Just two relatively small data points show that the death of the electric-vehicle revolution has been greatly exaggerated (to paraphrase Mark Twain). First, the EV sales of Hyundai’s (OTCMKTS:HYMTF) luxury brand, Genesis, soared 280% last year to 6,403. Secondly, Mercedes Benz (OTCMKTS:MBGAF) recently sold 1,000 electric semi-trucks to Swiss building materials and solutions provider Holcim.
The information suggests that the trend of upper-end consumers and businesses electrifying is far from dead and is in fact ongoing. And in the midst of the tremendous, unjustified bearishness on EVs, there are some high-potential EV firms that are making great progress that are being ignored. Here are three emerging EV stocks to consider buying at this point.
Polestar (PSNY)
Europe-based EV maker Polestar (NASDAQ:PSNY), in which Volvo (OTCMKTS:VLVLY) has a 48% stake (which is likely to change), has started to sell an SUV that could be a game changer.
Polestar has unveiled its luxury SUV, the Polestar 3. and the EV is slated to hit the roads in the U.S. “in the next few months.”
Polestar 3 is a luxury SUV with a favorable range of 300 miles and has received impressive early reviews.
For example, Car and Driver called the EV “fairly quick,” “a handsome beast” and “good to drive.”
I believe that the EV could take a significant bite out of the huge market share of Tesla’s (NASDAQ:TSLA) Model Y, especially in Europe and China, given Polestar’s connections to Geely and Volvo.
PSNY stock is changing hands at a very low forward price-sales ratio of 1.60.
Ayro (AYRO)
Ayro (NASDAQ:AYRO) has developed a utility low-speed electric vehicle called the Vanish. The EV enables emission-free transportation around campuses and is used in last-mile delivery and micro-distribution.
Range anxiety, the biggest problem hindering EV adoption, is not much of an issue for vehicles that stay in small areas. Moreover, many companies, governments, and colleges, target markets for the Vanish, are very intent on reducing their emission.
There’s already evidence that the demand for the Vanish could be very strong, as a U.S. embassy in South Asia ordered an undisclosed number of the EVs. An unnamed “Fortune 100 Retailer” ordered 40 units of Ayro’s EVs.
Given the strong demand that I believe exists for low-speed utility EVs, many more government agencies and sizable companies could easily purchase large numbers of Vanish EVs in the coming quarters and years.
Li Auto (LI)
Li Auto’s (NASDAQ:LI) hybrid plug-in vehicles, which have gas engines to extend their range, have been popular in China.
In December, the automaker’s deliveries jumped 23% versus the previous month and 137% compared with the same period a year earlier to a very impressive 50,353. For the ninth straight month, Li’s monthly deliveries set a new record. For all of 2023, its deliveries soared 182% to 376,000.
Meanwhile, Li intends to launch a “multi-purpose vehicle” called the Mega. The large, purely electric vehicle seats seven and has an impressive cruising range of 435 miles, while 310 miles of range can reportedly be added to it in only 12 minutes.
I’m bullish on very large electric vehicles that can seat five or more people for three reasons. First, there are relatively few such vehicles available, whether they are gas-powered or EVs. Secondly, it’s much, much cheaper to power such vehicles with electricity than gas. Finally, large vehicles tend to carry much higher profit margins than smaller ones. Given these points, I believe that the Mega could be a big, positive catalyst for LI stock.
Li’s shares have a low, attractive enterprise value/EBITDA ratio of 4.70.
On the date of publication, Larry Ramer 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.
