With Q1 earnings behind most electric vehicle (EV) companies, it is time to reassess the market and investor positioning, identifying promising EV stocks to buy. The latest market growth forecast by BloombergNEF remains positive. This holds true despite the high entry cost and EV saturation in China.
North American EV sales are forecast to grow by 31% in 2024 from 49% in 2023. But, the EU market is heading for a slump due to faltering economy and subsidy cuts. This leaves the Euro market with only a 10% sales growth by the end of the year. For example, Germany and the Netherlands are phasing out EV subsidies. This move can substantially reduce EV demand.
Furthermore, investors should consider expected technological advancements. Gartner analysts predict that by 2027, EVs will be cheaper to produce than internal combustion engine vehicles, outpacing the cost of battery production, which makes up about 40% of an EV’s cost.
Although the research firm noted that about 15% of EV companies will go bankrupt or absorbed by that timeline, this is another phase in the evolving market.
Next, let’s explore three top EV stocks to buy as we navigate these changes.
FREYR Battery (FREY)
FREYR Battery (NASDAQ:FREY) targets the burgeoning EV battery sector with a proposition that blends high risk with potential high returns. In the last quarter, FREY stock increased by 8%. It now trades at $2.23 per share, which is significantly lower than its peak of $16.08 in October 2022. This positions it as a notable candidate among EV stocks to buy.
The company is significantly expanding its operations in the U.S. For instance, it plans to invest up to $2.6 billion by 2029 in a new facility in Georgia. This investment includes the development and scaling of its proprietary SemiSolid battery technology. Licensed from 24M Technologies, it promises to slash production costs by up to 40%.
For Q1 of 2024, FREYR reported a net loss of $28.7 million, deepening from a $12.9 million loss the previous year. This occurred despite a strong cash position of $250 million and reduced liabilities from $97.4 million to $86.6 million. The company’s strategic advances and financial management suggest it is well-positioned for future growth. Therefore, it offers investors an attractive, yet speculative, entry point into the EV market.
Nio Inc. (NIO)
Trading as American depositary shares, Nio Inc. (NASDAQ:NIO), is a prominent player in the competitive EV market. It’s especially notable in China, where the company leverages external technologies to innovate on a large scale.
As of April, Nio Inc. reported a 21.2% year-over-year (YOY) growth in EV deliveries, totaling 45,673 vehicles and reaching a cumulative 479,647 units. The company focuses on premium luxury EVs. It boasts partnerships with major firms like Geely Group and JAC Group.
Despite a challenging market, Nio Inc. stood out by closing 2023 with a net loss of $2.9 billion. However, it continued to gain popularity through technological advancements in battery performance and competitive pricing. In fact, NIO often surpassed rivals like Mercedes-Benz (OTCMKTS:MBGYY) in value for money.
Looking ahead, Nio Inc. plans to expand into the U.K. market under the leadership of former Mercedes-Benz and Volvo (OTCMKTS:VLVLY) executive Matt Galvin. The launch of the affordable Onvo L60 SUV is set for September 2024. And, it is expected to increase monthly delivery outputs to 20,000 EVs.
By 2025, NIO aims to boost its sales volume to 300,000 units, marking a 62% YOY increase. Despite a recent 12% decline in stock value, Nio Inc. remains optimistic with its stock price at $4.72. With $8.1 billion in cash reserves as of year-end 2023, NIO is well-equipped to surprise investors positively in the upcoming June 14th earnings announcement.
Aspen Aerogels (ASPN)
Just as battery companies like FREYR are indispensable for the EV industry, the same is true of Aspen Aerogels (NASDAQ:ASPN). As many EV owners have noticed, getting batteries to retain the same capacity across different climates is a challenge.
Aspen Aerogels advances battery insulation with PyroThin barriers, stabilizing battery temperatures from -40°C to 90°C and preventing degradation. Beyond EVs, its Cryogel Z insulation is crucial in liquid natural gas (LNG) facilities.
Despite the Nord Stream pipeline sabotage, the global gas demand is expected to see substantial growth in 2024, according to IEA. This positions Aspen Aerogels as a versatile investment, applicable across various sectors. Those include LNG storage, shipping, refining, military, transportation and EVs. So, it’s become a compelling choice among EV stocks to buy.
As a result, ASPN gained stellar 253% value over one year, or 52% over three months. In May’s Q1 2024 earnings, Aspen improved outlook by 109% for 2024, from a net income loss of $23 million to positive $2 million. Overall, the company’s revenue increased 107% YOY.
Although high at present price of $27.02, the stock is still far away from its all-time high of $63.66 in November 2021. Aspen’s 52-week low point is $5.33 per share. Per Nasdaq’s aggregated analyst consensus, ASPN stock remains a strong buy at $28.11 average price target.
On the date of publication, Shane Neagle 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.
