Truly, 2023 wasn’t the greatest for the electric vehicle (EV) industry.
As automakers struggled amidst the United Auto Workers (UAW) strike, a high interest rate environment dropped consumer spending and EV demand. While the strike did cost millions to the automakers, the drop in demand also caused the profits and subsequently, EV stocks to drop. Several automakers cut down on their EV investments as well as 2024 production targets.
So now, many EV makers struggle to meet production targets despite government support. Yet, the sales figures prove that EV adoption is growing, as the U.S. sold one million units for the first time ever. Growing at a rapid pace, the industry has immense competition.
However, only a few companies will be able to win. If you are ready to join the EV revolution, let’s examine three EV stocks to watch this year.
BYD Company (BYDDF)
BYD (OTCMKTS:BYDDF) is now the biggest EV seller and the second largest battery maker in the world. As Warren Buffet’s favorite EV company, it’s proven its strength with impressive deliveries and high profit margins.
This past quarter, the company delivered 526,000 EVs, claiming the top spot. Also, it’s seen a strong rise in international exports, and this underscores the increasing demand for BYD cars globally. Manufacturing over a million EVs in 2023’s first nine months, it saw a 100% profit surge year over year (YOY).
While catering to the Chinese market, BYD also eyes new markets and plans new factories in Thailand and Brazil. In fact, it has already started deliveries in Mexico.
Thus, BYD is only getting ready to race higher. Trading for $26, the stock is down 20% in the past six months, and this discount represents an opportune chance to buy.
Li Auto (LI)
Li Auto (NASDAQ:LI) is one of the best EV makers in China and could rule in 2024. It has impressed the market with strong delivery numbers and even better financials.
Further, Li Auto reported 131,805 deliveries in Q4, up 184.6% YOY while yearly deliveries stood at 376,030 cars. Also, it saw an impressive 546% YOY rise in gross profit in Q3.
The company enjoys a solid industry position and will report an impressive fourth quarter. Recently, it announced a partnership with Nvidia (NASDAQ:NVDA) for autonomous driving. While not their first partnership, LI has already used their tech in its previous cars. So, this appears as a brand new move to improve sales.
Nvidia’s centralized car computer will power the next range of EVs for LI, possibly working as a catalyst in the long term. Consumers will be happy to take advantage of the best tech available in the industry. Additionally, Li Auto will start deliveries of Li Mega on March 1 as it gears up for a solid year ahead.
Currently, LI stock is trading at $33, down 7% year to date (YTD) and looks highly undervalued. It’s worth buying the stock at this level as it will likely move upward as the market conditions improve.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) might be ranked second place, but it remains an undisputed champion in the EV industry.
The company resorted to price cuts in 2023 which led to a lower profit margin. While it has affected the stock, Tesla can bounce back in no time. The year wasn’t exactly bad for Tesla either. It achieved a market cap of about $800 billion, and the company diversified into Artificial Intelligence (AI).
Despite a drop in profits, TSLA saw revenue growth. The EV maker managed to hit the yearly delivery target of 1.8 million vehicles and also launched the Cybertruck.
TSLA stock is down 12% over the past six months and is exchanging hands for $234. The company is working on production expansion by building new factories. Also, it has opened the charging network to other automakers which will generate revenue in the long-term.
Finally, Tesla will announce results on January 24, and we could get more clarity about its yearly direction.
On the date of publication, Vandita Jadeja did not hold (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.
