The global electric vehicle (EV) market has suffered more than anyone ever imagined it would. While Tesla (NASDAQ:TSLA) continues to make news, there is so much more going on in the EV industry. The sales have slowed over the past few months, and EV makers have already addressed this issue by cutting down on the production targets, which ultimately impacted EV stocks. However, there is a bright side to the current situation for investors looking for EV stocks to buy.
The U.S. has incentivized the purchase of EVs through tax subsidies and grants. While the EV market is not expected to pick up anytime soon, one cannot deny the future is electric. Sooner or later, people will have to transition towards electric vehicles. Developing nations like India have started to see higher demand and adoption of EVs over the past year. If you can take a little risk and have the patience to hold onto your stock until the market improves, here are three stocks to buy.
EV Stocks to Buy: BYD (BYDDF)
In the period between Jan and May 2024, BYD (OTCMKTS:BYDDF) continued to hold the largest share in China’s EV market, taking the crown from Tesla. It holds a 33.4% passenger market share in China, with retail sales of 268,226 vehicles in May.
During this period, the company’s sales rose by 20% year over year (YOY), giving it a top spot in the industry. Trading at $29 today, the stock is up 8% year-to-date (YTD) but down 11% in the past 12 months. BYDDF has become one of the best EV stocks to buy.
BYD is a global powerhouse that is expanding at a rapid pace. Besides holding the largest market share for batteries, the company also beat Tesla in EV deliveries in 2023. The company is now entering the electric bus market in London and intends to replace the Boris Bus.
BYD doesn’t have to worry about the high tariff concerns in the U.K. It has ample space to grow in Europe and will have the lowest additional tax levy. That means BYD can also enjoy pricing power in Europe and expand its market share. It is currently building a factory in Europe and will export to the E.U.
The company is also building a factory in Hungary, making it the first Chinese automaker to build cars in Europe. The biggest benefit that BYD has is its global presence. It is already an established player in the industry and is set to benefit once the market revs up. Citi (NYSE:C) opened a 30-day upside catalyst watch and has a Buy rating for the stock.
Li Auto (LI)
A top 2023 EV stock, Li Auto (NASDAQ:LI) had a very slow start to 2024. Having reported impressive delivery numbers and fundamentals, the company saw a drop in EV demand, leading to lower production and sales.
However, I think Li Auto is one of the best EV players out there. LI stock is trading for $18 today and has lost 49% of its value since the beginning of the year. The EV maker is focused on SUVs and enjoys a price advantage. The company started delivering EVs in 2019 and saw a tremendous upside in 2023. That allowed the company to turn profitable last year, and analysts are expecting to see a steady revenue increase this year.
The company delivered a total of 80,400 cars in the first quarter and delivered nearly 61,000 vehicles in April and May combined. Li Auto is not the one to sit back and wait for the industry to improve. Instead, it is scaling up production, working on new marketing campaigns and ramping up the Mega shipments.
It recently launched the Li L6. The company will also be investing over 6 billion yuan in building 5,000 charging stations. While the process may take time, it will open a new revenue line for the business. The company is profitable, setting it apart from several other EV companies.
An improvement in the macro environment could boost the EV market, and Li Auto will be the first one to benefit. Once the sales stabilize, there is no going back for the company. LI is one of the best EV stocks to buy.
General Motors (GM)
Automaker General Motors (NYSE:GM) has been in the industry for many years and has seen several market ups and downs. The company is investing heavily in the EV segment and managed to deliver 75,000 EVs last year and 9,500 EVs in May this year.
It has committed to invest $35 billion in the sector in 2024. Once the economy recovers, we could see General Motors report tremendous growth. It managed to sell a total of 2.6 million cars last year, which shows its strong position in the auto industry
It saw a 21% jump in EV retail customer deliveries in the first quarter and has ambitious goals to produce 200,000 and 300,000 EVs this year. The management announced a $6 billion share repurchase plan and also hiked its dividend by 33% in the quarter. General Motors is doing well as compared to its competitors, who are bleeding cash due to the slow EV demand.
While the company has slowed down EV production, it will manage to return cash to shareholders. Once the market picks up, GM will be ready with its lineup. It is aiming to end gas-powered vehicle sales by 2035. The management will invest $850 million in Cruise, the self-driving car subsidiary this month to relaunch it.
Trading at $47, the stock is up 33% YTD and is very close to its 52-week high of $49. The stock still looks undervalued to me and is a buy below $50.
On the date of publication, Vandita Jadeja 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.
