuation (it’s trading at a forward price-earnings ratio of just four), I think that GM is one of the best EV stocks to buy now.

Tesla (TSLA)

Interior of the Tesla Model 3
Source: Khairil Azhar Junos/Shutterstock.com

Although the prices and specs of Tesla’s (NASDAQ:TSLA) new Cybertruck are disappointing compared with the goals for the EV that CEO Elon Musk set back in 2019, the truck is certainly “trailblazing” in some respects.

Specifically, its appearance is very unique and it’s reportedly bulletproof, which is a very unusual feature. Further, Musk indicated that it’s unlikely to be badly damaged if it crashes into another truck. And the EV is very fast for its size, as it can reportedly accelerate to 60 miles per hour in just 2.6 seconds.

In a survey released by investment bank Canaccord Genuity, 33% of respondents said that they would buy the Cybertruck. The result suggests that the EV could meaningfully lift Tesla’s sales and increase Americans’ interest in EV in general and Tesla’s autos in particular.

Meanwhile, TSLA is reportedly working on developing an EV that would cost just $25,000. If Tesla does release such an affordable vehicle, the market share of EVs in America is likely to rise tremendously.

Rivian (RIVN)

An image of the Rivian logo imposed on top of a stock graph; Rivian stock through magnifying glass
Source: Dennis Diatel / Shutterstock

Like GM, Rivian (NASDAQ:RIVN) intends to introduce “a new battery pack” to its consumer vehicles. Specifically, the changes will make “the battery pack and module structure” less complex and “thousands of dollars” cheaper, CFO Claire McDonough reported recently. Additionally, these new battery packs and modules will be “much easier” to manufacture, the CFO noted.

Elektrek believes that the new battery packs and modules could enable the automaker to reduce the prices of its R1 trucks to “the $60,000s” before federal tax credits. Consequently, the website thinks that the EV could become “a best seller.”

Also importantly, McDonough stated that she expects the company’s overall gross margins to turn positive in 2024. As a result, I believe that Rivian will just have to raise its production levels in order to at least approach overall profitability in 2025, With its second factory likely to start production in late 2024 or early 2025, it should indeed be able to greatly boost production in 2025.

On the date of publication, Larry Ramer held a long position in RIVN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.


Article printed from InvestorPlace Media, https://investorplace.com/2023/12/ev-trailblazers-3-stocks-driving-the-electric-dream/.

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