The surge in electric vehicle (EV) stocks, particularly undervalued EV stocks, is as palpable as ever. This booming sector, bolstered by countries offering incentives to boost EV adoption, is not just about environmental stewardship, but represents a nexus of innovation and advanced technology. With automakers committing an impressive $1.2 trillion to EVs and batteries by 2030, the EV market is a hotbed of investment opportunities.

Yet, some EV stocks haven’t surged in popularity as investor’s would’ve hoped, leaving investors questioning their potential. This puzzle highlights the sector’s rapidly evolving nature, while some companies lag, others are just revving up. Evaluating the sector’s rapid growth from today’s standpoint might not fully capture its future trajectory. However, this uncertainty masks the latent promise of emerging players in the EV space. Astute investors eyeing the clean energy trend have a chance to discover these hidden gems. For those willing to look beyond the obvious, these three stocks offer a gateway to participate in the transformative journey of the EV sector.

General Motors (GM)

General Motors (NYSE:GM) has navigated through a turbulent year, presenting a unique opportunity for long-term investors. Despite facing challenges, the company posted a revenue bump to $44.13 billion, a 5% increase, though its net income saw a 7% dip to $3.06 billion. These figures reflect GM’s adaptability and strategic emphasis on sustainable growth amidst market fluctuations.

In a bold move, GM is gearing up to launch seven Ultium-based EVs by the end of 2023, including the Chevy Blazer EV and Cadillac LYRIQ. Moreover, the company’s collaboration with Pilot Company and EVgo (NASDAQ: EVGO) to build a nationwide EV charging network. These prospects underscore its dedication to enhancing EV infrastructure and boosting EV adoption.

GM’s financials are compelling, with the company trading at a forward price-to-sales ratio of 0.27 times, roughly 69% below the sector median. Moreover, its stock trades at a forward price-to-book ratio of just 0.62 times, underscoring its undervalued status at 75% lower than the sector median of 2.48 times.

Li Auto (LI)

Li Auto (NASDAQ: LI) stands out in the EV sector, defying market volatility with remarkable growth. In a striking display of progress, the company reported a delivery of 34,914 vehicles in August, marking a 663% year-over-year increase. October saw an even more impressive milestone, with a record 40,422 New Energy Vehicles delivered, the first time Li Auto surpassed 40,000 in a single month.

Financially, Li Auto shines with its third-quarter results, boasting a 271.2% surge in year-over-year revenue and a 296% rise in annual vehicle deliveries. Despite a higher valuation at 2.48 times sales compared to peers, the shift from negative to positive cash flow signifies the company’s significant financial turnaround and long-term growth potential.

February 2024 is set to be a milestone for Li Auto with the launch of its flagship car, the Li MEGA. This introduction, combined with a strategic retail expansion in China, positions the company for heightened delivery growth. If you are looking for undervalued EV stocks, start here.

Toyota Motors (TM)

Toyota Motors (NYSE:TM) has adeptly navigated the evolving automotive landscape by investing across the full spectrum of energy options. This strategic diversification has helped Toyota avoid the challenges faced by pure EV manufacturers. The company’s sound decision-making is reflected in its financials, with operating profit soaring to $9.5 billion, more than double the previous year, driven largely by a global surge in demand for its hybrids.

Moreover, its partnership with BYD (OTCMKTS: BYDDF) to develop an electric sedan highlights its commitment to expanding its EV portfolio. Additionally, Toyota’s Beyond Zero campaign demonstrates its dedication to sustainable transportation, offering a broad range of low and zero-emissions vehicles.

Furthermore, Toyota is embracing cutting-edge technologies, such as Vehicle-to-Grid (V2G), exemplified by its collaboration with Oncor Electric Delivery in Texas. Given its strategic innovations and solid financials, with TM stock trading at 0.92 times sales and 9.02 times forward earnings, Toyota represents an attractive investment opportunity in the automotive sector. This one easily earned its spot on our list of undervalued EV stocks.

On the date of publication, Muslim Farooque 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