The auto sector is entering an exciting and more lucrative era. That’s because automakers are starting to charge subscription fees for high-tech services. I believe that these companies will soon also start offering to track the well-being of various components within vehicles in exchange for fees. Which may transform them into the one of the best auto stocks investors want to buy. Of course, for the owners of electric vehicles, keeping informed about the welfare and needs of their EV’s batteries is extremely important. As a result, I’m sure that many owners will be willing to pay to stay on top of those matters.
Importantly, most consumers seem willing to pay monthly fees for services within their vehicles. But they often like to try out these services first. In July 2023, S&P polled roughly 4,500 consumers who had a free trial or a subscription for services within their vehicles. More than 80% of the respondents said they would consider purchasing subscription-based services in the future. For investors who want to profit from this trend, here are the three best auto stocks to buy.
General Motors (GM)
Modern electric vehicles are much more computerized than their gas-powered counterparts. Lucid Motors (NASDAQ:LCID) CEO Peter Rawlinson explained in 2021 that computing has become central to vehicles, especially EVs. As a result, it’s much easier to offer software-based services through EVs than gas-powered vehicles. Consequently, automakers that sell many EVs will be much better positioned to offer software subscriptions.
Among the veteran automakers, General Motors (NYSE:GM) is one of the best positioned firms to become a top seller of EVs. Sales of the Cadillac Lyriq luxury SUV jumped 500% last quarter year-over-year to 5,800. The Chevrolet Bolt was a top-selling EV in the U.S before it was taken off the market. However, GM is slated to release a retooled version of the Bolt next year. Moreover, the automaker has begun selling electric versions of many of its most popular trucks and SUVs. I believe that these will become best sellers in the longer term. Boding well for the future, GM expects its North American EV business to enter the black in the second half of this year.
Finally, GM reported very strong first-quarter results, has a very low valuation, and is returning a great deal of cash to its shareholders.
Rivian (RIVN)
How can anyone not love a company that’s an integral partner of both Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL)?
It appears that EV maker Rivian (NASDAQ:RIVN) could be on the verge of achieving that huge milestone. As of last October, the start-up had provided Amazon with 10,000 of the delivery vans that the e-commerce giant has ordered. And tech website DigiTimes recently reported that Apple is considering forming a partnership with Rivian.
Such an alliance would certainly make sense for Apple. Obviously, the software behemoth is interested in selling products via EVs. And Rivian is one of the top American EV-oriented firms.
Meanwhile, Rivian CEO RJ Scaringe did not deny that the automaker could partner with Apple. He even noted that his company has a history of partnerships. Given these points, I think there’s a very high chance of the two firms forming an alliance. Such a deal should prove to be very lucrative for Rivian.
VinFast (VFS)
VinFast (NASDAQ:VFS) is a Vietnam-based EV startup that’s growing very rapidly and has a semi-secret weapon. Last quarter the company’s sales soared 270% YOY to $302.65 million. Meanwhile, its EV deliveries jumped 444% YOY to 9,689.
The automaker’s semi-secret weapon is its alliance with Israeli EV battery maker StoreDot. The company’s batteries will be utilized by VinFast’s commercially available vehicles starting next year.
Another EV maker, Polestar (NASDAQ:PSNY), recently reported that a test they conducted showed that StorDot’s battery can add 200 miles worth of charge in just 10 minutes.
On the date of publication, Larry Ramer held long positions in RIVN and AMZN.The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
