From being among the hottest stocks in the markets, EV stocks have been wealth destroyers in the last few quarters. The reasons for the sell-off in EV stocks include higher borrowing costs, slow growth in Europe and expiring subsidies.

However, it’s worth noting euphoric rallies tend to take valuations to unsustainable levels that defy fundamentals. In the same way, the sell-off can punish stocks more than they deserve. I believe this currently holds for some of the best EV stocks.

An important point to note is that as global growth remains sluggish, there is a strong case for multiple interest rate cuts this year and in 2025. As macroeconomic headwinds wane and borrowing costs potentially decline, the EV industry might be poised for a strong comeback.

So, it’s a good time to consider exposure to some oversold EV stocks. The names discussed could double before the end of 2025.

Li Auto (LI)

If I had to buy just one EV stock now, it would be Li Auto (NASDAQ:LI). The company has been growing at a stellar pace, and LI stock is undervalued at a forward price-earnings ratio of 33.9. With the likelihood of strong quarterly numbers, I expect the stock to skyrocket relatively soon.

As of Q3 2023, Li Auto reported a cash buffer of $12.13 billion. Further, the company reported free cash flow of $1.8 billion for the quarter. With high financial flexibility, Li Auto seems positioned to continue delivering strong growth. The company has been aggressively expanding its retail presence in China. Given the strong cash buffer, international expansion seems likely in the next 12 to 24 months.

It’s worth noting that LI MEGA is due for a commercial launch in March. In the foreseeable future, the vehicle is likely to support strong deliveries growth. Li Auto set an ambitious target to deliver 800,000 vehicles this year. If it achieves that goal, LI stock will double sooner than expected.

Tesla (TSLA)

Tesla’s (NASDAQ:TSLA) stock has earned the reputation of making big moves in quick time. In April 2023, TSLA slumped to lows of $152. In three months, the stock surged by 97% to closing highs of $299. However, with intense competition coupled with macroeconomic headwinds, the stock has witnessed renewed correction to current levels of $191. In my view, the stock is oversold and poised for another strong reversal rally.

With the mass production of Cybertruck impending and a pipeline that includes Roadster and Semi, the deliveries growth outlook is bullish. In March 2023, Elon Musk indicated the company planned to cut manufacturing costs in half for its next-generation vehicle platform.

With Tesla eying entry into emerging markets like India, there is a possibility of some announcements related to its low-price cars. That’s an impending catalyst, as it would help Telsa make inroads into multiple emerging markets — Asia and Southeast Asia. Therefore, I would ignore near-term headwinds and consider accumulating TSLA stock for another big move.

Panasonic Holdings (PCRFY)

Among EV battery stocks, Panasonic Holdings (OTCMKTS:PCRFY) looks massively undervalued. Currently, PCRFY stock trades at a forward price-earnings ratio of 9.5. I further believe PCRFY stock deserves a place in the long-term portfolio.

In December 2023, Panasonic announced it shelved plans for an EV battery factory in Oklahoma. That was a part of the company’s plan to quadruple EV battery capacity by 2031. A possible reason could be slowing industry growth.

However, Panasonic continues to innovate, and I am bullish on the outlook for the next few years. The company is already working on increasing the battery energy density by 25% by the end of the decade. The cylindrical lithium-ion batteries will also offer industry-leading safety and reliability.

The company is also targeting to produce solid-state batteries for drones and factory robots by 2030. That will likely be another big addressable market and a revenue growth catalyst. For now, the rally from oversold levels could be triggered by potential rate cuts that boost the EV industry’s growth outlook.

On the date of publication, Faisal Humayun 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.