The electric vehicle market remains challenged. Consumer demand has weakened, the needed infrastructure, such as charging stations, has not kept pace, and high interest rates have made investments by automakers more expensive even as they have kept consumers from making new vehicle purchases. The current situation has led to a decline in many automotive stocks or led the shares to trade sideways. Some automakers have begun to scale back their electric vehicle production schedule owing to the current environment.
The good news is that major automakers remain committed to their long-term electric vehicle strategies, choosing to see the current problems as short-term and likely to be resolved on their own. Multi-billion dollar investments in electric vehicle fleets continue and most automakers have set themselves ambitious goals to transform the motor vehicles they sell by 2030. Government incentives around the world also help with sales and expectations are that demand will rise as interest rates fall later this year. Here are three EV stocks gearing up for a seasonal comeback.
Ford Motor Co. (F)
Ford Motor Co. (NYSE:F) started out this year by reducing production of its F-150 Lightning pick-up truck as consumer demand for electric vehicles remains soft. However, the leading Detroit automaker still sees electric vehicle sales growing worldwide in 2024. The company retains its ambition to produce 600,000 electric vehicles this year. By 2030, Ford plans for half (50%) of its annual vehicle sales to come from electric models.
Now is a good time to buy F stock, not only because of the company’s electric vehicle ambitions but also because the share price is on the rise, having gained 9% since the start of this year. Ford has quickly put the turmoil of last fall’s strike by the United Auto Workers (UAW) union behind it and got back down to business. While its share price is marching higher, F stock still trades at only 12 times future earnings estimates and offers a quarterly dividend of 15 cents a share for a yield of 4.40%.
Tesla (TSLA)
Slumping sales and rising competition have crushed Tesla (NASDAQ:TSLA) stock. The shares are down 33% this year and bringing up the rear of the S&P 500. But don’t lose faith as TSLA stock could easily stage a seasonal comeback. The company is not taking its current problems lying down. On the contrary, Tesla has raised prices for all versions of its Model Y electric vehicle in the U.S. by $1,000 and is moving up plans to launch a cheaper compact electric vehicle by 2025.
Tesla is also pushing into new areas, developing supercomputers, experimenting with artificial intelligence, and building a humanoid robot called “Optimus.” As always, Tesla remains an imaginative company under the leadership of CEO Elon Musk. The company also remains a major producer of electric vehicle batteries and solar panels and is starting to generate revenue by allowing other automakers to use its network of charging stations across the U.S. and around the world. Look for TSLA stock to rebound.
Toyota Motor Co. (TM)
Japanese automaker Toyota Motor Corp. (NYSE:TM) arguably has the most ambitious electric vehicle strategy of any automaker. The company, which is the world’s largest vehicle manufacturer producing 10 million units a year, plans to sell 1.5 million electric vehicles per annum by 2026. Toyota is also aiming for a driving range of 1,000 kilometers for its future electric vehicles, which is about double the 570-kilometer driving range of a typical Tesla Model 3 electric sedan.
Toyota is also developing a method for mass-producing solid-state batteries for electric vehicles and aims to commercialize the technology by 2028. While it is still a major producer of gas-electric hybrid vehicles, Tesla has gotten religion on fully electric vehicles under new CEO Koji Sato, who took over the company in April 2023. Toyota has even created a new business unit called “BEV Factory” that will produce its electric vehicles and the needed batteries.
News of the pivot to electric vehicles has ignited a fire under TM stock. Over the last 12 months, the company’s share price has risen by 70%, including a 33% gain this year.
On the date of publication, Joel Baglole 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.
